Retire in Style With These Top Dividend-Paying Stocks in Your Portfolio

Dividend stocks like Canadian National Railway (TSX:CNR) tend to do pretty well over the long term.

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Are you looking for quality stocks to help you retire in style?

If so, you’ve got a lot of great opportunities available to you.

While most financial advisers recommend that retirees put their money in index funds, many retirees have done well with individual stocks as well. Individual stock portfolios tend to be riskier than funds, but they can also perform better if everything goes well. In this article, I will explore three dividend stocks that you could consider adding to a well-diversified retirement portfolio.

CN Railway

Canadian National Railway (TSX:CNR) is a Canadian railroad company that is a vital component of North American supply chains. It ships $250 billion worth of goods per year around Canada and the U.S., not only by train but also by a fleet of trucks.

CN Railway has done quite well as a company over the last few years. It has grown its revenue and earnings and has delivered a 30% profit margin. That’s a very strong showing.

What’s next for CN Railway?

I would expect the company to be highly profitable for the foreseeable future. It only has one competitor in Canada and only a tiny handful in the United States. It does sometimes have issues with winter weather and poor grain harvests (shipping grain is one of its biggest business activities), but, on the whole, it should do well.

TD Bank

Toronto-Dominion Bank (TSX:TD) is a Canadian bank stock I’ve owned since 2018. One of the better performing stocks in my portfolio, it has beaten the TSX index over the period I’ve owned it.

What do I like about TD Bank stock?

First, it’s highly profitable, with a 31.7% profit margin and a 14.55% return on equity in the trailing 12-month period.

Second, it’s growing, with 7% growth in revenue and 8.8% growth in earnings per year over the last five years.

Third and finally, it’s committed to growing even more, having acquired the investment bank Cowen this year. On the whole, it’s a stock I’m very happy to keep holding.

Brookfield Asset Management

Brookfield Asset Management (TSX:BAM) is a Canadian asset management company. It manages funds, typically for high net worth people, which it collects fees on. This is what’s called an “asset light business model.” Brookfield Asset Management does not own any property, plant, and equipment directly. Instead, it manages these assets for its clients, and collects fees on its clients’ holdings. This business model substantially reduces BAM’s risk exposure, while allowing it to collect high fees, as long as client assets perform well.

BAM’s dividend yield is not particularly high right now, but it has the potential to grow. BAM’s management have said that they have grown client assets at 16% per year over the last decade and can keep the growth track record going. If that’s the case, then Brookfield Asset Management’s fee income should grow, too, and its shareholders should be rewarded over time. So, there’s a lot of potential for dividend growth here.

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 Andrew Button has positions in Toronto-Dominion Bank. The Motley Fool recommends Brookfield Asset Management and Canadian National Railway. The Motley Fool has a disclosure policy.

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