If you are an investor that is at or near retirement, picking the right stocks is absolutely crucial. While an investor who is younger may have time to rebound from a blunder, the closer you are to retirement, the less opportunity you’ll have to recover from any major mistakes.
This makes each stock you select for your portfolio all the more important.
While you can look for stocks that have some strong upside potential over the next few years, you are better off to select companies that you know you’ll never have to sell.
On top of that, you’ll also have to find companies that are reliable dividend payers to secure that passive-income stream, regardless of what happens in the economy or financial markets.
Since these companies are going to have to be relied on to maintain the stability of their dividends, it’s prudent to select the best of the best from the Canadian Dividend Aristocrats list.
Two of the top stocks to consider adding to your portfolio today are Telus (TSX:T)(NYSE:TU) and Choice Properties REIT (TSX:CHP.UN).
Telus
Telus is the ideal stock when you think of a company that you’ll never have to sell. It’s well managed, well positioned, and in an industry that is thriving and will continue to be a mainstay of the economy.
Investors who have owned Telus in the past will be the first to tell you what a wonderful investment it is, the company has returned roughly $16 billion to shareholders through its share-buyback program, but primarily from its dividend-growth plan.
Its dividend, which yields roughly 4.6% today, has a highly sustainable payout ratio of just 77%; plus, it’s increased the dividend by 39% in the last five years, which is an extremely fast dividend-growth rate. Looking at it from a compounded view, that means Telus has increased the dividend at a 6.8% compounded annual growth rate since 2015.
Going forward, Telus continues to build its infrastructure and grow its customer base to continue to grow its earnings before interest, taxes, depreciation, and amortization (EBITDA).
Plus, with the introduction of 5G, it will have plenty of runway for future growth, making it a top candidate for long-term stocks to add to a portfolio.
You can gain exposure to Telus today at a pretty fair valuation of just over 17 times earnings, or an enterprise value-to-EBITDA ratio of 8.8 times — both pretty attractive valuations for one of the best stocks in the country.
Choice Properties
Real estate is the perfect industry to look for reliable long-term stocks, and Choice Properties is the top choice in the sector.
When you consider Choice Properties’s dividend yield, its strong portfolio in key markets, and its reliable tenant base, it’s obvious that Choice Properties is the clear winner in the Canadian real estate industry.
The dividend, which yields 5.25% and has been increased by 14% over the last five years, has a payout ratio of just 83% of its adjusted funds from operations, so it’s due for another dividend increase soon.
On the operations side of the business, Choice has one of the highest-quality portfolios in Canada, with a consolidated occupancy rate of 97.8%. This is no surprise given its portfolio of high-quality tenants such as banks and grocery stores, including Loblaw, which accounts for more than half of its rental revenue.
Going forward, Choice continues to grow its revenue as a result of strong operations and new developments coming to market.
Considering you can buy this leading real estate investment trust today at a price to book of just 1.1 times, and it will pay you a solid dividend that you can expect to grow over time, Choice is one of the top companies to add to a retirement portfolio that you’ll never have to worry about.
Bottom line
It’s paramount that investors find both a strong and reliable company to invest in but also an industry that can be expected to grow with stability over the long run.
This is always a crucial balance, but even more so when you are crafting a long-term retirement portfolio.
