2 Dividend-Growth Stocks Perfect for New Retirees

Restaurant Brands International (TSX:QSR) and another stellar dividend grower that’s getting a tad on the cheap side.

| More on:
woman looks at iPhone

Source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Dividend-growth stocks can be good long-term bets for beginner investors who are going to reinvest their dividend or distribution payments anyway. Indeed, there’s nothing wrong with going after some of the higher-yielding dividend names out there.

That said, some of the market’s best dividend-growth stocks seem intriguing at these levels, especially as interest rates continue to fall from here.

Undoubtedly, a falling-rate climate can be seen as a bit of a rising tide that lifts most boats (think stocks and real estate investment trusts, or REITs) on the TSX Index or S&P 500. And while many stocks have already risen quite a bit after the latest round of cuts from the Bank of Canada, I still think the rate hikes to come could act as rally fuel for a stock market that may be ready to keep on moving higher.

So, if you’re looking to ride on the back of this bull market, the following dividend growers seem worth checking out, whether you’re a young, new investor or a new retiree who’s looking for a bit more than hefty dividend yields.

CN Rail

CN Rail (TSX:CNR) stock stands out as a long-term core holding that’s perfect for Canadian investors of all ages. If you’re a new retiree who’s looking for a solid upfront yield (just north of 2%) and above-average annual dividend growth, it’s tough to look past the $100 billion railway firm. Though the TSX Index may be at a fresh new high, CN Rail has fluctuated wildly. Now down over 11%, CNR stock goes for a very modest 18.8 times trailing price to earnings (P/E).

Though some may argue that the long-time rail titan has lost its market-beating edge—the stock has gained a mere 33% in the past five years—after enduring a slew of industry and macro headwinds, I’d argue that the firm has numerous means to chug higher as rates fall and demand for intermodal freight looks to stay robust. As I’ve noted in prior pieces, CN Rail isn’t running as efficiently as it could be.

Should the stock keep dragging its feet in the coming year, I’d look for the firm to consider adding an industry veteran to upper management. With such exceptional assets and so much untapped potential, CN Rail could really use a catalyst. Bringing a seasoned rail veteran may very well be the missing piece to the puzzle that is CN Rail.

Despite the headwinds, CNR has grown its dividend by well over 10% annually in the past five years. That’s impressive.

Created with Highcharts 11.4.3Canadian National Railway PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

Restaurant Brands International

Restaurant Brands International (TSX:QSR) is a quick-serve restaurant company that could regain its market-beating edge as past investment efforts finally look to pay off in a big-time way. Indeed, the company has been investing in its fast-food brands to jolt consumer visits and make some market share gains over rivals amid the inflationary hailstorm.

Now that the worst of inflation is over, with the Bank of Canada and Fed slashing rates, the real question is whether Restaurant Brands can continue to court consumers with tasty food and even tastier deals. I think it can. Either way, QSR shares are too cheap at 17.5 times trailing P/E with a generous 3.32% dividend yield.

Like CN Rail, Restaurant Brands has a history of dividend hikes (averaging around 4% in the past five years), though not nearly as generous as CN Rail.

Created with Highcharts 11.4.3Restaurant Brands International PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

Should you invest $1,000 in Canadian Natural Resources right now?

Before you buy stock in Canadian Natural Resources, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Canadian Natural Resources wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

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 positions in Canadian National Railway and Restaurant Brands International. The Motley Fool recommends Canadian National Railway and Restaurant Brands International. The Motley Fool has a disclosure policy.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Retirement

RRSP Canadian Registered Retirement Savings Plan concept
Retirement

Here’s the Average Canadian TFSA and RRSP at Age 60

Many Canadian retirees have tens of thousands invested in ETFs like the iShares S&P/TSX 60 Index Fund (TSX:XIU).

Read more »

Redwood trees stretch up to the sunlight.
Retirement

3 Canadian Growth Stocks I’d Buy and Hold in a TFSA Forever

These stocks have the potential to outperform the broader market with their returns. Using the TFSA can further amplify your…

Read more »

woman retiree on computer
Retirement

Want to Retire Early? These 2 TSX Stocks Could Make it Happen

These safe, large-cap dividend stocks could help fast-track your path to retirement.

Read more »

RRSP Canadian Registered Retirement Savings Plan concept
Retirement

How to Protect Your Retirement Savings From the CRA

Building a sizeable retirement pool is important, but it is equally important to protect it from the CRA’s tax claws.

Read more »

grow money, wealth build
Retirement

Maximizing TFSA Growth: Top Investment Choices for 2025

Two resource companies are the top investment choices for 2025 to maximize TFSA growth.

Read more »

cloud computing
Retirement

The Absolute Best Canadian Stocks to Buy and Hold Forever in a TFSA

The TFSA is the perfect place to hold Canadian stocks that will compound and multiply over decades. These stocks are…

Read more »

The TFSA is a powerful savings vehicle for Canadians who are saving for retirement.
Stocks for Beginners

The Best Canadian Stocks to Invest $7,000 in This Month

Wondering how to deploy your $7,000 TFSA contribution in 2025? Here are four quality Canadian stocks to add if the…

Read more »

Two seniors float in a pool.
Retirement

3 TSX Stocks That Can Turn Retirement Dreams Into Reality

Find out how to make your retirement dreams a reality by focusing on long-term investments and preparing for unforeseen circumstances.

Read more »