Dividend investing is a practical strategy for retirement planners. If the goal is to retire with $1 million, your journey to wealth should begin with Bank of Montreal (TSX:BMO)(NYSE:BMO), BCE (TSX:BCE)(NYSE:BCE), and Canadian Utilities (TSX:CU).
You can live off the dividends from these buy-and-hold stocks during retirement, not counting the CPP or OAS payments.
Despite having a single-digit growth rate, BMO remains a top choice for would-be retirees. The fourth-largest bank in Canada is the first-ever domestic company that paid dividends to shareholders. It all began in 1829 and continues to this day. Currently, the bank stock pays a 4.19% dividend.
The unbeatable track record is a confirmation of BMO’s dependability as an income provider. Notably, in the last five years, the dividend growth streak is 5.15%.
Collectively, the Big Five banks in Canada are attractive investments. BMO, however, stands strong individually. It’s becoming a great franchise in the U.S., particularly in the Midwest. Also, this $65 billion bank is innovating and investing more in technology.
Recently, it introduced BMO insights, a new personal financial management solution that leverages artificial intelligence (AI) to deliver personalized, automated, and actionable insights for daily banking customers. BMO is now helping clients gain better control of their financial well-being.
Telecom giant BCE also has an impressive dividend track record. The first dividend payout happened in 1881, and since then, the company hasn’t missed paying dividends. At present, this stock offers a 5.22% dividend yield.
BCE is no longer a pure telecom, but a media firm that is operating prominent TV channels. The company has joined the streaming services bandwagon and hold a majority stake in several professional sports teams.
More importantly, BCE is operating in an industry that is nearly a monopoly for decades now. The fewer number of competitors enables this dividend titan to maintain high operating margins.
Over the last four years, BCE’s average net income is $2.8 billion on average revenue of $22.3 billion. The stock’s performance is credible, gaining 18.4% in 2019.
There’s no denying that Canadian Utilities is a forever asset. With 47 years of dividend growth streak to back it up, this utility stock can be a retiree’s source of lifetime income.
This $11 billion diversified utility company has gained almost 31% in 2019. It yields an appealing 4.32% dividend. An investor, who bought $10,000 worth of the CU 20 years ago would have realized a total return of 633.37%. The value of the investment today is seven times more, or $73,283.54.
Apart from financial sustenance in a retiree’s later years, the earning from the stock is a boost to after-tax income. Thus, Canada Utilities is a core holding of many TFSA users. Should there be a bear market in 2020, this stock is not as defenceless as other stocks.
Regardless of the market environment, Canadian Utilities should have no problem with generating income. Rates are regulated and the business is therefore recession-resistant.
The fulfilment of a journey
With BMO, BCE, and Canadian Utilities in your portfolio, you stand a better chance of enjoying a healthy and sustainable retirement. The only requirement of your journey is to start investing as early as now.
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Fool contributor Christopher Liew has no position in any of the stocks mentioned.