There are different investing strategies that can help you build a wealthy retirement. If you are able to save a portion of your paycheque and grow your diversified investment portfolio through your working years to a sizeable amount, you could earn a lucrative income from your investments.
For example, a $1,000,000 dividend stock portfolio with an average yield of 6.2% today would earn an annual income of $62,000. Many dividend stocks also increase their dividends over time, so if you are selective in your dividend stocks, your passive income is likely to rise every year!
$1,000,000 doesn’t just pop out of a magic hat, which is why the earlier you start investing, the better, because your money will start working for you. You could also buy stocks with higher growth to aim to build a wealthy retirement.
Here are three dividend stocks that appear to pay out safe dividends.
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Dividend stocks offering income of about 6%
Bank of Nova Scotia (TSX: BNS) has tripled its dividend over the last 20 years or so. However, it has been an underdog among its peers over the last decade.
BNS and ZEB Total Return Level data by YCharts
For instance, the big Canadian bank stock is still more than 20% below its 2022 peak, whereas some of its peers have surpassed their 2022 peak levels. Therefore, Bank of Nova Scotia stock now offers a large dividend yield of almost 6.8%.
If the stock turned around over the next five years under the leadership of the fairly new president and chief executive officer, Scott Thomson, the stock could deliver outsized double-digit total returns in the period.
Canadian real estate investment trusts (REITs) are also a good place to explore for current income. For instance, at $14.41 per unit, retail REIT CT REIT (TSX: CRT.UN) offers a yield of 6.4%, which is paid out in monthly cash distributions.
The stock has a track record of delivering stable funds-from-operations-per-unit growth of 3% per year over the past eight years. Importantly, the low-growth stock trades at some margin of safety. Specifically, it trades at a discount of 15% from its long-term normal valuation, which represents a current fair value of $17 per unit. As a result, the stock could potentially deliver total returns of about 12% per year over the next five years.
TSX dividend stock with higher growth
An example of a TSX stock with higher growth is Brookfield Asset Management (TSX: BAM). It’s a global alternative manager that was spun off from Brookfield Corp. not too long ago.
BAM has about US$1 trillion of assets under management across the globe in renewable power and transition, infrastructure, private equity, real estate, and credit assets. On top of management fees, it earns performance fees if it’s able to achieve certain long-term returns for its clients.
The company has a strong growth profile along with anticipated growing demand for what it offers. It is also able to target a payout ratio of over 90%, which makes it an interesting dividend idea for decent income and income growth. Its current yield is about 3.9%, and its last dividend hike was 18.8% in February.
The above dividend stocks are but three out of many on the stock market for investors to potentially invest in for a wealthy retirement. So, pick stocks wisely. What’s important is that you make it a habit to save and invest regularly.
