A growing concern today is preparing for retirement. Thinking about life in the future frightens most Canadians. But that shouldn’t distress you. Instead, why don’t you kick-start your retirement by investing in dividend-growth stocks?
Here are three stocks that can aid you financially on the road to retirement.
One of the best benefits of investing in Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM), or CIBC, is the 5.45% dividend, which is the highest in the banking sector. The bank has increased its dividend four times year over year and 18 times since 2011.
With the bank’s robust earnings growth, you can expect future dividend growth. Some say that CIBC’s focus on the domestic mortgage market would hamper near-term growth in the event of a real estate correction. However, the Canadian mortgage market is less vulnerable to such crashes.
CIBC is trading below $100 in August, so why not exploit the price dip? The bank’s 151-year history of dividend payments is genuinely remarkable and unprecedented.
If you’re not comfortable with the banking sector, your next option is a diversified utility company.
Canadian Utilities (TSX:CU) can put you on track on your journey. This $10.45 billion firm is one of 2019’s top dividend-growth stocks. Canadian Utilities has 47 years of dividend increases. The firm’s 9%, 10-year annual average dividend-growth rate is equally impressive. The company is a high-quality investment because of market exposure and revenue growth.
It owns $22 billion worth of regulated electric and gas distribution and transmission assets. Industrial and commercial customers depend on Canadian Utilities to serve their needs.
But the compelling reason to invest in the company is the source of income. Canadian Utilities will not experience cash flow snags as 86% of its earnings coming from regulated sources and 14% from long-term contracted assets.
Future revenue growth is a certainty with Canadian Utilities’s plan to invest $3.5 billion over the next three years in regulated utilities in Canada and Australia. The move will all the more strengthen its high-quality earnings base.
Market analysts are bullish about the prospects of one of the largest infrastructure companies in North America. The consensus forecast is that TC Energy (TSX:TRP)(NYSE:TRP) will outperform the market in the remainder of 2019 and beyond.
Their forecasts seem correct, as the stock is nearing its 52-week high of $67.15 with a potential upside of 17.22% in the coming months. The positive outlook stems from TC Energy’s Q2 2019 earnings results that exceeded Q2 2018 numbers. Revenue grew by 5.54% while earnings rose by 16.98%.
The $60.1 billion company has been operating pipelines, storage facilities, and power-generation plants for more than 65 years. People in Canada, Mexico, and the U.S. need TC Energy for their daily energy needs. Its core operations — natural gas, oil and liquids, and power and storage — are the growth drivers.
The company’s formidable and diversified assets ensure long-term growth. The 4.25% dividend yield and the compounding returns thereof will also allow you to build a sizable retirement fund.
Give yourself a head start
Let your savings work for you by using it to invest in the top dividend-growth stocks. You’ll gain the advantage of an early start toward retirement.
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Fool contributor Christopher Liew has no position in any of the stocks mentioned.