Canada has plenty of dividend-paying stocks that you could rely on in your retirement years. They consistently grow their payouts as their profits increase, taking care of inflation. So, if you want to retire early, it makes perfect sense to park your reserves in TSX dividend stocks and enjoy your sunset years in peace.
If you have reasonable clarity about your financial needs in your sunset years, making a plan will be relatively easy. For example, one can consider deploying a large reserve in a relatively safe portfolio of defensive stocks that can pay regular dividends. The capital will grow at a slower pace with these defensives, but they will provide stability, which is crucial in retirement planning. If one doesn’t have a reserve, they can consider investing aggressively in growth stocks during their earning period.
Here are some of the top TSX dividend stocks.
Canada’s top utility stock Fortis (TSX:FTS) has increased its shareholder payouts for the last five consecutive decades. Through boom-and-bust cycles, it has kept its dividend payment streak intact, which makes it a reliable name among dividend investors. FTS stock currently yields 4.2%, higher than the TSX stocks’ average. If you invest $500,000 in FTS stock, it will generate $21,000 in dividends annually.
Fortis has a stable earnings base, driven by its regulated operations and stable demand. The utility gives away a significant chunk of its earnings as dividends, which is quite common among utilities. In the last five years, Fortis has given away, on average, 60% of its earnings annually as shareholder payouts.
Utility stocks generally trade lower when benchmark interest rates rise. That’s why FTS stock has underperformed, losing 10% in the last 12 months.
Fortis might disappoint you if you expect above-average growth. But it is an apt name for income-seeking investors who want less volatility and sound sleep at night.
If you are looking for a higher yield, Canadian telecom giant BCE (TSX:BCE) is an attractive bet. It offers a juicy yield of 6.3%, the highest among its biggest telecom peers.
BCE also has a long dividend payment history backed by its stable earnings. Its net income has grown by 3%, compounded annually in the last 10 years. While that may look too scanty, this slow growth makes the dividend payouts resilient in uncertain markets.
BCE has increased its capital expenditures in the last few years to improve its network infrastructure. The aggressive spending has come at an important time when the industry is going through a paradigm shift and ahead of the full 5G rollout. Its improved network infrastructure will likely boost its wireless subscriber base in the next few years. BCE caters to almost 10 million wireless subscribers in a three-player dominated Canadian telecom industry.
Canadian midstream energy company Enbridge (TSX:ENB) is another appealing name for income-seeking investors. It offers a dividend yield of 6.7%, the highest among the Canadian bigwigs.
ENB has raised shareholder payouts for the last 28 consecutive years. This highlights its earnings and payout stability. While energy-producing companies have been outperforming since the pandemic on rising oil prices, ENB stock has relatively underperformed and rather lost 10% in the last 10 months. That’s because it has a relatively lower correlation with oil and gas prices. Its earnings stem from long-term contracts, making it a much safer option in the low-price environment.
Even though ENB has underperformed in the short term, it has created a decent reserve in the long term. In the last decade, ENB stock has returned 7% compounded annually, including dividends.