2 High-Yield Dividend Stocks for Canadian Retirees

These stocks still offer attractive yields for investors seeking passive income.

| More on:
Hand Protecting Senior Couple

Source: Getty Images

Canadian seniors are searching for ways to get better returns on their hard-earned savings. With Guaranteed Investment Certificates (GICs) paying much lower rates compared to this time last year, retirees are looking to dividend stocks again as a source of passive income.

The rally in the TSX in 2024 has made it harder to find undervalued dividend stocks, but investors can still find some with high yields that are trading at reasonable prices.

Bank of Nova Scotia

Bank of Nova Scotia (TSX:BNS) is up about 30% in the past 12 months to $78 per share at the time of writing. The stock, however, still trades well off the $93 it fetched in early 2022.

Cuts to interest rates by the Bank of Canada and the U.S. Federal Reserve have provided support for most bank stocks in recent months. Falling borrowing costs will help ease the pressure on businesses and households that are facing a jump in interest expenses that have occurred as a result of the sharp rise in interest rates in 2022 and 2023.

Reduced debt expenses should lead to lower provisions for credit losses (PCL) at Bank of Nova Scotia in the coming quarters. The bank increased its PCL considerably to cover potential loan defaults as more customers struggled to pay their debts. Lower PCL would improve profits.

Bank of Nova Scotia has a new chief executive officer (CEO) who is shifting the growth strategy away from South America to focus more on the United States and Canada. In 2024, Bank of Nova Scotia announced a US$2.8 billion deal to take a 14.9% stake in KeyCorp, a U.S. regional bank. The company also created a new executive role to drive expansion in Quebec, where the bank sees good growth potential.

Investors who buy BNS stock at the current level can get a dividend yield of 5.4%.

Enbridge

Enbridge (TSX:ENB) trades near $60 per share. The stock recently hit a multi-year high and is up 24% in 2024. Despite the big rebound, investors can still get a 6% dividend yield from ENB stock and can look forward to steady dividend growth.

Interest rate moves over the past two years are largely responsible for the pullback and subsequent recovery of Enbridge’s share price. The energy infrastructure giant uses debt to fund part of its growth program, which includes acquisitions and development projects. A sharp rise in borrowing costs in 2022 and 2023 caused some worries that Enbridge might have to trim its generous dividend. This led to the stock’s decline from $59 to $44. As soon as sentiment shifted from fears of more interest rate hikes late last year to expectations of rate cuts in 2024, ENB stock started to recover.

Enbridge is working on a $24 billion capital program and recently wrapped up its US$14 billion acquisition of three natural gas utilities in the United States. The new assets will boost revenue and cash flow to help support ongoing dividend increases. Enbridge has given investors a raise in each of the past 29 years.

The bottom line on high-yield TSX dividend stocks

Bank of Nova Scotia and Enbridge are good examples of TSX stocks that pay attractive dividends and should continue to grow. If you have some cash to put to work, these stocks deserve to be on your radar.

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.

The Motley Fool recommends Bank Of Nova Scotia and Enbridge. The Motley Fool has a disclosure policy. Fool contributor Andrew Walker has no position in any stock mentioned.

More on Retirement

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Retirement

Here’s How Much Canadians Need in Their TFSA to Retire

With one of the highest yields out there, this dividend stock could certainly help increase your TFSA and get you…

Read more »

RRSP Canadian Registered Retirement Savings Plan concept
Dividend Stocks

Here’s the Average RRSP Balance at Age 20 in Canada

It may seem like a long way away, but starting early and investing often can make retirement saving a breeze.

Read more »

senior man smiles next to a light-filled window
Retirement

Maximize Your Monthly OAS Benefit With These Tips

Supplement retirement benefits such as the OAS and CPP by holding dividend stocks such as Brookfield Infrastructure.

Read more »

A Canada Pension Plan Statement of Contributions with a 100 dollar banknote and dollar coins.
Retirement

Want the Maximum $1,346.60 CPP? Here’s the Income You Need

Most CPP users receive the average pension but have ways to boost their retirement income.

Read more »

Man in fedora smiles into camera
Retirement

The Case for Waiting Until Age 70 to Take CPP

You can get more CPP by delaying benefits until age 70. You can also supplement your benefits by holding ETFs…

Read more »

a man relaxes with his feet on a pile of books
Dividend Stocks

CPP Pensioners: Watch for These Important Updates

The CPP is an excellent tool for retirees, but be sure to stay on top of important updates like these.

Read more »

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Retirement

The Average TFSA at Age 50: Where Do You Stack Up?

The TFSA is a great way to save for retirement and during it, but what if you're still short of…

Read more »

Senior uses a laptop computer
Retirement

Here’s Why the Average RRSP for Canadians Age 65 Isn’t Enough

The RRSP is an excellent way to save for retirement. Yet most Canadians don't have enough! Here's how to catch…

Read more »