Owning a few high-quality dividend stocks can help boost your retirement income. Thus, Canadian retirees must own shares of Fortis (TSX:FTS), Enbridge (TSX:ENB), and Toronto-Dominion Bank (TSX:TD). While these Canadian stocks are famous for their reliable payouts, let’s understand why they are must-haves in your portfolio to earn a worry-free income in the coming years.
Known for its low-risk defensive business and stellar dividend payment history, Fortis is a must-have for retirees to earn passive income that could continue to grow with each passing year. It owns regulated electric utility businesses that generate predictable cash flows and enable the company to enhance its shareholders’ returns through higher dividend payments.
Impressively, Fortis has increased its dividend for 49 consecutive years. Further, its growing rate base suggests that the company could continue to grow its future dividend at a decent pace.
The company, through its $22.3 billion capital plan, expects to grow its rate base by a CAGR (compound annual growth rate) of over 6% through 2027. A growing rate base will drive Fortis’s top and bottom lines and support future dividend payments. Further, its investments in renewable power-generation capabilities augur well for growth.
Fortis expects to grow its dividend at a CAGR of 4-6% through 2027. Meanwhile, it offers a reliable yield of close to 4%.
Like Fortis, Canadian retirees can also rely on Enbridge stock. It owns an energy infrastructure business and transports oil and gas. Thanks to its high-quality asset base, contractual arrangements, and a growing portfolio of conventional and renewable energy assets, Enbridge consistently generates solid distributable cash flows that help it to enhance its shareholders’ returns.
Enbridge has been paying dividends for about 68 years. Furthermore, its dividend increased at a CAGR of 10% in the past 28 years. Thanks to its resilient business model, Enbridge has paid and increased its dividend even amid the pandemic, which is positive. Moreover, it offers a compelling yield of 7.3% near the current levels.
Overall, Enbridge’s extensive midstream assets and a growing portfolio of renewables suggest that the company could continue to capitalize on energy demand and deliver solid cash flows. Further, its low capital-intensity growth projects, inflation-protected earnings, and power-purchase agreements bode well for growth and will enable the company to pay higher dividends.
Similar to its banking peers, Toronto-Dominion Bank has a rich history of dividend payment and growth. It’s worth highlighting that this financial services company has been paying a regular dividend for 166 years. Furthermore, Toronto-Dominion Bank has raised its dividend at a CAGR of 11% since 1995. Its solid dividend payments make it a reliable income stock for Canadian retirees.
Toronto-Dominion Bank benefits from its diversified revenue base and a growing loans and deposits portfolio. Further, its stable credit quality, strong balance sheet, and focus on driving efficiency help it consistently grow its earnings (grown at a CAGR of approximately 9% in the last five years) and increase its payouts.
Looking ahead, the strength in its underlying business, accretive acquisitions, growing earnings base, and a sustainable payout ratio of 40-50% suggest that the bank could continue to boost its shareholders’ returns through higher payouts. Currently, it offers a yield of 4.74%.
These TSX stocks are fundamentally strong, have been paying and increasing their dividends for years, and have a growing earnings base, which makes them attractive investments for retirees to earn steady passive income.