3 Dividend-Growth Stocks for a Cushy Retirement

Owning and holding three dividend-growth stocks for a lengthy period can build a substantial nest egg for a comfortable retirement.

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Dividend-growth stocks are excellent investment options for future retirees building retirement wealth. Besides the growing income streams, the share prices could appreciate over time. Three established dividend growers stand out if you want to ensure a cushy living in the sunset years.

TC Energy (TSX:TRP), Allied Properties (TSX:AP.UN), and Canadian Imperial Bank of Commerce (TSX:CM) are among the best choices for their impressive dividend-growth streaks. You can have a substantial nest egg when you finally decide to retire.

Vital operations

TC Energy owns a vast network of natural gas and crude oil pipelines — not to mention storage facilities and power-generation plants. The $56.77 billion company is a solid investment for long-term growth, given 23 consecutive years of dividend hikes. At $55.51 per share (+4.64% year to date), the dividend yield is 6.7%.

The operations of the pipeline operator are vital to North America’s oil and gas midstream industry. Its 3,000-mile-long liquids pipeline satisfies 20% of crude oil demand in Canada. Meanwhile, the 58,200 natural gas pipeline lines cover 25% of regional demand. Long-term contracts support about 79% of the power portfolio.

Management takes pride in TC Energy’s sustainable cash flow and resilient dividend growth. It expects all assets to remain highly utilized and functional across various energy transition pathways. The plan in 2023 is to sell discrete non-core assets and use the +$5 billion proceeds for capital rotation.

Urban intensification

Like TC Energy, Allied Properties is a Dividend Aristocrat owing to 11 consecutive years of dividend increases. At $24.21 per share (-3.85% year to date), you can partake in the 7.42% dividend. Moreover, income investors should find the real estate investment trust (REIT) attractive for its monthly dividend payments.  

The $3.1 billion REIT is taking the lead in consolidating the workspace sector and urban intensification in Canada’s major cities. In 2022, revenue increased 9.9% to $519.5 million versus 2021, while net income declined 15.3% year over year to $375.5 million.

Management believes that the REIT’s growth portfolio is unmatched and a differentiating factor. Allied sold its urban data centre portfolio to reduce debt, fund the current development activity, and supercharge the balance sheet. Today’s primary focus is to increase the distribution and grow the net asset value over time.

No-brainer buy

CIBC is a no-brainer buy, as Canadian big banks are bedrocks of stability, notwithstanding the banking crisis across the border. The country’s fifth-largest financial institution has a dividend track record of 155 years, while its dividend-growth streak is 12 years. At $55.51 per share (+2.89% year to date), the dividend offer is 6.13%.

According to its president and chief executive officer Victor Dodig, the capital position of the $50.6 million bank remains resilient, despite the lower income of $432 million in the first quarter of fiscal 2023. Besides the financial strength, CIBC will rely on strong risk management and credit quality to enhance shareholder value in this fiscal year.

Financial security

TC Energy, Allied Properties, and CIBC can help prospective retirees achieve financial security. By owning these dividend-growth stocks for an extended period, the compounding returns should result in long-term wealth.

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.

Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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