Retirement is one of the last things most professionals in their twenties think about and may not get on their radar until they are in their forties or fifties.
Even though you can realistically build a sizable nest egg, even if you start working on it when you are just a decade or two away from your retirement, assuming you have a lot of savings or can put away a massive segment of your income, the ideal scenario is to start early.
If you start your retirement planning in your twenties, it would be possible to build not just a retirement safety net but retirement wealth with safe and predictable dividend stocks.
A utility company
If we could choose just one dividend stock from the TSX that “embodies” the traits safe and predictable, Fortis (TSX:FTS) would be the most common choice. It’s a utility stock with 2.1 million electricity and 1.3 natural gas consumers, 10 utility operations, and $64 billion worth of assets.
Fortis is one of the most trusted dividend stocks in the country. As a utility company with revenue streams tied to utility bills, financial stability is a characteristic trait of the business model. But it has proven its resilience and the commitment to not just sustain but grow its payouts over decades.
The company has been raising its dividends for 49 consecutive years, the second-highest streak in the country. The yield is typically quite healthy (4.2% at the time of writing), and the payout ratios are usually quite safe.
Its return potential comes from more than just its dividends. In the last decade, it grew by about 75%, which pushed the overall returns over the period to over 155%.
A bank
Bank of Montreal (TSX:BMO) is one of the oldest financial institutions in the country, with a massive dividend history, though its recent dividend history might be more interesting to investors – over a decade of consecutive dividend growth. It also enjoys the stability shared by all Canadian bank stocks.
Its financial and operational stability, combined with a juicy dividend yield of about 4.9% and a modest capital appreciation potential (74% in the last ten years), make it a healthy long-term pick for most investors. Another reason to consider this stock now is the 22% discount it’s trading at.
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Foolish takeaway
The two stocks can be compelling picks for your TFSA portfolio. They offer stability and decent long-term return potential. If you invest a sizeable enough sum, you can use the dividends to start or augment a passive income, or you can reinvest the dividends in these or other stocks.
