For those that arenât familiar, dividend stocks are those that pay shareholders a certain amount of cash on a regular basis, simply for holding shares in the company. As you can imagine, investing in dividend stocks can be beneficial because it could allow shareholders to supplement, or maybe even replace, the income they receive from their jobs. That could allow you to live life more freely, spending more time on things youâd rather be doing instead of working.
As a rule of thumb, I look for stocks that can pay dividends comfortably year after year (which Iâll get into more later in this article). In addition, I tend to target stocks that have a 4% dividend yield or higher. Thatâs because a portfolio size of $1 million, yielding 4%, will generate $40,000 in dividends on an annual basis. That could help investors retire comfortably or as I said earlier, supplement your income to help you live the life you want.
In this article, I’ll discuss two great stocks that could help you live the dividend dream.
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One of the best dividend stocks in the country
When it comes to Canadian dividend stocks, Fortis (TSX: FTS) will always stand out to me as an excellent company. If youâve never heard of this company, you should know that it provides regulated gas and electric utilities to more than three million customers across North America. Whatâs intriguing about investing in a utility company is that it tends to receive revenue on a recurring basis. That means the company operates on a very predictable and stable source of revenue.
Using that reliable revenue stream, companies like Fortis are able to plan for dividend payments much ahead of the actual pay date. This can result in a number of things, mainly an increase in the companyâs dividend over time. Speaking of which, Fortis holds the second-longest active dividend-growth streak in Canada (50 years). The company has also already announced its plans to continue raising its dividend at a rate of 4-6% through to 2028. Finally, Fortis offers investors a 4.37% forward dividend yield.
An outstanding dividend payer
Bank of Nova Scotia (TSX: BNS) is another great dividend stock worth investing in today. This company is one of the Big Five Canadian banks. It ranks as one of the countryâs largest banks in terms of assets under management, market cap, and revenue. What I find very interesting about Bank of Nova Scotia is its focus on international diversification. Compared to its peers, Bank of Nova Scotia has the largest international presence, which could drive growth in the future.
Bank of Nova Scotia first started paying shareholders a dividend in 1833. Since then, the company has never missed a dividend payment. That means Bank of Nova Scotia is nearing 191 years of continued dividend payments. If that doesnât impress you, Iâm not sure what will. Perhaps its forward dividend yield of 6.30% could do the trick.
