2 Top Dividend Stocks for Canadian Seniors Today

The best dividend stocks for retirees pay attractive dividends that continue to grow through challenging economic times. These two stocks fit the bill.

| More on:
Senior Couple Walking With Pet Bulldog In Countryside

Image source: Getty Images.

The best dividend stocks for retirees tend to be ones that pay reliable and growing dividends through good and bad economic times.

What are the best dividends stocks for retirees?

Canadian seniors need to get as much income as possible from their savings while minimizing the risk to their capital. That’s a challenge in the current environment. The Bank of Canada just announced plans to keep interest rates at record low levels. This situation could persist for years.

That means GICs from the big banks could stay low for a very long time. Right now, the best return is about 1% on a GIC. This doesn’t help seniors who need to generate income on investments to help pay the bills.

As a result, many investors are searching for the best dividend stocks to put in a TFSA. Fortunately, the TSX Index is home to a number of great dividend stock that tend to hold up well in tough times and should be solid buy-and-hold picks for an income portfolio.

BCE has always been one of the top dividend stocks for seniors

BCE (TSX:BCE) (NYSE:BCE) is Canada’s largest communications company. The stock has a great track record of providing income investors with generous dividends. This is likely the reason BCE has been a favourite among retirees for decades.

The company continues to be an attractive dividend pick and the stock trades at a reasonable price. BCE saw its share price dip a bit since the start of the year due to the hit on its media operations. Advertising revenue slipped in the TV and radio businesses and the pro sports teams have just recently restarted their games, although without fans in the seats.

BCE’s focus on Canada helps keep it sheltered from the turbulence in international markets. People are not going to cancel their phone or internet subscription services, so there is some built-in protection against tough economic times. The expansion of 5G in the next few years should provide BCE with new revenue opportunities.

The dividend growth is modest, but steady, and normally supported by rising free cash flow. Investors who buy BCE today can pick up a 5.8% yield.

The main risk to BCE’s stock price is rising interest rates. For the medium term, that shouldn’t be a concern.

Is TC Energy the top dividend stock for retirees right now?

TC Energy (TSX:TRP) (NYSE:TRP) used to be called TransCanada. The company is best known for its vast natural gas pipeline networks and gas storage facilities. TC Energy also owns oil pipelines and power generations assets.

The stock moves in step with the momentum of the energy sector, but TC Energy has limited direct exposure to changing oil and gas prices. The company’s energy infrastructure network essentially acts as a toll road. This might be why Warren Buffett’s Berkshire Hathaway recently invested US$10 billion to acquire assets similar to those operated by TC Energy.

The company has a large capital program in place that should ensure revenue and cash flow growth for years. TC Energy expects to raise the dividend by 8-10% in 2021 and by 5-7% per year afterwards. That’s one of the best dividend stock outlooks in the TSX Index. TC Energy’s current dividend provides a yield of 5.3%.

No wonder the stock has steadily climbed over the past decade.

TC Energy Stock Price

The bottom line

BCE and TC Energy should be solid buy-and-hold picks at their current prices and are among the top dividend stocks in the Canadian market. If you only buy one, I would probably make TC Energy the first choice today.

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.

The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares) and recommends the following options: short September 2020 $200 calls on Berkshire Hathaway (B shares), long January 2021 $200 calls on Berkshire Hathaway (B shares), and short January 2021 $200 puts on Berkshire Hathaway (B shares). Fool contributor Andrew Walker owns shares of BCE and TC Energy.

More on Dividend Stocks

Two seniors float in a pool.
Dividend Stocks

TFSA: How to Earn $1,890 in Annual Tax-Free Income

Plunk these investments into your TFSA to earn passive income and avoid the taxman.

Read more »

Engineers walk through a facility.
Dividend Stocks

1 TSX Stock I Wouldn’t Touch With a 10-Foot Pole

AtkinsRéalis (TSX:ATRL) is one TSX stock I'd never invest in.

Read more »

edit Woman in skates works on laptop
Dividend Stocks

3 No-Brainer Stocks to Buy Under $30

These three stocks all offer a huge deal for investors looking for dividends, as well as growth that will last.

Read more »

You Should Know This
Dividend Stocks

How to Convert a $300 Monthly Investment Into $338 in Monthly Income

If you want a certain amount in monthly passive income, invest a similar amount today and leave the rest to…

Read more »

Increasing yield
Dividend Stocks

3 Income Stocks With Big Yields to Consider in April 2024

If you haven’t yet made your March investments, here are three income stocks to buy the dip and lock in…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

RRSP Investors: Don’t Miss Out on This Contribution Hack!

This hack has so many benefits for you -- not just when you put it in your RRSP but for…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

Passive Income: 2 Safe Dividend Stocks to Own for the Next 10 Years

Dividend stocks such as Manulife and Fortis can help you generate a stable and recurring passive-income stream.

Read more »

Young woman sat at laptop by a window
Dividend Stocks

3 Dividend Stocks Everyone Should Own for the Long Haul

For investors looking for top-tier dividend stocks to buy and hold for the long term, here are three of my…

Read more »