Canadian dividend stocks are excellent income-producing assets, even for retirees with a low-risk appetite. However, as stocks are risky and volatile, retirees should focus on shares of fundamentally strong companies with a growing earnings base, reliable dividend payouts, and a solid history of dividend payments and growth.
With the goal of earning reliable income for retirees, I’ll discuss three Canadian stocks that offer solid dividend income regardless of market conditions. These Canadian companies are Dividend Aristocrats and have uninterruptedly increased their dividends for decades.
With a history of uninterruptedly increasing its dividend for 28 years, Enbridge (TSX:ENB) is a solid stock for retirees to generate consistent income. It’s worth highlighting that Enbridge also paid and raised its dividend even amid the pandemic when a lot of energy companies announced dividend cuts or paused their payouts. This shows the resiliency of Enbridge’s business model and ability to grow distributable cash flows (DCF).
Enbridge’s highly diversified income streams (over 40 income sources) and a two-pronged strategy (investments in conventional energy assets and growing renewable energy capabilities) position it well to deliver solid DCF in all market conditions. Also, contractual arrangements with provisions to lower price and volume risks and multi-billion-secured capital projects augur well for growth.
Enbridge pays a quarterly dividend of $0.887 per share, reflecting a stellar dividend yield of 6.64% (based on its closing price of $53.43 on May 5). Furthermore, its target dividend payout ratio of 60–70% is sustainable in the long term.
The low-risk regulated business and predictable cash flows make utility companies a solid investment for retirees to generate worry-free income. Within the utility space, Fortis (TSX:FTS) is a compelling stock to earn passive income regardless of market conditions. It operates regulated electric utility businesses that generate solid cash flows, making its stock less volatile. Also, its growing cash flows have helped the company to enhance shareholders’ returns through higher dividend payments.
Fortis increased its dividend for 49 years. Impressively, FTS expects to grow its dividend by an average annualized growth rate of 4–6% through 2027. The utility’s growing rate base and increase in renewable power capacity will support this growth. Fortis’ $22.3 billion capital plan will drive its rate base. The rate base is projected to increase at a compound annual growth rate of more than 6% over the next five years.
Fortis pays a quarterly dividend of $0.565 a share, reflecting a dividend yield of 3.71%. Its decent yield, visibility over future payouts, and low-risk business make it a must-have income stock for retirees.
The last stock in this list is also from the utility sector. With a stellar history of growing its dividend for 51 years, Canadian Utilities (TSX:CU) stock is a dependable income stock for retirees. The company generates earnings from regulated and contracted assets, which drives its earnings base and dividend payments.
CU continues to invest in regulated and contracted assets, which will expand its high-quality earnings base and support higher dividend payouts in the coming years. Canadian Utilities pays a quarterly dividend of $0.449 a share, translating into a well-protected yield of 4.56%.