Investors in Canada have a number of ways to make their retirement more comfortable. As a CPP pensioner, adding stocks to a Tax-Free Savings Account (TFSA) can help boost passive income beyond the limits of the OAS. Today, we will take a quick look at three low-risk stocks that offer yields above 5% that can help grow one’s TFSA wealth while adding peace of mind to a diversified portfolio of retirement assets.
Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) — or CIBC to its customers — is one of the country’s most instantly recognizable financial institutions. As an investment, its business is reassuringly diversified, spread across a range of products and services that cater to an international blend of private and public customers.
The stock rewards the careful investor on a number of levels. First off, it’s arguably the best value for money among its Big Five peers, combining attractive market ratios and a +30% discount off its fair value with the richest yield among its Bay Street banking competitors. Currently offering a dependable dividend of 5.36%, CIBC is also looking at an expected 2.25% annual growth in earnings.
Another way to play the financial sector is to look beyond the Big Five and similar types of institutions. By focusing on financial service providers such as Power Financial (TSX:PWF), an investor can still reap the rewards of a big-name bank but with potentially lower risk. Power Financial is active in Canada, the United States, Europe, and Asia, for instance, adding defensive clout to a sturdy retirement savings plan.
Beyond being categorically low risk, Power Financial also rewards the eagle-eyed retirement investor with a value play matched with earnings growth. The stock trades at 24.7% below its future cash flow value, with earnings growth of 7.11% expected per year, more than double its past 12-month performance. Paying a rich and reliable dividend yield of 5.31%, Power Financial is a solid buy.
BCE (TSX:BCE)(NYSE:BCE) is one of the top stocks on the TSX to buy once and forget about. BCE covers a broad swathe of the Canadian population, offering must-have services that are strongly recession resilient, while also generating dependable and diversified revenue streams.
BCE’s yield is just over the 5% mark and is unlikely to deviate too far from that for the foreseeable future, since its market share is effectively split with only two other major competitors. With its strong cash flows and wide-moat business operations covering TV, radio, sports, mobile, and internet services, BCE is defensively diversified.
For investors looking for companies that like to reinvest in themselves, BCE’s multi-billion-dollar network upgrading program and fibre-to-home rollout make for a progressive choice. The company is a strong choice for pensioners seeking high-yielding businesses on the TSX that display stability in their dividend payments while also delivering growth in a competitive market.
The bottom line
CIBC, Power Financial, and BCE offer key benefits to retirees buying stocks this month. Their mix of passive income, low-risk business models, market share, and rich yields make for a solid trio of buy-and-hold investments.
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 Victoria Hetherington has no position in any of the stocks mentioned.