Canadians are fortunate because they have foundations when they retire. However, the Canadian Pension Plan (CPP) and Old Age Security (OAS) are not retirement wealth. If you desire to retire rich or live a more luxurious retirement lifestyle, take it to the next level.
Blue-chip companies like the Toronto-Dominion Bank (TSX:TD)(NYSE:TD), Enbridge (TSX:ENB)(NYSE:ENB), and Power Corporation of Canada (TSX:POW) are wealth-builders. Long-term investors can amass a fortune over time by owning shares of the three companies.
TD is a no-brainer investment choice for income investors or people building retirement wealth. The average life expectancy in Canada for 2021 is 82.66 years. If you retire at age 65, your retirement years could be18 years or more.
Canada’s second-largest bank has a dividend track record of 163 years, so it tells you already the bank stock can provide you a pension-like income for decades to come. TD didn’t slash dividends or suspend payouts even during the harshest recessions in recent memory.
This $140.05 billion bank was the only company that reported revenue and profit growth in the 2008 financial crisis. Today, you can purchase the bank stock at $77.14 per share to partake of the 4.1% dividend. The payments are safe regardless of the market environment. Keep reinvesting the dividends and let your money compound before retirement.
Must-have income stock
If TD is a no-brainer buy, Enbridge is a must-have asset. The energy stock pays a super high 7.77% dividend. Any amount you invest in the TSX’s to-tier energy stock will double in less than nine-a-half-years. Assuming you have $120,000 worth of shares, your annual dividend earnings would be around $9,324.
Would-be investors should understand the risks in the energy sector before investing. However, Enbridge has qualities that can mitigate the industry headwinds. The take-or-pay or cost-of-service contracts insulate the $87.5 billion energy infrastructure company fluctuating commodity prices and volumes.
Management is confident that mainline volumes will return to pre-corona levels. Enbridge projects a 5% to 7% growth in annual earnings in the coming years. Similarly, its core business should remain robust given its multi-billion-dollar secured capital program. The energy stock hasn’t disappointed investors over the last 25 years as the dividends have been growing at a healthy clip.
Power up your retirement income
Power Corp is the mother company of Great-West Lifeco and IGM Financial. This $20.93 billion international management and holding company have interests in several industries in North America, Europe, and Asia. Its forte is in financial services, insurance, and wealth or asset management, although it’s present in the renewable energy space, startups, and other business sectors.
At $30.68 per share, the dividend yield is a high 5.83%. You don’t see many price swings in holding companies, but Power Corp. can sustain dividend payments. The assets generate strong cash flow and earnings. Among the next growth catalyst is the electric vehicle (EV) market.
Power Sustainable Capital is the largest indirect shareholder of the Lion Electric Company, a Canadian electric truck and bus manufacturer. The wholly-owned subsidiary of Power Corp plans to go public through a special purpose acquisition company (SPAC) merger with Northern Genesis Acquisition Corp., a blank check company.
The three dividend stocks are best for Canadians with long-term financial goals. You can retire wealthy by accumulating more shares years before your retirement date.
Speaking of three TSX stocks that can help Canadians retire rich...
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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 Christopher Liew has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Enbridge.