One of the things many novice investors have trouble with is that building and securing your retirement wealth/retirement nest egg are two different investment activities. When you are building wealth, especially if you are working with relatively low amounts of capital or are short on time, you may have to make up for them by increasing your risk tolerance.
However, once you have grown your nest egg to the desired size, your portfolio (ideally) should not reflect the same level of tolerance.
You might consider going for safer, low-risk stocks that may help you grow your retirement wealth at a decent pace or preserve its value while generating a decent dividend-based income.
There are two stocks that can help you secure the retirement wealth you have stashed in your Tax-Free Savings Account (TFSA).
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A dividend stock
If you are looking for a safe dividend stock to park part of your TFSA retirement savings in, Great-West Lifeco (TSX:GWO) is an option worth considering. It’s a financial holding company that owns four insurance-related businesses operating in several international markets, including Europe and the United States. The company has over $2.5 trillion in consolidated assets under the Great-West Lifeco banner.
The insurance business is not exciting per se, and growth opportunities are relatively limited, especially after the Great Recession. However, the positive side of being boring is the stability it offers. The stock can be a great candidate to secure your retirement savings and keep its value relatively stable in the long term.
Meanwhile, the stock can help you generate a decent dividend-based income. It’s currently trading at a modest 6% discount and is offering a 5.4% yield. The value seems attractive enough, and the dividends are financially stable.
The payout ratio hasn’t crossed over to the dangerous territory (over 100%) even once in the last decade. The company has also been growing its payouts for over eight years, so its sustainability characteristic gets more endorsement.
A dividend and growth stock
Brookfield (TSX:BAM) offers a good mix of both dividends and capital-appreciation potential, or at least it did until the post-pandemic slump that has lasted till now and placed the company in a long-term bearish phase. It has lost about 30% of its value in less than two years, but there are two positive consequences of this slump.
The first is valuation. The company is currently trading at a price-to-earnings ratio of about 6.4, making it quite attractive undervalued. Secondly, this blue-chip stock is currently offering a healthy 4% dividend yield, thanks to the slump.
The stock rose well over 300% in the decade preceding the 2020 crash, so its capital-appreciation potential is solid and worth considering as well. Also, as one of the largest asset management companies in Canada with an incredibly diverse portfolio of assets around the globe, Brookfield is a safe long-term bet to secure your retirement wealth.
Foolish takeaway
Securing your retirement savings and ensuring that they help you generate a decent income through dividends or selling your shares (following a disciplined approach) while remaining ahead of inflation is an important part of retirement planning. The two financial giants with a healthy international presence might be among the strongest candidates for this job.
