Some people find it unrealistic that you could get rich in the stock market. However, financial experts argue you can gather wealth or create a small fortune through dividend investing. Also, the strategy is simple. Choose a company with a long history of consistent dividend payments.
Besides the investment choice, the key to achieving the goal is the holding period. You must be ready to hold the stock for the long term, say 10-15 years or maybe longer. Sometimes, you only need to invest in one or two companies to realize the power of compounding.
Manulife Financial (TSX:MFC)(NYSE:MFC) and TC Energy (TSX:TRP)(NYSE:TRP) are well-established dividend companies Canadians can consider either or both in Q3 2021. These companies are stalwarts in industries that have seen the best and worst of times. The life insurer is 134 years old, while the pipeline company has been around for seven decades.
Top 25 global insurance brand
Based on data from BrandFinance, Manulife is ranked number 25 in the Insurance 100 2021 Ranking. The Toronto-based company was in 30th place in 2020. Its current market capitalization is $46.57 billion. The good news is that the life insurer had a strong start this year.
In Q1 2021 (quarter March 31, 2021), the quarter’s highlight was the 67% increase in core earnings to $1.6 billion compared to Q1 2020. However, net income dropped to $783 million from $1.29 billion. Roy Gori, Manulife’s president & CEO, said higher risk-free rates and a steepening yield curve within North America impacted net income in the quarter.
Phil Witherington, Manulife’s CFO, noted the new business value (NBV) in Asia and the United States. Moreover, its Global Wealth and Asset Management business generated $1.4 billion in net inflows during the quarter. Asia is the growth driver following the 32% increase in NBV compared to the same period in 2020.
A top insurer like Manulife is risk averse and pays attention to risk factors all the time. This insurance stock also belongs to TSX’s Dividend Aristocrat group. At $23.98 per share, the dividend yield is a juicy 4.67% (41.95% payout ratio).
Long-life infrastructure assets
TC Energy prided itself on having financial strength and diversified high-quality assets. The core operations of this $60.33 billion energy infrastructure company are pipelines, power-generation plants, and storage facilities. It delivers energy to end users in Canada, the U.S., and Mexico.
Management also boasts 21 consecutive years of dividend increases since 2000 and an average annual return of 12%. As of July 16, 2021, the share price is $61.63, while the dividend yield is a hefty 5.65%. Current investors are up 22.55% year to date.
The energy sector is volatile at times, although TC Energy’s business model is actually low risk. Its long-term contracts are with investment-grade counterparties. Management expects EBITDA through 2024 to grow an 8% CAGR clip. According to OilPrice.com, TC Energy is one of Canada’s highest-valued energy companies The stock should benefit from the fast-recovering oil prices and zero threat of a price war.
Dividend investing is a proven and reliable method to build wealth. Well-managed and cash-generating firms like Manulife and TC Energy can help you amass a fortune over time. Keep the stocks in your basket for years and reap the harvest in due time.
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 has no position in any of the stocks mentioned.