Why These Dividend-Paying Stocks Are Perfect for Canadian Retirees

Wide moat stocks like the Canadian National Railway tend to be good bets for retirees.

| More on:
Path to retirement

Image source: Getty Images

Are you a retiree looking for quality stocks that you can buy at reasonable prices?

If so, you’ve picked a good time to go shopping.

Canadian markets have delivered lukewarm returns this year, in contrast to U.S. markets, which quickly got overheated due to tech stock euphoria. As a result, you can now buy Canadian banks and energy stocks at some of the highest yields observed in recent memory. In this article, I will explore three Canadian dividend stocks that would be worthy additions to any Canadian retiree’s portfolio.

Royal Bank of Canada

The Royal Bank of Canada (TSX:RY) is Canada’s biggest bank by market cap. It has over $1 trillion in client assets and counting. The bank has branches all across Canada, as well as investment banking operations in the U.S., and wealth management in the U.S. and Caribbean.

Royal Bank’s most recent quarterly earnings release was pretty strong. The company beat analysts’ estimates on revenue and earnings, and delivered positive revenue growth.

One exciting thing happening with Royal Bank right now is the buyout of HSBC Canada. The deal is worth $13.5 billion and could add $1 billion a year or more in earnings power to Royal Bank. The deal appears to be going smoothly so far, so investors will have a lot to look forward to in the months ahead.

CN Railway

The Canadian National Railway (TSX:CNR) is Canada’s biggest transportation company. It’s a railway company that ships over $250 billion worth of goods each and every year. North America’s only transcontinental railway primarily ships goods from Canada to the U.S. via rail. It also has a truck fleet to help it reach areas that its rail track doesn’t touch.

CN Railway’s most recent earnings release was quite strong. The company beat analysts’ estimates on revenue and earnings, delivering positive growth in both metrics. Company management also signalled optimism for continued growth in the year ahead. On the whole, CNR stock is a worthy addition to any Canadian retiree’s portfolio.

Brookfield Asset Management

Brookfield Asset Management (TSX:BAM) is a Canadian asset management company that manages assets for its clients. It mostly offers private funds to wealthy clients; you can’t buy BAM’s funds on the stock markets like you can exchange traded funds. BAM’s exclusivity is a selling point to wealthy investors, who like the idea of getting in on deals not everybody has access to.

One of the best things about BAM as a company is its asset-light business model. Unlike its parent company, Brookfield Asset Management does not hold assets directly on its balance sheet. Instead, it holds them on its clients’ behalf and collects fees in exchange for doing so. This business model tends to result in low costs and high profit margins for BAM, which is one of the most profitable companies in Canada going by margins.

Foolish takeaway

If you’re retired, dividends are the name of the game. With a good portfolio of dividend stocks, you can bring in consistent income whether the markets go up, down, or sideways. Not all dividend stocks are great, but the ones mentioned in this article should perform reasonably well over time.

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 no position in any of the stocks mentioned. The Motley Fool recommends Brookfield Asset Management and Canadian National Railway. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Various Canadian dollars in gray pants pocket
Dividend Stocks

Passive Income: How to Make $90 Per Month Tax Free

You can add this amazing Canadian monthly dividend stock to your TFSA now to generate $90 in tax-free monthly passive…

Read more »

A golden egg in a nest
Dividend Stocks

Investing for Retirement? Check Out These Dividend-Paying Stocks in Canada

Dividend-paying stocks like First National Financial are on sale in June 2023.

Read more »

The sun sets behind a high voltage telecom tower.
Dividend Stocks

Fortis Stock Is a Steady Dividend Player for Your Energy Portfolio

You can rely on Fortis stock for growing dividend income. Aim to buy the stock on market corrections to boost…

Read more »

Path to retirement
Dividend Stocks

Investing for Retirement? These Dividend Stocks Can Help You Get There

TD Bank and Brookfield Renewable Partners are two solid dividend-growth stocks to hold for decent total returns through retirement.

Read more »

Happy family father of mother and child daughter launch a kite on nature at sunset
Dividend Stocks

Parents: Here’s How to Boost Your Monthly Income

Parents, you have enough to worry about. But if you can put aside even $40 per month, that can create…

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

Looking for a Reliable Retirement Income? Consider These Dividend-Paying Stocks

Investors looking to establish a reliable retirement income have no shortage of options to choose from. Here's a trio of…

Read more »

edit Person using calculator next to charts and graphs
Dividend Stocks

3 Oversold Dividend Stocks That Could Make You Rich When They Bounce Bank

Don't wait around for these oversold dividend stocks to bounce back, each certainly will, which is why now is the…

Read more »

A small flower grows out of a concrete crack.
Dividend Stocks

Down 8% Last Month, Canadian Tire Stock Is a Deal Heading Into June 2023

May wasn't a good month for the stock, but June has been different from the beginning and may present an…

Read more »