3 Top Passive-Income Stocks for Canadian Pensioners

These stocks pay attractive and growing dividends for investors seeking reliable passive income.

| More on:
Close up shot of senior couple holding hand. Loving couple sitting together and holding hands. Focus on hands.

Image source: Getty Images.

Canadian retirees are searching for quality dividend stocks to buy insider their TFSA to generate reliable and growing passive income.

Enbridge

Enbridge (TSX:ENB)(NYSE:ENB) is a giant in the energy infrastructure sector. The company moves 25% of the oil produced in the U.S. and Canada. It also transports 20% of the natural gas used in the United States. Other assets include Canadian natural gas utilities and a growing renewable energy business.

In its 2022 outlook, Enbridge said it expects ongoing capital programs and the positive impact of a recent acquisition to drive distributable cash flow growth of 5-7% (DCF) over the medium term. The board raised the dividend by 3% for 2022, but higher increases could be on the way for the following years if DCF gains hit the upper end of the guidance.

Enbridge has the financial clout to buy strategic assets to help drive growth and still has ample development opportunities across the asset base, with most new projects expected to be in the natural gas transmission and renewable energy groups.

The stock appears attractive at the current share price near $52 and offers income investors a solid 6.6% dividend yield.

Emera

Emera (TSX:EMA) is a utility firm based in Halifax with assets in Canada, the United States, and the Caribbean. The company gets most of its revenue from regulated businesses such as electric and natural gas utilities.

Emera reported a $7.4 billion capital program for 2021-2023 with an additional $1.2 billion under consideration that could get added to the mix. In 2021, the company spent about $2 billion of that amount, bringing the rate base up by 6% to $22.5 billion.

The ongoing investments are expected to drive rate base growth of about 8% over the three years. This should support dividend increases of 4-5% for 2022 and 2023.

At the time of writing, the stock provides a yield of 4.4%. Emera is a good defensive stock to consider right now if you think the broader market is headed for a meaningful correction at some point in 2022.

CIBC

CIBC (TSX:CM)(NYSE:CM) has had a big run off the 2020 lows. In fact, the stock has more than doubled. Despite the huge rally, CIBC stock still looks attractive for income investors. The shares trade at a reasonable 11.5 times trailing 12-month earnings and the current dividend provides a 4% yield.

CIBC increased the quarterly payout from $1.46 per share to $1.61 when it reported fiscal Q4 2021 results. The bank also plans to use some of its excess cash to buy back up to 2.2% of its stock under the new share-repurchase program.

The expected interest rate hikes in Canada and the United States this year should help CIBC boost net interest margins in the domestic market and south of the border. Some investors might be concerned that a sharp spike in rates could put parts of CIBC’s large Canadian residential mortgage portfolio at risk of default. That’s certainly possible, but housing demand is expected to remain strong, even as rates rise due to low supply, so a crash in house prices isn’t likely on the way and CIBC has ample capital to ride out a downturn.

The bottom line on top stocks for passive income

Enbridge, Emera, and CIBC all pay attractive dividends that should continue to grow. If you have some cash to put to work in a TFSA focused on passive income, these stocks deserve to be on your radar.

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.

The Motley Fool recommends EMERA INCORPORATED and Enbridge.  Fool contributor Andrew Walker owns shares of Enbridge and Emera.

More on Dividend Stocks

Dividend Stocks

2 Canadian REITs on Sale: A Passive Landlord’s Dream Come True!

It's time for investors to explore Canadian REITs that are discounted and become passive landlords!

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

Retirees: Top TSX Stocks to Earn Worry-Free Passive Income

These TSX stocks have consistently returned cash to their shareholders irrespective of the volatility and market conditions.

Read more »

Man making notes on graphs and charts
Dividend Stocks

Recession Stocks for Beginners

Recession-proof opportunities like Shaw Communications (TSX:SJR.B)(NYSE:SJR) should be on your watch list.

Read more »

protect, safe, trust
Dividend Stocks

1 Dividend Stock Yielding 8.98% Offering Stable Income

This dividend stock on the TSX today offers investors a chance at over $4,000 in returns over the next year…

Read more »

A close up image of Canadian $20 Dollar bills
Dividend Stocks

Passive Income: 2 Dividend Stocks Yielding About 4-5% to Buy Now

These discounted dividend stocks should provide market-beating passive income and total returns with below-average risk in the long run.

Read more »

Woman has an idea
Dividend Stocks

2 Ways to Fight the Record-High Inflation

Investing allows you to grow your savings faster than inflation can deplete them, and different types of investments offer various…

Read more »

Couple relaxing on a beach in front of a sunset
Dividend Stocks

3 Dividend Stocks I Plan on Buying This Summer

Are you on the hunt for new dividend stocks to add to your portfolio? Here are three stocks I plan…

Read more »

Dividend Stocks

Real Estate Prices Finally Soften: Buy These 2 REITs?

Two recovering REITs should attract investors if real estate prices continue to soften and the central bank raises interest rate…

Read more »