When it comes to choosing the stocks to invest in, the time horizon of the investor should always be top of mind. Depending on how long someone is willing to hold their investment should significantly impact the decision of which stocks to buy.
For those with time horizons of decades or longer, there’s more time to weather down periods in the market, which means more opportunity to take on risk. But for those who may already be in their golden years, owning higher-risk stocks may not be that appealing.
One option for retirees to consider is investing in dividend stocks. Dividend-paying companies can provide an investment portfolio with a consistent inflow of cash, which the investor can either withdraw as cash itself or re-invest into more shares.
Fortunately, the TSX is loaded with high-quality dividend stocks to choose from. I’ve reviewed three dividend-paying companies that could be a perfect addition for a retiree looking to add a little extra cash in their pocket.
Bank of Nova Scotia
If passive income is what you’re after, the Canadian banks are a great place to start. Here, you’ll find top yields and some of the longest payout streaks around.
At today’s stock price, Bank of Nova Scotia’s (TSX:BNS) 6.5% yield ranks as the highest-yielding amongst the Big Five, as well as only one of two of the five major banks yielding above 5%.
In addition to an impressive yield, not many dividend stocks on the TSX can match Bank of Nova Scotia’s dependability. The bank has been paying a dividend to its shareholders for close to 200 consecutive years.
Passive-income investors don’t need to think twice about buying shares of this high-yielding bank stock.
Brookfield Infrastructure Partners
In addition to generating cash through dividends, retirees should also consider how they can minimize risk and volatility in their portfolios. One way of doing that is by owning boring but dependable companies.
When it comes to dependability, utility stocks are hard to beat. There’s not a whole lot to get excited about with the utility industry. However, if you’re looking for low-volatile stocks that can also generate income, utility stocks are an excellent option.
At a market cap of $20 billion, Brookfield Infrastructure Partners (TSX:BIP.UN) is a Canadian leader in the space. The company also boasts an international presence, providing added diversification for its shareholders.
In addition to providing a portfolio with low levels of volatility, the utility stock’s dividend is yielding above 4% at today’s stock price.
Northland Power
The last pick on my list is for the investor that’s willing to take on a little more risk than with the first two companies.
By no means would I say that Northland Power (TSX:NPI) is a high-risk investment. That being said, I would bank on more volatility than with the first two stocks on this list. Higher volatility, though, is the price to pay for long-term growth potential.
In addition to a nearly 5% dividend yield, Northland Power offers its shareholders the chance to earn market-beating returns over the long term. The energy stock has been declining since early 2021 but remains ripe with long-term growth potential.
Retirees bullish on the long-term rise in demand for renewable energy may want to consider adding this discounted energy stock to their watch lists.
