In retirement, your life could be made much more comfortable if you have a stable source of passive income to help sustain your lifestyle. One way to do that would be to invest in dividend stocks. It would be a good idea to look for stocks that are able to quickly grow their distributions to help keep your passive income ahead of inflation.
In this article, I’ll discuss three top dividend stocks that retirees should consider holding over the long term.
This massive company should be in your portfolio
In this article, I’ll be referring to a company that grows its dividend at a fast rates as a “dividend-growth stock.” With that said, the first dividend growth stock that retirees should consider holding in their portfolio is Canadian National Railway (TSX:CNR). This company operates nearly 33,000 km of track, making it one of the largest railway companies in North America. Its rail network spans from British Columbia to Nova Scotia, helping it become one of the most recognizable companies in Canada.
Canadian National Railway is notable for being one of 11 TSX-listed companies to maintain a dividend-growth streak of more than 25 years. Over the length of its streak, Canadian National Railway has grown its dividend at a compound annual growth rate (CAGR) of 16%. To put that into perspective, the long-term average rate of inflation is 2%. That means Canadian National shareholders have seen their passive income grow much faster than inflation, allowing them to build buying power over the years.
Don’t sleep on this “boring” company
The next dividend growth stock that retirees should consider buying and holding for the long term is Alimentation Couche-Tard (TSX:ATD). This is a company that many around the country may not be familiar with. However, you may be more familiar with some of the other banners it operates under. That includes Mac’s, On the Run, Circle K, Daisy Mart, and many more. Yes, Alimentation Couche-Tard operates convenience stores. It operates more than 14,000 locations across 24 countries and territories.
Another outstanding dividend-growth stock, Alimentation Couche-Tard has grown its dividend for over a decade. Since 2005, this company’s dividend has grown at a CAGR of 21.5%. That’s a very impressive rate. Even more impressive, Alimentation Couche-Tard’s dividend-payout ratio is less than 13%. This suggests that the company could continue to comfortably raise its dividend at a fast rate for years to come.
One of the fastest dividend-growth stocks around
Finally, retirees should consider holding shares of goeasy (TSX:GSY) for the long term. This company operates two distinct business lines. easyhome sells furniture and other durable home goods on a rent-to-own basis. easyfinancial provides high-interest loans to subprime borrowers.
Since 2014, goeasy has made it a priority to grow its dividend whenever possible; and it’s done that excellently. Over the past nine years, goeasy’s dividend has grown at a CAGR of 30.9%. That’s an incredible rate — one that retirees should keep a close eye on if they don’t decide to add this stock to their portfolio today. With a dividend-payout ratio of 34.5%, I think goeasy could continue to raise its dividend for many more years.