In retirement, you generally change the way you invest. As you no longer have a direct source of income, you need to create alternate revenue streams to support cash outflows and expenses once you are retired.
One way to do so is by investing in quality blue-chip stocks that generate steady earnings and pay investors a quarterly dividend. Typically, utility companies derive cash flows across market cycles and have very low volatility, making them ideal for income-seeking retirees.
Here are three perfect TSX stocks that retirees can buy hand over fist during a bear market.
Fortis stock
A Canadian utility giant, Fortis (TSX:FTS) is among the largest companies in Canada. Fortis owns and operates 10 regulated utility businesses and serves 3.4 million electric and gas customers. Around 99% of its assets are regulated, allowing Fortis to pay investors annual dividends of $2.26 per share, translating to a yield of 4.2%.
Fortis now plans to invest $22.3 billion in capital expenditures in the next five years, which should increase its base of cash-generating assets and support further dividend increases.
The Canadian heavyweight has already increased dividends each year for almost 50 consecutive years. Fortis expects to increase dividends between 4% and 6% annually through 2027.
According to consensus price target estimates, Fortis stock is trading at a discount of 8%. After accounting for dividend yields, total returns will be closer to 13%.
Brookfield Infrastructure Partners stock
A well-diversified infrastructure company, Brookfield Infrastructure Partners (TSX:BIP.UN) increased funds from operations by 20% year over year to $2.1 billion in 2022. Brookfield explained it benefited from organic growth, elevated inflation, and volume growth across critical infrastructure networks.
In 2022, it also commissioned more than $1 billion of new projects that are already contributing to earnings. The company expects to increase funds from operations between 12% and 15% in 2023 after this metric rose by 12% in 2022.
Brookfield Infrastructure Partners’s cash flows are backed by inflation-linked contracts, allowing it to enjoy pricing power. In the last two years, it has deployed more than $5 billion into new assets, and in 2022, it secured $2.9 billion of investments across five transactions, which should drive cash flows higher in the next 12 months.
BIP also entered a partnership to construct a semiconductor foundry in the United States, which has added $4 billion to Brookfield’s capital backlog.
BIP stock currently offers investors a tasty forward yield of 4.5%.
Northland Power stock
The final TSX stock on my list is Northland Power (TSX:NPI), a power producer that develops, builds, owns, and operates renewable energy projects in North America, Europe, Asia, and Latin America. It produces electricity from wind, solar, and hydropower as well as clean-burning natural gas and biomass, which is then sold under long-term power-purchase agreements.
Northland Power stock has an economic interest in 3.2 gigawatts of operating generating capacity. The shift towards clean energy solutions is set to accelerate in the upcoming decade, which should allow Northland Power to increase cash flows in 2023 and beyond.
It currently pays investors annual dividends of $1.20 per share, indicating a dividend yield of 3.6%. Northland Power stock is also trading at a discount of 33% compared to consensus price target estimates.
