Dividend-paying stocks boost passive income, thus helping retirees maintain their lifestyle even during the sunset years. Thankfully, several TSX stocks are fundamentally solid and have raised their dividends consistently. Here are my three top picks that retirees can add to their portfolio to earn a stress-free passive income.
Enbridge
Enbridge (TSX:ENB) owns and operates a pipeline network transporting oil and natural gas across North America. With around 98% of its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) protected from regulated assets and cost-of-service contracts, the company generates stable and predictable cash flows, thus allowing it to raise its dividends consistently. The company has increased its dividends uninterruptedly for the previous 28 years at a CAGR (compound annual growth rate) of over 10%. Besides, its forward yield currently stands at a juicy 7.38%.
Further, the company’s management is progressing with its $17 billion secured growth projects, with the expectation of putting around $6.4 billion worth of projects into service by the end of next year. These investments could boost its cash flows, thus allowing it to continue its dividend growth. Further, the company’s financial position also looks solid, given its liquidity of $12.6 billion as of March 31. Considering all these factors, I believe Enbridge would be an ideal buy for retirees.
Canadian Utilities
Canadian Utilities (TSX:CU) is a diversified energy infrastructure company engaged in the transmission and distribution of electricity and natural gas, meeting the needs of around 2 million customers. Supported by its low-risk regulated utility assets, the company is able to generate stable cash flows, thus allowing it to raise its dividends consistently for the previous 51 years. Meanwhile, its forward dividend yield stands at a healthy 5.34%.
Besides, the company expects to grow its rate base at an annualized rate of 2% from $14.9 billion in 2022 to $16 billion in 2025. Along with the rate base expansion, the utility’s solid execution could boost its financials in the coming years. Amid the rising interest rates, the company is under pressure this year, losing around 6% of its stock value. Amid the pullback, it trades at a price-to-book multiple of 1.7, making it an attractive buy.
Telus
Telecom companies earn a substantial percentage of their revenue from recurring sources, thus generating stable cash flows. Besides, the sector is highly capital-intensive, thus creating a natural barrier for new entrants while expanding the margins for existing players. So, I have selected Telus (TSX:T), a Canadian telecom giant, as my final pick. Since 2004, the company has returned $23 billion to its shareholders, with $18 billion in dividends. It currently pays a quarterly dividend of $0.3636/share, translating its forward yield to 5.72%.
Meanwhile, the demand for telecommunication services is growing amid digitization. Besides, the advent of 5G has created multi-year growth potential for the company. Also, its other verticals, such as Telus Health and International, are growing at a higher rate, which is encouraging. With the company currently trading at 1.8 times projected sales for the next four quarters, I believe Telus would be an excellent buy for income-seeking investors.
