The baby boomers in Canada have a strength in numbers more than any other generation. These are the persons born between 1946 and 1964. In the period between 1996 and 2006, the number of Canadians over 55 years old increased by 87%. And that number is predicted to increase by another 16% in the next decade.
Why are baby boomers special? This select group has a high life expectancy, good health, and spending power. With money to invest, they can build or grow their nest eggs. Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) and Telus (TSX:T)(NYSE:TU) are outstanding stocks well matched for baby boomers.
High-class bank stock
Scotiabank is one of Canada’s Big Five banks. Besides being an attractive bank stock, the banking institution included is a picture of financial strength and stability. Investors get a combination of tremendous value and stable passive income.
The $84 billion bank pays an annual dividend of 4.84%. With this yield, baby boomers can sustain their economic prosperity for years to come. By owning shares of Scotiabank and reinvesting the dividends, they can generate new income to fund their retirement lifestyles.
Scotiabank survived the subprime meltdown in 2008, but the pullback in the mortgage industry remains a major concern to investors. However, the bank is continuously working to counter the negative sentiment. Scotiabank made some domestic acquisitions while restructuring international operations.
The bank will soon fire on all cylinders when the business segments in Central and South America grow. Hence, the current low price of $69.57 is a reasonable entry point for the investing baby boomer.
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High-grade telecommunications stock
The first batch of the baby boomer generation reached retirement age in 2012 and are living their post-work years already. Some of them must have opened a TFSA in 2009 and invested in Canada’s second-largest telecommunications company. By now, the money in their nest eggs could have swelled to seven figures.
Telus has experienced remarkable growth through the years. Baby boomers should seriously consider the telecom giant as an investment option. Telus’s multi-year dividend-growth model is perfect for income-conscious investors.
The current dividend yield of 4.4% can help generate new income and more cash reserves. A baby boomer would have the resources to fund the day-to-day financial needs. Telus hopes to achieve a 7-10% dividend growth over the next three years.
The goal is doable with the coming of the 5G network. Baby boomers can expect a higher return on investment from a technologically advanced wireless company and its recession-free stock.
Dividend stocks for all generations
Senior citizens will comprise one-quarter of Canada’s population in about 20 years. But the stereotypical baby boomers will always prefer to invest in well-established companies over new or trending names.
However, Scotiabank and Telus are not only for baby boomers. Generation X and millennials can include the stocks in their investment portfolios. Some could even fulfill their dreams of retiring early and live comfortably for the rest of their lives.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Christopher Liew has no position in any of the stocks mentioned. Bank of Nova Scotia is a recommendation of Stock Advisor Canada.