September is known to be a very choppy month for stock markets, and the future may be no exception. While pullbacks allow investors to buy the dip in a range of growth and dividend stocks, not all companies are clearly created equal. Indeed, now may be the time for investors to take a somewhat cautious stance in this market.
For those looking to build a retirement portfolio with the ability to outlast any sort of medium-term trouble, here are two top dividend-paying companies I think are worth considering right now. These companies have the staying power and dividend growth profiles long-term investors will certainly want to focus on moving forward.
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Bank of Nova Scotia
The Bank of Nova Scotia (TSX: BNS) is one of the largest Canadian financial institutions providing banking and financial services internationally. The company operates via five business segments: Canadian banking, international banking, global banking and markets, global wealth management, and other services.
Many other Canadian banks’ peers decided to expand into the United States, while Scotiabank chose to expand into Central America and South America. The reasoning was there was less competition, and the prospects for growth will be stronger for the short and long terms.
However, the markets were undeniably more volatile as well. Earnings growth and return on equity have lagged their peers in the important performance metrics. Scotiabank has formulated a strategy to withdraw from less favourable markets, such as Colombia, while concentrating on more attractive ones like Mexico.
In exercising this strategy, the company has recently announced a deal to invest nearly 15% in KeyCorp. While this investment is expected to enhance earnings relatively soon, it is an exciting opportunity for the future, despite the particular merger not yet confirmed. Indeed, dividend investors looking to lock in a 5.8% yield with considerable long-term dividend growth upside may want to do so right now.
Fortis
Fortis (TSX: FTS) owns and operates 10 utility transmission and distribution assets in the United States and Canada that serve 3.4 million customers. The company also owns minority interests in electricity generation with various Caribbean utilities.
Fortis provides service and receives payment for this service on a recurring revenue basis. This means the business can generate recurring revenues that provide a stable income for long periods with little volatility due to the economic condition of the market.
But what makes Fortis such a safe investment for its post-retirement life? Well, that comes down to the industry that Fortis operates, that is, the utility industry. It supplies energy to businesses and homes so they can function, and no matter what happens in the economic cycle, energy is a necessity.
As we cannot live without energy, it creates a high level of predictability and reliability for Fortis’ revenues. It is one of the ideal characteristics if you are looking for passive income strategies or investments for post-retirement life.
With a yield of 3.9% and a track record of more than 50 years of consecutive dividend hikes, this is a top stock I remain focused on as a long-term dividend stock to buy, particularly on any future weakness.
