Dividend Fortunes: 2 Canadian Stocks Leading the Way to Retirement Wealth

Here are a couple of dividend stocks to help investors get started on retiring wealthy.

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Dividend investing is an excellent way to help anyone retire with the kind of lifestyle they want. Billions of dollars of favourably taxed Canadian dividends are up for grabs for anyone willing to take risks in the stock market. For money, you don’t need for a long time, it makes good sense to consider investing in solid dividend stocks.

Canadians from all walks of life can benefit from investing in high-yield dividend stocks that tend to increase their dividends over time. If you have a long way until retirement, you might complement your dividend portfolio with lower-yielding but higher-growth stocks.

Here are a couple of dividend stocks to help investors get started on retiring wealthy. In fact, if investors have a sufficiently large portfolio, they could churn out enough dividend income to improve their lifestyles today!

MFC Total Return Level Chart

MFC Total Return Level data by YCharts

Manulife

Manulife (TSX:MFC) stock was an underperformer for some time. Finally, the stock price seems to have caught up to its earnings. At $35.22 per share, the dividend stock trades at a reasonable blended price-to-earnings ratio (P/E) of about 9.8 versus its long-term normal valuation of roughly 10.2 times earnings. Over the past decade, the life and health insurance increased its adjusted earnings per share (EPS) at a compound annual growth rate (CAGR) of 10%, which helped drive a 10-year dividend-growth rate of 10.9%.

At the recent quotation, it offers a decent dividend yield of 4.5% and is expected to increase its adjusted EPS by at least 7% per year over the next few years. If so, investors can approximate total returns of north of 11% per year, assuming no valuation expansion. You can also expect dividend growth that more or less aligns with its earnings growth.

Dollarama

Dollarama (TSX:DOL) has been a fabulous growth stock that also increased its dividend at a double-digit rate over the last decade. Its 10-year dividend-growth rate is 11.7%. At the recent quotation, it offers a puny dividend yield of 0.3%. So, investors should focus on its potential for capital gains and dividend growth.

The value retailer attracts shoppers looking for deals, as its well-selected, diversified basket of merchandise is sold at select fixed price points up to $5. Therefore, the business makes quality earnings through good and bad economic periods.

Last week, it reported solid fiscal 2025 first-quarter results with sales growth of 8.6% to $1.4 billion versus a year ago. Comparable store sales grew 5.6%. And the EPS climbed 22%.

In fiscal 2025, it plans to open 60-70 net new stores and targets comparable store sales of 3.5% to 4.5%.

The only thing that might deter investors from the stock today is its valuation, which is at the high end of its historical range. At about $123 per share at the time of writing, it trades at a forward P/E of approximately 30, with anticipated EPS growth of over 11% per year over the next couple of years.

Interested investors could consider accumulating shares in the proven name on meaningful market pullbacks.

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 Kay Ng has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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