Retirees: 2 Reliable Stocks for Steady Passive Income

Canadian Natural Resources (TSX:CNQ) and another dividend stock are looking fit for retirees going into 2024.

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Retirees who live off passive-income payments have a lot of intriguing plays to choose from these days. With high interest rates, risk-free assets (think bonds and Guaranteed Investment Certificates) certainly look tempting. However, various dividend stocks also look enticing, especially if you’re looking to build a reliable income stream that’s poised to grow at an above-average rate over the next decade. Indeed, dividends have the potential to rise at a pretty impressive rate.

Mid -to high single-digit raises are hard to come by in the workforce, but when it comes to dividends of various cash-rich blue chips, such generous annual raises can be the norm. Amid high levels of inflation, such raises really make a big difference in covering the ever-rising costs of everyday living.

So, for retirees looking to jolt their income streams with “risky” assets, the following two dividend stocks, I believe, offer great value, income, and dividend growth over time.

Without further ado, consider shares of oil producer Canadian Natural Resources (TSX:CNQ) and life insurance play Great-West Lifeco (TSX:GWO).

Canadian Natural Resources

Canadian Natural Resources is pretty much a king among men in the Canadian crude scene. The stock is pretty close to a new all-time high at just north of the $90 mark. With a compelling 4.44% dividend yield and some of the best-run operations in the oil patch, it’s hard not to reach for the $98.52 billion energy stock going into a new year that may be filled with uncertainty.

In the last two years, the stock is up an astounding 77%. Despite the incredible run, shares are anything but expensive at just 14 times trailing price to earnings (P/E). Even with the recent dip in the price of oil, I wouldn’t bet against CNQ, as it continues to produce at what I’d describe as an enviable cost of production.

A UBS analyst previously referred to CNQ as a “cash machine” worthy of a buy. I couldn’t agree more. In many ways, the firm stands above the crowd in the Canadian energy scene. And I don’t think the valuation reflects the calibre of the firm quite yet. Even if oil prices were to keep slipping from here, CNQ is better equipped to ride out another storm.

Great-West Lifeco

Great-West Lifeco is an often-overlooked financial stock that’s been quietly rallying this year, with over 37% in gains posted year to date. As it stands, GWO stock is at a new all-time high of $43 and change. With a 4.83% dividend yield, prudent investors can have their consistent passive income payments as well. With base earnings rising to $950 million in its latest (third) quarter, up from $809 million posted over the same quarter last year, things seem to be looking up for the underrated insurer.

Though you could grab a lower price of admission (and higher yield) with other insurance stocks, I view GWO as an optimal mix of momentum, value, and dividends. The 0.81 beta also makes shares slightly less correlated to the rest of the market.

For retirees, GWO is not a name to overlook, especially if you seek to grab a wonderful business at a fairly reasonable price. At writing, shares trade at 18.53 times trailing price to earnings. It’s not a bad price to pay for a firm that’s performing so well in today’s tricky environment.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Joey Frenette has no position in any of the stocks mentioned. The Motley Fool recommends Canadian Natural Resources. The Motley Fool has a disclosure policy.

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