If you’re at the stage of your investment journey where it’s time to start thinking about lining your nest egg, you should seriously consider investing in dividend stocks. Simply put, these are companies that pay investors a portion of their earnings simply for holding shares in their company. By accumulating many shares of outstanding dividend stocks, investors could possibly see a massive recurring payment in their portfolios.
In this article, I’ll discuss three top Canadian dividend stocks that can help you in retirement.
This is the best dividend stock around
When it comes to dividend stocks, Fortis (TSX:FTS) is always a company that investors should be thinking about. Serving more than three million customers, this is one of the largest utility companies in North America. Because of the nature of its business, Fortis can take advantage of stable and recurring revenue and turn that into an outstanding dividend. In fact, Fortis shareholders have been treated to one of the most impressive dividend track records in Canada.
In each of the past 49 years, Fortis has managed to increase its dividend distribution. That represents the second-longest active dividend-growth streak in the country. Fortis has already announced its plans to continue increasing its dividend through to at least 2027 at a rate of 4-6%. If you’re looking for a stock that could help you live a comfortable retirement, then Fortis is certainly a stock worth considering.
Don’t forget about the Canadian banks
Investors should also consider buying shares in the Canadian banks. These companies, especially the ones at the top of the industry, have managed to establish very stable businesses. The Big Five, as the leaders in the Canadian banking industry, are known to maintain very formidable moats, which help them stay ahead of their competitors. Of that group, Bank of Nova Scotia (TSX:BNS) is the company I find the most attractive.
Bank of Nova Scotia has been paying shareholders a dividend since July 1, 1833. Since then, it has never missed a payment. That represents 190 years of continued dividend distributions. Although the company doesn’t boast the same kind of dividend-growth streak as Fortis, I think its long history of reliably paying shareholders is something that shouldn’t be overlooked.
One dividend stock I plan on adding to my portfolio
Finally, investors should consider adding Canadian National Railway (TSX:CNR) to their portfolios. I know I have been. This is one of the largest railway companies in North America, operating nearly 33,000 km of track. Its rail network stretches from British Columbia to Nova Scotia and as far south as Louisiana.
Like Fortis, Canadian National is impressive because of its outstanding dividend-growth streak. At 26 years, it’s only one of 11 TSX-listed stocks to currently maintain a dividend-growth streak of that length or longer. With a dividend-payout ratio of about 38% on the books, Canadian National appears to still have a lot of room to continue growing that dividend in the future.
