One of the top ways to safeguard your retirement is via investment in income stocks. However, the volatility associated with the market raises concerns, as it could erode the capital. Nonetheless, investors can reduce this risk by investing in fundamentally strong companies with solid dividend payments and growth history. Moreover, one must diversify their portfolio to lower future disappointment and earn a steady income.
Against this backdrop, I’ll discuss three Canadian dividend stocks that are great sources of income. These Canadian stocks are less volatile, have a growing earnings base, and have a solid dividend payment and growth history. Let’s delve into stocks.
Toronto-Dominion Bank
Top Canadian bank stocks can be a valuable addition to your portfolio to earn a reliable income and safeguard your retirement. Among the large bank stocks, one can consider investing in the shares of Toronto-Dominion Bank (TSX:TD). This financial services company has paid a dividend for over 166 years. Impressively, it increased the same at a CAGR (compound annual growth rate) of about 11% in the last 25 years.
Toronto-Dominion Bank’s ability to pay and increase its dividend at a solid pace and a conservative payout ratio of 40-50% support my bullish outlook.
The firm is poised to deliver solid earnings in the coming years, supporting its stock price and driving higher payouts. Its diversified revenue sources, expansion of its loan portfolio, and strong balance sheet will support its top-line growth. At the same time, stable credit performance and efficiency savings will cushion its earnings. In addition, its accretive acquisitions will help expand its business, accelerate its growth, and support its financials.
Retirees can earn a worry-free yield of 4.5% (based on its closing price of $85.85 on August 10) by investing in Toronto Dominion Bank stock near the current levels.
Fortis
Fortis (TSX:FTS) is a must-have stock to earn a steady income and safeguard your retirement due to its stellar track record of dividend growth (49 consecutive years) and low-risk business. The company operates a regulated electric utility business and generates predictable and growing cash flows. Its ability to consistently expand its rate base drives its earnings and enables it to enhance its shareholders’ return.
It operates 10 regulated utility businesses and generates nearly all of its earnings from utility assets, implying that its payouts are safe and well covered. Further, the company expects to grow its rate base by a CAGR of 6.2% through 2027, enabling it to increase its dividend by 4-6% annually during the same period.
Fortis’s solid track record of dividend payments, resilient business model, visibility over future dividend growth, and a decent yield of 4.2% makes it an attractive investment.
Enbridge
I’ll wrap up with Enbridge (TSX:ENB). The firm transports oil and natural gas. Also, it owns a small portfolio of renewable power businesses and runs a regulated natural gas utility business. Its diversified portfolio, long-term contracts, and high utilization rate help it to generate solid DCF (distributable cash flow) and support higher payouts.
Also, power-purchase agreements, regulated cost-of-service tolling frameworks, and low-risk commercial arrangements support its financials.
The company has paid a dividend for 68 years. Moreover, it increased the same for 28 consecutive years. Looking ahead, its investments in conventional and low-carbon energy assets, solid secured capital projects, and strategic acquisitions will drive its DCF per share and dividend payments. Meanwhile, it offers a high yield of 7.2%.
Overall, its resilient business, solid payouts, and lucrative yield make Enbridge a dependable investment.
