Amid reduced earnings, increasing healthcare expenses, and longevity risks, retirees will have lower risk-taking abilities. So, they should invest in fundamentally strong companies that generate solid cash flows and pay dividends at a healthier rate. Meanwhile, here are three top dividend stocks that retirees could consider buying.
Enbridge (TSX:ENB)(NYSE:ENB), a Dividend Aristocrat, has raised its dividends for 26 consecutive years. Meanwhile, it has been paying dividends uninterruptedly for 66 years. It earns around 98% of its EBITDA from regulated assets or long-term contracts, thus delivering predictable or stable cash flows. These steady cash flows have supported the company’s dividend hike. Meanwhile, its forward dividend yield is currently standing at a juicy 6.33%.
Meanwhile, Enbridge is continuing with its $17 billion secured growth projects, strengthening its midstream and renewable assets. Along with these investments, the rising oil demand could boost the throughput of its liquid pipeline segment, thus driving its financials. Meanwhile, the company generated $2.2 billion of cash flows from operating activities in its recently reported third quarter, while its distributable cash flows stood at $2.3 billion. At the close of the quarter, it had $10 billion in liquidity. So, I believe Enbridge’s dividends are safe.
Second on my list would be Canadian Utilities (TSX:CU), which has been raising dividends for the last 49 years, the longest among Canadian public companies. It serves over two million customers by providing electricity and natural gas. Given their low-risk utility business, the company’s cash flows are predictable. In the recently reported third-quarter earnings, the company’s top-line grew by 8.7%, while adjusted net earnings increased by 15.8%. It also generated $320 million of cash flows from its operations and closed the quarter with its liquidity standing at $2.8 billion.
Meanwhile, Canadian Utilities plans to increase its rate base from $14 billion in 2020 to $14.8 billion by 2023 with an investment of $3.2 billion. The increase in rate base could boost its earnings and cash flows in the coming years. Given its stable cash flows, healthy growth prospects, and strong liquidity position, I believe Canadian Utilities could continue with its dividend growth. Meanwhile, the company’s forward dividend yield currently stands at a healthy 5%.
NorthWest Healthcare Properties REIT (TSX:NWH.UN) could also be an excellent buy for retirees. Due to its high-defensive healthcare portfolio, long-term contracts, and government-backed tenants, its occupancy and collection rate remain high irrespective of an economic cycle. Also, most of its rent is inflation-indexed, which is encouraging. Supported by its steady cash flows, the company pays monthly dividends, with its forward yield currently standing at an attractive 5.94%.
Meanwhile, NorthWest Healthcare has $1 billion of projects in the development stage. Apart from organic growth, it also focuses on strategic acquisitions to drive growth. The company has closed acquisitions worth $400 million this year. Also, it is currently working on acquiring the Australian Unity Healthcare Property, which owns a portfolio of 62 healthcare facilities and enjoys an occupancy rate of 98%.
So, given its healthy growth prospects and stable cash flows, I believe NorthWest Healthcare is well-positioned to continue paying dividends at an attractive yield.