Dividend investing is a proven way to build retirement wealth. If time is on your side and finances allow, it’s also the best avenue to help you retire early, or before the traditional age of 65. All you need are less-volatile, dependable dividend stocks to achieve your objective.
A perfect combo for future retirees is Canadian Imperial Bank of Commerce (TSX: CM)(NYSE: CM) and TC Energy (TSX: TRP)(NYSE: TRP). Both companies have outstanding dividend track records. Play smart by using the dividends to accumulate more shares. You’ll amass a fortune over time through the power of compounding.
Growth opportunities ahead
CIBC endured the global pandemic and will continue to flourish notwithstanding an extended health crisis. Because of strong fundamentals and sound risk-management practices, Canada’s fifth-largest bank ended fiscal 2021 (year ended October 2021) up.
The $66.5 billion bank reported net income and adjusted net income increases of 68.42% and 52.27% versus fiscal 2020. CIBC president and CEO Victor Dodig said, “We delivered strong financial performance in 2021 with growth across all of our strategic business units.” He added that with a strong capital position, the bank is well positioned for growth.
According to management, the launching of a new logo in September 2021 symbolizes the opportunities that lies ahead. The rebranding was due to the expanded platform across North America. CIBC will focus on meeting the needs and expectations of clients on both sides of the border.
This year, CIBC should attract ESG investors after it announced a new $100 million key climate tech and energy transition funds. Harry Culham, Group Head at CIBC Capital Markets, said, “With new and intensifying environmental challenges, we believe our bank has an important role to play in supporting the acceleration of climate action.”
Cullham added, “These investments are another way we’re driving growth into new areas of the economy while helping to foster long-term sustainability.” Performance-wise, CIBC rewarded investors with a total return of 41.52% in 2021. The share price is $147.45, while the dividend yield is 4.37% if you invest today.
Multiple growth platforms
TC Energy didn’t disappoint income investors in 2021. Besides the 20.33% overall return, the energy stock raised its dividend, as it has every year since 2000. At $58.83 per share, the dividend yield is a mouth-watering 5.92%. The dividend payouts should grow, given the $22 billion secured capital program and billion-dollar investments in various growth projects.
Management committed to focus on managing and reducing greenhouse gas emissions by building constructive, enduring relationships. TC Energy has established strategic partnerships with Irving Oil (joint development of energy projects) and Nikola Corporation (large-scale hydrogen production hubs).
Furthermore, management’s other plans include modernizing existing systems & assets, decarbonizing its energy consumption, and driving digital solutions and technologies. The compelling reasons to invest in TC Energy are diversified, high-quality assets, multiple growth platforms, and visible dividend growth.
TC Energy’s portfolio of complementary infrastructure assets and $22 billion of secured growth projects should support annual dividend growth of 3-5%, says management.
Early retirement is possible
Blue-chip stocks like TC Energy and CIBC are established wealth builders. Investing in the pair could improve your chances of retiring early.
