Retirees are risk-averse investors because they will not have a regular income to rely upon. Therefore, they should invest in quality dividend stocks with solid underlying businesses and dividend payments. Given their regular payouts, these companies are less prone to market volatility, thus stabilizing their portfolios. Dividend stocks will also help retirees earn a stable passive income, irrespective of the broader market conditions. Against this backdrop, let’s look at two high-yielding dividend stocks that are ideal for retirees.
Enbridge
Enbridge (TSX:ENB) is a diversified energy infrastructure company focusing on transporting oil and natural gas across North America. It is also involved in utility and renewable energy businesses. Its resilient regulated business and asset base expansion through capital investments have boosted its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) and DCF (discounted cash flows). These healthy cash flows have allowed the company to pay dividends uninterrupted for 69 years while raising the same for the previous 30 years. The Calgary-based energy company offers a healthy forward dividend yield of 5.85% as of the January 21st closing price.
Further, the diversified energy company continues to expand its asset base with its $27 billion secured capital investments. Meanwhile, it plans to put $6 billion of projects into service this year. Along with these asset base expansions, favourable revisions of toll prices, higher distribution charges, and customer base expansions could boost its financials. The company recently acquired three natural gas utility assets in the United States, lowering its business risks and increasing its cash flows.
Amid these growth initiatives, Enbridge projects its 2025 adjusted EBITDA to come between $19.4 billion and $20 billion. The midpoint of the guidance represents a 9.4% increase from the midpoint of the 2024 guidance. Also, the company’s management hopes to grow its adjusted EBITDA at 7-9% annually in the coming years. Amid these growth prospects, Enbridge could continue its dividend growth. Also, its valuation looks reasonable, with its NTM (next-12-month) price-to-earnings multiple at 21.6. Considering all these factors, I believe Enbridge would be an ideal buy for retirees.
Bank of Nova Scotia
Retirees should also consider Bank of Nova Scotia (TSX:BNS) due to its consistent dividend payment. Given its diversified revenue streams and extensive geographical presence across North and South America, the financial service company generates healthy cash flows, allowing it to pay dividends consistently since 1833. Also, the company has raised its dividends at an annualized rate of 4.5% for the last 10 years and currently offers a healthy dividend yield of 5.73%.
Moreover, BNS recently signed an agreement to transfer its Colombia, Costa Rica, and Panama operations to Davivienda in exchange for owning a 20% stake in the combined entity. This transaction would support BNS’s strategy to improve its operational efficiency in its noncore markets. Its common equity tier-one ratio could also benefit 10-15 basis points amid a decline in risk-weighted assets.
Further, the company acquired an additional 10% stake in KeyCorp to raise its ownership stake to 14.9%. This strategic investment could help BNS increase its capital deployment in the United States, a high-growth market. These growth initiatives could continue to boost BNS’s financials and cash flows, thus allowing BNS to continue rewarding its shareholders with healthy dividends. The company’s current NTM price-to-earnings multiple stands at 10.6, making it an excellent buy for retirees.
