For many investors, including me, the dream is to be able to live off the gains generated in your portfolio. One of the easiest ways to visualize this is by imagining a source of recurring revenue that could replace the income you generate by your day job. In my opinion, the easiest and most reliable way to generate income via an investment portfolio is by buying dividend stocks.
In this article, I’ll discuss three dividend-paying stocks that investors should consider buying if they hope to retire comfortably.
Start with this outstanding dividend stock
When it comes to dividend stocks, Canadians should be very familiar with Fortis (TSX:FTS). In my opinion, this is one of the best dividend stocks in the country. For those that are unfamiliar, Fortis provides regulated gas and electric utilities to more than three million customers across North America. Because utility companies tend to receive payments on a recurring basis, Fortis is able to plan dividend distributions much ahead of time.
Over the past five decades, Fortis has managed to take advantage of its business model and has generated a 49-year dividend-growth streak. That represents the second-longest active dividend-growth streak in Canada. Fortis has already announced its plans to continue growing its dividend at a rate of 4-6% through to 2027.
This stock has raised its dividend at an impressive rate
Canadian National Railway (TSX:CNR) is another dividend stock that investors should consider buying today if they hope to retire comfortably. One of the largest companies in the country, Canadian National operates a rail network that spans from British Columbia to Nova Scotia. All considered, Canadian National’s trains operate across nearly 33,000 km of track.
Canadian National has increased its dividend in each of the past 26 years at a compound annual growth rate of about 16%. That’s a very important number to highlight, because it indicates that Canadian National shareholders have been able to see their dividends grow at a faster rate than inflation. A failure to achieve such a high dividend-growth rate could result in a loss of buying power over time.
Because Canadian National holds such a formidable lead among its fellow railway companies, in Canada, I am confident that this company’s business could continue operating very strongly over the coming years.
Consider this Canadian behemoth
Finally, investors should consider adding Telus (TSX:T) to their portfolio. This is a company that needs little introduction. One of the largest telecom companies in the country, Telus’s coverage area accounts for 99% of the Canadian population. Although Telus’s telecom services are very well established, its presence in the healthcare industry makes it a very interesting company to hold in your portfolio today.
Telus is another stock that has notably increased its dividend distribution for a long time. Claiming a 17-year dividend-growth streak, I’m confident that Telus could continue to reward shareholders for many years to come. One thing that investors should note is that Telus’s dividend-payout ratio is a bit higher than I normally would prefer a stock to have. However, because of its strong position within a very stable Canadian industry, I don’t think that should bother investors too much.
