2 Top TSX Income Stocks to Buy for Retirement

Here’s why Fortis (TSX:FTS)(NYSE:FTS) and Enbridge (TSX:ENB)(NYSE:ENB) are two top TSX income stocks to consider for retirement.

| More on:
Retirement plan

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

The time to think about retirement is always yesterday. However, the thought that typically goes into retirement planning is that it’s a problem for tomorrow.

For those seeking to get a head-start on picking some stocks to put in that RRSP for the long term, these two stocks are among the best picks in Canada. Let’s take a look at why investors should consider Fortis (TSX:FTS)(NYSE:FTS) and Enbridge (TSX:ENB)(NYSE:ENB) right now.

Fortis

In the utilities sector, Fortis remains one of my top picks.

Indeed, the company’s strong fundamentals and solid cash flows provide defensiveness that’s hard to find. This utility makes money when its customers keep the lights and the heat on. That means Fortis will continue to churn out impressive cash flow.

Indeed, Fortis’s allure for long-term investors is mainly tied to the company’s impressively growing dividend. Fortis’ track record of raising its dividend every year for nearly five decades is impressive. That’s some sleep-at-night security for investors looking for income growth in retirement.

Even if the stock market provides volatility, Fortis’s dividends are always there to keep investors warm at night. And the company’s plan of raising its dividend at a 6% clip through 2025 is evidence this track record isn’t likely to be broken any time soon.

Additionally, Fortis is making headway in the ESG space. The company’s investing $20 billion in green energy and other projects to lower GHG emissions. These strategies could pay dividends (figuratively and literally) for investors over the long haul.

Enbridge

Another income stock most investors like is Enbridge. However, unlike Fortis, Enbridge is poised to be a slower-growth option in terms of dividend appreciation. The company is targeting 3% annual dividend hikes over the medium term. This rate has been lowered from the mid- to high-single-digit pace the company kept for many years.

Why?

Well, for starters, Fortis’s current yield is around 6.8%. Therefore, the company doesn’t need to raise its dividend aggressively from here for investors to get a great yield.

Secondly, Enbridge is investing heavily in improving its balance sheet and funding its capital-spending needs. By relying less on debt for such projects, the company can increase its earnings per share over time for investors. That’s great for retirees banking on long-term capital appreciation with this income stock as well.

Indeed, we’ve seen the economic value of pipelines play out in recent months via the closure of some key pipelines. Until we fully transition to a green energy future, Enbridge will be there to guide us along the way. Investors looking for a high-yield dividend stock today can’t do much better than Enbridge right now.

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 Chris MacDonald has no position in any stocks mentioned in this article. The Motley Fool owns shares of and recommends Enbridge. The Motley Fool recommends FORTIS INC.

More on Dividend Stocks

Man data analyze
Dividend Stocks

3 Inflation-Resistant TSX Stocks to Buy Right Now

These inflation fighters will see you through this trying time and could double your portfolio in the next decade!

Read more »

Canadian Dollars
Dividend Stocks

Passive-Income Investing: How You Can Churn Out $445/Month for the Rest of 2022

Canadians crushed by inflation should look to make big passive income in 2022 with stocks like Freehold Royalties Ltd. (TSX:FRU)…

Read more »

calculate and analyze stock
Dividend Stocks

2 TSX Stocks to Buy With Dividends Yielding More Than 3%

Are you looking for some great income stocks that can provide growth, too? Here are two stellar TSX stocks to…

Read more »

edit Balloon shaped as a heart
Dividend Stocks

Dividend Lovers: 3 U.S. Stocks You Haven’t Heard About

Don't just stick to Canadian companies for a great dividend, consider these U.S. stocks you probably haven't even heard of.

Read more »

money cash dividends
Dividend Stocks

How to Invest $10,000 Over the Next 5 Years

Those looking to put $10,000 to work in this rather uncertain and volatile market may want to consider these three…

Read more »

TFSA and coins
Dividend Stocks

TFSA Investors: 2 Incredible Deals to Buy in August

Here are two TSX stocks investors can consider for their TFSA contribution this year.

Read more »

Hand arranging wood block stacking as step stair with arrow up.
Dividend Stocks

These 3 TSX Stocks Have Doubled Over 3 Years: Can They Do It Again?

Three TSX stocks whose share prices have doubled in three years are well-positioned to repeat history and reward investors with…

Read more »

data analytics, chart and graph icons with female hands typing on laptop in background
Dividend Stocks

Smart Buys: 2 Low-Profile Value Stocks With Strong Upside

Two low-profile value stocks with strong upside are smart buys if you’re looking for investments outside the energy sector.

Read more »