Many Canadian workers are fortunate enough to be offered a workplace pension, which immediately makes one’s retirement planning a million times easier.
Unfortunately, the subsection of Canadian employees who can count on a pension is a significant minority. In fact, unless you’re a top exec or you work for the government, you’re likely planning your own retirement using company RRSP matches, expensive mutual funds, and other less-optimal solutions.
It doesn’t have to be this bleak. Building your own pension is as easy as taking your cash and investing it with Canada’s top dividend-paying companies. You’ll be putting your capital to work in the same securities that top pension plans invest in. And as a small-time investor, you can even seek out opportunities in tiny stocks that large institutional investors are forced to ignore.
Let’s take a closer look at three of Canada’s top dividend-paying stocks, the kinds of companies you can build a long-term retirement plan around.
Rogers Sugar
The sugar business isn’t a big grower, but it generates gobs of predictable earnings, cash flow that is paid back to shareholders via one of the best dividends on the entire Toronto Stock Exchange.
The sugar business in Canada is dominated by two companies at the top: Redpath and Rogers Sugar (TSX:RSI). These two behemoths are protected from imported sugar by tariffs that tax any product not grown in Canada, and they’re so well established no domestic competitor dares to challenge them. That’s the kind of moat every investor wants to see.
Rogers has recently expanded into the maple syrup business, which isn’t going terribly well. Strong competition is reducing margins, with management predicting further investments are needed to protect market share. This will keep margins low for the time being.
The good news is, this is creating a nice buying opportunity. Shares trade at $5.10 each, which is close to a 52-week low. The dividend, which is secure even if the maple syrup business remains weak, is currently 7%.
BSR REIT
BSR REIT invests in apartment buildings in attractive U.S. markets — the kinds of locations it has determined to have solid fundamentals. Big chunks of its +10,000-suite portfolio are located in markets like Little Rock, Dallas, Austin, and Oklahoma City.
There are a few important reasons why BSR makes a good investment today. Unlike many other REITs, its management team is fully internal; this saves the company significant money over the long term. There are ample growth opportunities to expand the portfolio. Shares trade at a lower valuation compared to many of the company’s Canadian peers. And top management owns nearly half the company.
The REIT also offers a pretty high yield for the residential real estate sector; the dividend is currently 4.2%. Look for that payout to creep higher over time, too.
Laurentian Bank
Laurentian Bank of Canada (TSX:LB) offers investors the chance to put their cash to work in the lucrative Canadian banking industry while collecting a succulent dividend.
Laurentian Bank is Canada’s seventh-largest financial institution with a decent sized market share in Quebec. Through a series of acquisitions of specialty finance companies, it has expanded operations outside La Belle Province, and management looks poised to make further deals, too.
One problem is the company’s branches aren’t terribly efficient. Management has taken steps to correct this, including laying off staff and setting efficiency targets. If successful, these goals should make Laurentian a much more profitable enterprise.
While investors wait for this turnaround to hit the bottom line, they’re treated to the best dividend in the entire sector. Laurentian’s dividend is $0.66 per share each quarter — good enough for a 5.7% yield. Investors don’t have to sweat the payout either; the dividend is just a little over half 2020’s projected earnings.
