If you want to retire comfortably with financial freedom, you should ideally start saving some of your regular income early. Investing these savings in the Canadian stock market for the long term has the potential to multiply them by the time you retire. However, you must pick stocks for your retirement portfolio very carefully.
In this article, I’ll highlight two of the best dividend-paying Canadian stocks you can buy in 2023 and expect to retire comfortably if you hold them for the long term.
Magna International stock
Magna International (TSX:MG) is the first Canadian dividend stock that you can consider adding to your retirement portfolio now. This Aurora-headquartered auto parts and mobility company currently has a market cap of $23.8 billion as its stock trades at $82.96 per share with about 9% year-to-date gains.
At this market price, MG stock offers a decent 3% annualized dividend yield that can help its investors create a reliable source of quarterly passive income. More importantly, the company has raised its dividend payouts by 64% in the five years between 2017 and 2022, despite facing coronavirus-driven global operational challenges.
While Magna’s adjusted earnings have gone down on a year-over-year basis in the last couple of quarters, it remains on track to post solid financial growth in the coming quarters, as global auto production and sales continue to recover sharply. This recovery could be one of the key reasons why Bay Street analysts expect its earnings to rise 21% in the ongoing year, which should help its stock rally from current levels.
Moreover, Magna’s continued focus on futuristic mobility technologies and vehicle electrification platforms makes its future outlook look even brighter, raising the possibility of continued increases in its dividend payouts.
Royal Bank stock
Royal Bank of Canada (TSX:RY) is another trustworthy dividend stock in Canada you can buy now and hold to build wealth for retirement. This Toronto-headquartered bank currently has a market cap of $181 billion as its stock trades at $130.17 per share with a minor 2.3% year-to-date gains.
RY stock has a 4.1% dividend yield on an annualized basis. Just like Magna International, Royal Bank is also known for its attractive dividend growth. To give you an idea, its dividend per share went up 43% in the five years between its fiscal year 2017 and 2022 (ended in October 2022).
Besides its impressive dividend-growth track record, Royal Bank’s robust balance sheet, strong credit ratings, and diversified business model make it a great dividend stock to hold in your retirement portfolio even in difficult economic times. Also, its growing focus on balanced capital deployment and tech innovations has the potential to accelerate its financial growth further in the coming years.
After witnessing a negative movement in the first half of 2023, the largest Canadian bank’s share prices seem on the path of a recovery in the second half of the year, as investors remain hopeful that the Bank of Canada will soon pause interest rate hikes. Given that, it could be the right time for long-term investors to buy RY stock.
