Dividend Desirables: 2 Canadian Dividend Stocks to Lead You Into Retirement

If you’re hoping to make it through retirement in one piece with cash to spare, these dividend stocks can help you on your way.

| More on:
A glass jar resting on its side with Canadian banknotes and change inside.

Source: Getty Images

If you’re looking for dividend stocks to carry you into a comfortable and early retirement, Canadian Utilities (TSX:CU) and Capital Power (TSX:CPX) are two of the best choices on the TSX. Both have proven track records of consistent dividend payments and are industry leaders in the Canadian energy and utility sectors. Let’s explore why these stocks stand out and are worth considering for your retirement portfolio.

Canadian Utilities

Canadian Utilities has long been a favourite for dividend investors. The dividend stock is offering an impressive forward annual dividend yield of nearly 5% at writing, with a solid history of consistent dividend growth. In fact, CU holds the record as the longest-standing dividend growth stock in Canada, with over 50 consecutive years of dividend increases. This makes it one of the most reliable choices for those seeking stable and growing income streams in retirement.

On the earnings front, Canadian Utilities continues to deliver despite market fluctuations. The dividend stock recently reported quarterly revenue of $3.7 billion, a slight dip of 2.2% year over year. However, with a profit margin of 16.4% and solid management effectiveness metrics, including a return on equity of 8.7%, CU remains a resilient performer in the utility space. For retirees, this translates into confidence that dividends will continue to flow, even during economic downturns.

Capital Power

Capital Power is another exceptional dividend stock, boasting a forward annual dividend yield of 5% as of writing. What sets Capital Power apart is its strategic focus on renewable energy, making it not only a strong income stock but also a company with a future-oriented vision. With a robust market cap of $6.8 billion and a forward price/earnings (P/E) ratio of 18.4, CPX balances income and growth potential well. This is essential for those looking to retire early and still see capital appreciation.

In terms of recent earnings, Capital Power reported revenues of $3.9 billion for the last 12 months, though there was an 8.5% dip in quarterly revenue growth year over year. Despite this, the dividend stock’s profit margin remains healthy at 16.8%. Further, management effectiveness metrics, such as a return on equity of 19.5%, demonstrate its ability to generate solid returns for shareholders. CPX’s management has been proactive, with a focus on expanding its renewable energy portfolio. This should position the company well for future growth as demand for clean energy rises.

Strength abounds

Both companies have experienced notable headlines recently. Canadian Utilities is focused on maintaining its leadership in utility services while exploring growth in renewable energy. Meanwhile, Capital Power has been making headlines for its aggressive expansion into sustainable energy projects, including investments in solar and wind. These align with global trends toward greener energy solutions. For an investor aiming for early retirement, this growth story adds an exciting element of future-proofing to your portfolio.

Management plays a key role in the success of these two dividend giants. Canadian Utilities is led by experienced executives who have a long history of generating stable returns. Their conservative approach ensures that dividends remain a priority, even when market conditions are challenging. Capital Power, on the other hand, has embraced a slightly more growth-oriented strategy under its leadership, with a focus on renewable energy and sustainability. This gives it the potential for long-term capital growth alongside its already strong dividend payouts.

Looking toward the future, both Canadian Utilities and Capital Power seem well-positioned to continue rewarding shareholders. Canadian Utilities, with its essential services and stable cash flow, will likely remain a cornerstone of dividend portfolios. As for Capital Power, its strategic focus on renewable energy will allow it to benefit from the global shift toward cleaner energy sources, thus ensuring dividend growth and potential capital appreciation.

Bottom line

Altogether, Canadian Utilities and Capital Power are two of the best TSX dividend stocks to consider for those looking to retire early. The blend of stable dividend yields, strong management, and promising future outlooks make them prime candidates for any long-term retirement strategy. If you’re aiming to build a reliable income stream that supports early retirement, these two dividend stocks should be at the top of your list.

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 Amy Legate-Wolfe 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.

More on Dividend Stocks

data analyze research
Dividend Stocks

Dividend Powerhouses: Top Canadian Stocks to Enhance Your Portfolio

These stocks have increased the dividend annually for decades.

Read more »

dividends grow over time
Dividend Stocks

The Smartest Dividend Stocks to Buy With $5,000 Right Now

The smartest dividend stocks on the market can provide decades of growth on autopilot. Here's how and what stocks you…

Read more »

Canadian dollars are printed
Dividend Stocks

Build a Lucrative Passive-Income Portfolio With Just $35,000

Canadians can build a lucrative passive-income portfolio with a small capital and a pair of dependable dividend payers.

Read more »

profit rises over time
Dividend Stocks

Buy 2,990 Shares of This Stock for $165.25/Month in Passive Income

A high-yield dividend stock can transform your investment into monthly passive income streams.

Read more »

close-up photo of investor Warren Buffett
Dividend Stocks

3 Warren Buffett Stocks to Buy Hand Over Fist in November

Warren Buffett has been buying Occidental Petroleum (NYSE:OXY) hand over fist. He previously owned the similar Canadian oil giant Suncor…

Read more »

dividend growth for passive income
Dividend Stocks

Is Intact Financial Stock a Buy for its 1.8% Dividend Yield?

Intact Financial's dividend is not that attractive, but its strong history of execution and dividend growth are compelling factors for…

Read more »

Hourglass and stock price chart
Dividend Stocks

Where Will Brookfield Stock Be in 5 Years?

Based on its recent successes, Brookfield Corp (TSX:BN) looks poised to be more valuable in five years' time than today.

Read more »

hand stacks coins
Dividend Stocks

The Smartest Dividend Stocks to Buy With $400 Right Now

The market is full of dividend stocks to buy. Here's a look at two options that cater to both growth…

Read more »