With no regular income, retirees will have less appetite for risk-taking. They would like to invest in fundamentally strong stocks that are less prone to market volatility and deliver a stable passive income. Against this backdrop, let’s look at my three top picks that offer dividends at healthy yields.
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Enbridge
Enbridge (TSX: ENB) has rewarded its shareholders with consistent dividend payouts and growth, making it ideal for retirees. Its tolling-frame work and long-term take-or-pay contracts to transport oil and natural gas across North America shield its financials from macroeconomic fluctuations. Besides, its PPAs (power-purchase agreements)-backed renewable energy assets and rate-regulated utility businesses deliver stable and predictable financials and cash flows, irrespective of the broader market conditions. Supported by these solid cash flows, the energy infrastructure company has paid dividends uninterruptedly for 70 years. It has also raised its dividends at an annualized rate of 9% for the previous 30 years and currently offers a juicy forward dividend yield of 6.09%.
Moreover, Enbridge is planning to make a capital investment of $8-$9 billion annually, expanding its asset base. The recent acquisition of three natural gas utility assets in the United States could further strengthen its cash flows and lower business risks. Its financial position also looks healthy, with its liquidity at $14.4 billion at the end of last year. Considering its impressive underlying business, healthy growth prospects, and solid financial position, Enbridge is well-equipped to continue with its dividend growth, thus making it an excellent buy.
Bank of Nova Scotia
Bank of Nova Scotia (TSX: BNS) is another Canadian stock ideal for retirees due to its uninterrupted dividend-paying record, dating back to 1833. It generates stable and predictable cash flows through its financial services, which it offers in over 20 countries. Its quarterly dividend of $1.06/share translates into a forward dividend yield of 6.49%.
Moreover, BNS focuses on strengthening its business in North America while optimizing its operations in other markets to boost profitability. On the back of this strategy, the bank acquired a 14.9% stake in KeyCrop, which would increase its capital deployment in its priority market. Further, the company is working on transferring its banking operations in Colombia, Costa Rica, and Panama to Davivienda and, in turn, would receive around 20% stake in Davivienda. The company’s management expects to complete the transaction, which requires certain regulatory approvals, by the end of this year. Considering all these factors, I expect BNS’s cash flows and financials to grow in the coming quarters, allowing it to continue its dividend growth.
Telus
Telus (TSX: T) is my final pick. The Vancouver-based telco has raised its dividends 27 times since initiating its dividend-growth program in May 2011. Also, the company has returned $27 billion to its shareholders since 2004 through dividend payouts and share repurchases. Its strong cash flows from recurring revenue streams have facilitated its consistent dividend growth. Its forward dividend yield currently stands at a juicy 7.85%.
Moreover, the demand for telecommunication services is rising amid growing data consumption and technological advancements, such as 5G and AI (artificial intelligence). Amid the growth in demand, Telus continues to expand its 5G and broadband infrastructure and has planned to make a capital investment of $2.5 billion this year. Further, its other segments, Telus Health and Telus Agriculture and Consumer Goods, are also growing at an impressive rate. Considering all these factors, I believe Telus could continue rewarding its shareholders with healthy dividends.
