Looking for Steady Income in Retirement? These Stocks Can Help

Investors that want to develop a stream of steady income in retirement should invest early in one of these superb Canadian stocks.

| More on:

Establishing a steady income in retirement remains one of the foremost goals of all investors. To accomplish that feat, investors should draw on a well-diversified portfolio that includes some dividend-paying stocks.

Fortunately, the market provides us with ample options, including these candidates that can provide a steady income in retirement.

Banking on future growth and a stable income

Canada’s big banks are among some of the best long-term options to consider for any portfolio. The reason for that stems back to their mature domestic segments that provide a stable revenue stream coupled with long-term international growth prospects.

Throw in a juicy dividend that has paid out without fail for well over a century and you have a prime candidate to generate a steady income in retirement.

And Bank of Montreal (TSX:BMO) is the bank that investors should be looking at right now. BMO offers investors nearly two centuries of juicy dividend payouts with fail. Today, the yield on that dividend works out to an appetizing 4.95%.

Turning to growth, BMO has focused its expansion efforts on the U.S. market. Earlier this year, the bank completed the acquisition of California-based Bank of the West. The deal brings hundreds of new branches and 1.8 million new customers into BMO’s growing U.S. segment.

That segment now has a reach into 32 state markets, and the deal has propelled BMO into position as one of the largest lenders in the U.S.

Steady growth, steady dividend

Utilities are some of the most defensive stocks for any portfolio, making them great options to establish a steady income in retirement. The reason for that comes down to the stable if not lucrative nature of their business. In short, utilities generate a stable revenue stream that is backed by long-term, regulated contracts.

That stability allows utilities to invest in growth and maintain a generous dividend.

Fortis (TSX:FTS) is one of the largest utilities in North America with operations across Canada, the U.S., and the Caribbean. The regulated nature of its business, which services over three million gas and electric customers, provides a stable revenue stream that topped $11 billion last year.

Apart from its reliable and stable business model, Fortis has provided investors with 49 consecutive years of annual dividend increases. That gives Fortis the second-longest streak in Canada, and it’s on track for a 50th increase later this year. When that happens, Fortis will become just the second Dividend King in Canada.

As of the time of writing, Fortis’s quarterly dividend works out to an appetizing 4% yield, making it a great option to establish or maintain a steady income in retirement.

Another stable business with a growing dividend

Utilities are great defensive investments, but there’s another segment to build a steady income in retirement to consider. That would be Canada’s telecoms.

Telus (TSX:T) provides the typical bevy of subscription-based services to customers across the country.

In recent years, the importance of a wireless and home internet connection has become one of necessity. This has elevated the already defensive appeal of a telecom stock like Telus even further.

Despite that defensive appeal, Telus stock has dipped over 10% in the trailing 12-month period.

Prospective investors should keep in mind that Telus is a long-term investment to establish a steady income in retirement. In other words, the price dip should be seen more as an opportunity to buy Telus at a discount.

That dip has swelled Telus’s already impressive dividend. As of the time of writing, the yield works out to 5.71%. This makes Telus one of the better-paying dividends on the market.

Additionally, Telus has provided investors with annual or better bumps to that dividend for well over a decade. The telecom also plans to continue that cadence.

A steady income in retirement is possible

Finding the right mix of investments to establish a steady income in retirement is possible. And while no investment is without risk, the three stocks noted above all boast significant defensive appeal as well as growth and income-earning capabilities.

In my opinion, one or all of the above should be core holdings in any long-term, well-diversified portfolio.

Buy them, hold them, and enjoy a steady income in retirement.

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 Demetris Afxentiou has positions in Fortis. The Motley Fool recommends Fortis and TELUS. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Paper Canadian currency of various denominations
Dividend Stocks

Cash Kings: 3 TSX Stocks That Pay Monthly

These TSX stocks pay monthly dividend and offer high yield near current market price, making them top investments for passive…

Read more »

Dividend Stocks

An 8.1% Dividend Stock Paying Cash Every Single Month

This dividend stock is a strong option not just for income in general, but also for paying out every month!

Read more »

stocks climbing green bull market
Dividend Stocks

2 TSX Stocks to Hold for Steady Gains

These TSX stocks are backed by a defensive business model and consistently deliver above-average returns for their shareholders.

Read more »

dividend growth for passive income
Dividend Stocks

5 Canadian Dividend Stocks With Years of Secure Payouts Ahead

These Canadian dividend stocks have visibility over future payouts, implying investors can rely on them for steady passive income.

Read more »

Piggy bank and Canadian coins
Dividend Stocks

How to Transform $28,000 in TFSA Contributions Into a Reliable Income Source

These three monthly-paying dividend stocks can deliver a reliable passive income.

Read more »

ETF stands for Exchange Traded Fund
Dividend Stocks

How to Grow a $10,000 TFSA Into $100,000

You can turn $10,000 into $100,000 by holding index funds like the iShares S&P/TSX 60 Index Fund (TSX:XIU).

Read more »

hand stacking money coins
Dividend Stocks

How I’d Invest $32,000 in Canadian Value Stocks to Maximize My Investment Potential

Here's a diversified portfolio of Canadian value stocks that trade at reasonable to discounted valuations. They pay out nice income,…

Read more »

four people hold happy emoji masks
Dividend Stocks

The Smartest Dividend Stocks to Buy With $500 Right Now

Wondering where to deploy $500 for some income? Check out these three sustainable Canadian dividend stocks to buy today.

Read more »