Canadian Dividend stocks with steady and sustainable yields could be solid investments for retirees to generate worry-free passive income post-retirement. However, as stocks carry higher risk and dividend payouts are not guaranteed, retirees could consider shares of companies with solid fundamentals, a growing earnings base, and a history of consistent dividend payments and growth. These companies can help them earn secure dividend income.
With this background, here are three Canadian stocks to earn secure dividends.
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Fortis stock
Fortis (TSX: FTS) is a no-brainer stock for retirees to generate secure dividend income, and there are solid reasons for that. The electric utility company operates a rate-regulated business that generates predictable and growing cash flows regardless of economic conditions. Its low-risk earnings and cash flows support its dividend payments and growth, making it a dependable income stock in all market conditions.
Thanks to its resilient business model and growing earnings and cash flows, Fortis has increased its dividend for 51 consecutive years.
Further, Fortis’ $26 billion capital plan will enable the company to grow its rate base by 6.5% annually over the next five years. This will help Fortis to expand its earnings and drive higher dividend payouts. Notably, the utility company forecasts its annual dividend to increase by 4–6% over the next five years. Moreover, the company offers a well-protected yield of 4% and visibility over future distributions.
Enbridge stock
Like Fortis, Enbridge (TSX: ENB) is another must-have dividend stock for retirees to earn a worry-free passive income. This energy infrastructure company has a well-diversified revenue base with high-quality assets supported by long-term contracts that generate solid earnings and distributable cash flows (DCF) regardless of economic and commodity cycles. This stability allows Enbridge to pay and increase its dividend and offer a high and sustainable yield.
Enbridge has been paying dividends for about seven decades. What stands out is that this energy company increased its dividend for 29 consecutive years. Further, with a growing earnings base and DCF, Enbridge is poised to increase its dividend in line with its bottom-line growth.
Enbridge’s extensive network of pipelines, presence in top supply and demand regions, higher asset utilization, power-purchase agreements (PPAs), and regulated tolling frameworks position it well to grow its earnings steadily. Moreover, acquisitions and investments in conventional and renewable energy sources will likely accelerate its growth rate.
The company targets mid-single-digit earnings and DCF per share growth rate over the long term. This will help Enbridge increase its dividends at a similar pace. Further, it offers an attractive and dependable yield of about 6.4%.
Toronto-Dominion Bank stock
The leading Canadian bank stocks are known for their proven track record of dividend payouts. For instance, top Canadian financial companies have paid dividends for over a century. Among the top banks, Toronto-Dominion Bank (TSX: TD) stands out for its impressive dividend growth, which is higher than all its peers.
The bank has continuously paid dividends for 167 years. Moreover, its dividend has increased at a compound annual growth rate (CAGR) of 10% since 1998.
Toronto-Dominion Bank’s diversified revenue, ability to grow loans and deposits, and operating efficiency enable it to consistently grow its earnings and dividend payments. Further, its solid balance sheet and accretive acquisitions augur well for growth.
The Canadian financial services giant has a conservative dividend payout ratio of 40–50%, which is sustainable in the long term. Moreover, it offers a compelling yield of 5.2% near the current market price.
