With no regular income to bank upon, retirees will have less appetite for risk-taking. Given their lesser risk-taking abilities, retirees should look to invest in stocks with solid underlying businesses, healthy cash flows, and consistent dividend payments. Against this backdrop, let’s look at three ideal Canadian stocks for retirees.
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Enbridge
Enbridge (TSX:ENB) is one of the most reliable dividend stocks to buy due to its stable cash flows, consistent dividend payments, and higher dividend yield. The diversified energy company transports oil and natural gas across North America through regulated cost-of-service tolling frameworks and long-term take-or-pay contracts. It is also North America’s largest natural gas utility company and has a substantial presence in the clean energy production business. It sells most of the energy produced from these facilities through long-term PPAs (power-purchase agreements). So, the company’s financials are less susceptible to market volatility, thus generating stable and predictable cash flows and allowing it to reward its shareholders with consistent dividend payments.
Enbridge has been uninterruptedly paying dividends for 69 years and raising them for the 30 previous years. It offers a healthy forward dividend yield of 5.95%. Moreover, the company’s continued investments in expanding its midstream, renewable, and utility assets could drive its financials in the coming years. The company’s management projects its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) to grow 7-9% annually through 2027, thus making its future dividend payouts safer.
Bank of Nova Scotia
Another Canadian dividend stock ideal for retirees is Bank of Nova Scotia (TSX:BNS), which has been paying dividends since 1833. Given its wide range of financial services and extensive international presence, the company generates healthy cash flows irrespective of the broader market conditions. These stable cash flows have allowed it to pay dividends uninterruptedly. Its current quarterly payout of $1.06/share translates into a juicy forward dividend yield of 5.82% as of the February 6th closing price.
Moreover, the Toronto-based financial services company focuses on improving its noncore markets’ profitability. It recently signed an agreement to transfer its Colombia, Costa Rica, and Panama businesses to Davivienda in exchange for a 20% stake in the combined entity. The transaction could improve BNS’s CET1 (common equity tier-one) ratio by 10-15 basis points with the reduction in risk-weighted assets. Further, BNS looks to expand its capital deployment in the United States through strategic investment in KeyCorp. Considering all these factors, I believe BNS could continue paying dividends at a healthier rate.
Telus
My final pick is Telus (TSX:T). This telecom giant has enhanced its shareholders’ value by returning $26 billion through dividends and share repurchases since 2004. It has raised its dividends 27 times since May 2011 and currently offers an attractive dividend yield of 7.7%. Amid recurring revenue streams and expanding customer bases, the company enjoys healthy cash flows, allowing it to reward its shareholders with consistent dividend growth.
Moreover, Telus continues to expand its 5G and broadband infrastructure to increase its customer base amid the rising demand for telecom services. Also, its bundled services are gaining traction among its customers and could aid in increasing its ARPU (average revenue per user). The company is also witnessing positive outcomes from its strategic investments in high-growth segments: TELUS Health and TELUS Agriculture & Consumer Goods. Also, the company’s streamlining of operations and falling interest rates could boost its profitability and cash flows. Considering all these factors, I believe Telus is well-equipped to continue rewarding its shareholders with healthy dividends, thus making it an ideal buy for retirees.
