Canada has different retirement accounts, although Canada Pension Plan (CPP) payments start at age 60 and Old Age Security benefit is available at 65. However, resourceful people with a good financial plan are more likely to retire early or before the standard retirement age.
Canadians can invest in TSX dividend titans while utilizing their Tax-Free Savings Account (TFSA) and the Registered Retirement Savings Plan (RRSP) for tax savings and tax shelter. Bank of Nova Scotia (TSX:BNS) and BCE (TSX:BCE), among the best in the lot, can help facilitate early retirement.
Next growth phase
BNS, Canada’s fourth-largest lender, provides banking products and services not only in Canada. The $72.52 billion bank is present in the U.S., Mexico, Chile, Colombia, the Caribbean, and Central America, and the Caribbean. Besides the reach or area of coverage, the big bank’s dividend track record is 191 years.
As of this writing, the share price is $60.17, while the dividend offer is a juicy 7.02%, the highest yield among the big bank stocks. BNS is a compelling investment option for early retirement planners due to several factors, including a substantial market cap, sustainable dividends, and quality earnings.
BNS’s average net income in the last three fiscal years is $8.77 billion and is on track to make $8.11 billion in profit for fiscal 2023 despite a challenging environment and strong headwinds. Net income in the third quarter (Q3) of fiscal 2023 declined 14.7% to $2.21 billion versus Q3 fiscal 2022. The drop was due to the 98.8% year-over-year increase in the provision for credit losses (PCL) to $819 million.
Nevertheless, BNS’s chief executive officer (CEO), Scott Thomson said, “The bank delivered another quarter of stable earnings, strengthening our capital and liquidity metrics while prudently increasing loan loss allowances and managing expense growth as we navigate this period of economic uncertainty.”
Thomson added, “Our results this quarter demonstrate early progress on our deposit growth initiatives and continued focus on balance sheet strength and stability, key priorities as we position the bank for our next phase of growth.”
Industry behemoth
BCE boasts more than a century of dividend payments like BNS. The $49 billion communications company provides wireless, wireline, internet, and television (TV) services to residential, business, and wholesale customers in Canada. At $53.77 per share, you can partake in the 7.18% dividend yield.
Canada’s most dominant telco is a cash cow, owing to the $2.78 billion average net income from 2020 to 2022. The run rate in 2023 is around $2.4 billion. BCE maintains its lofty industry position through the strength of three core segments: Bell Wireless, Bell Wireline, and Bell Media.
According to Grandview Research, the global telecom market is expected to grow to $2.87 trillion by 2030. A large-cap 5G stock like BCE should benefit immensely from the global market’s 6.2% compound annual growth rate.
Early retirement can be a reality
The best strategy to accelerate your retirement date is to adjust your current budget. A few changes can make room for more investments. Dividend titans BNS and BCE are ideal holdings because you can reinvest the dividends for faster principal compounding. Early retirement can be a reality, not just a state of mind.
