For individuals planning out their retirement, having dividend stocks in their portfolios can be highly beneficial. They can serve as a stable income source apart from facilitating long-term capital appreciation. In this regard, there are two companies in the Canadian stock market that investors can consider.
Let’s dive in.
Toronto-Dominion Bank (TSX:TD) is the second-largest banking and financial services provider in Canada. It provides retail and wholesale banking services in its home country as well as the United States. In the last quarter, TD declared a quarterly dividend of $0.96. The company’s payout ratio comes in at 43.38%, while TD’s dividend yield sits at just around 4.6%.
There are plenty of reasons to like TD’s dividend, in addition to its manageable payout ratio. This lender is one of the most stable options in Canada, with a diversified portfolio of loans that should be able to weather any economic environment. The company’s recent results point to a healthy company, and one with the potential to continue growing, despite market uncertainty.
The company’s recent results in early March highlighted 7% net income growth in the company’s personal and commercial banking divisions. Overall revenue surged 17% to $4.6 billion, signaling strength among its peers, and relative outperformance.
Additionally, TD’s U.S. business also showed spectacular performance. Net income surged 25% to $1.6 billion, prompted by a 9% year-over-year increase in loans. Business loans and personal loans grew at 6% and 11%, respectively.
So long as TD continues to pump out greater cash flow numbers, the bank’s dividend is well secured. This is among the higher-yielding bank stocks I think is worth a look right now, and particularly on any dips related to banking turmoil in the U.S.
SmartCentres REIT (TSX:SRU.UN) is one of Canada’s biggest real estate investment trusts (REITs). It has properties in more than 185 strategic locations, with assets totaling US$11.7 billion.
The REIT’s distributions have been declared at $0.15 for April, disbursed to shareholders of record on May 15. Overall, the company provides a solid dividend yield of 7.1%, putting this stock squarely in the high-yielding category.
Now, most companies with yields this high are concerning to investors. That’s because in order for the company to continue to pay out this yield, many things have to go right. And considering that REITs are required, by law, to distribute most of their net income to shareholders, if there’s a rise in vacancies, this distribution could be cut.
While the market appears to be implying a cut here, I tend to think SmartCentres is among the safer retail REITs. Yes, retail will likely get hit hard by any turmoil. However, the blue-chip nature of SmartCentres’s clientele ensures a greater deal of cash flow stability over time.