With no regular income, seniors fear running out of cash during their twilight years. However, they can overcome this fear by making suitable arrangements to earn steady income streams that can take care of their expenses. With interest rates falling, investing in quality dividend stocks with reliable cash flows and consistent dividend payments would be an excellent strategy. Against this backdrop, let’s look at three top dividend stocks that are ideal for retirees.
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Fortis
Fortis (TSX: FTS) is an ideal stock for retirees due to its low-risk regulated utility assets, reliable cash flows, and consistent dividend growth. The company operates 10 regulated utility assets, with around 93% of its assets engaged in the low-risk transmission and distribution business. These regulated and low-risk assets shield the company’s financials from commodity price fluctuations and market volatility, thus generating healthy cash flows and rewarding its shareholders with consistent dividend growth. The electric and natural gas utility company has raised dividends uninterruptedly for 51 years and currently offers a healthy dividend yield of 3.7%.
Moreover, Fortis is well-positioned to continue its dividend growth, given its expanding rate base, rising customer rates, and improving operating efficiency. Its $26 billion capital investment plan will grow its rate base at an annualized rate of 6.5% through 2029 to $53 billion. Besides, the company expects to meet 70% of its funding through the cash generated from its operations and dividend reinvestment plans. So, these investments would not substantially raise its debt levels, thus maintaining its interest expenses. Amid these growth initiatives, Fortis’s management expects to increase its dividends by 4–6% annually through 2029.
Enbridge
Enbridge (TSX: ENB) is another Canadian stock that retirees should consider buying due to its regulated cash flows, impressive track record of dividend payment and growth, and high dividend yield. Its regulated midstream business, low-risk utility assets, and PPA (power purchase agreement)-backed renewable energy-producing facilities shield its financials from market volatilities, with the company meeting its guidance for 19 consecutive years. Also, the company has paid dividends in the previous 70 years and has increased its dividends at an annualized rate of 9% since 1995. ENB’s forward dividend yield stands at 6% as of its May 23 closing price.
Moreover, Enbridge’s management has identified $50 billion worth of growth opportunities across its four business segments through 2030. It is also making an annualized capital investment of $9–10 billion, expanding its rate base and supporting its financial growth. The company’s acquisition of three utility assets for $19 billion last year has strengthened its cash flows, thus facilitating its future dividend growth.
Bank of Nova Scotia
Bank of Canada (TSX: BNS) offers various financial services in over 20 countries. Given its diversified revenue stream, the company enjoys healthy cash flows, supporting its consistent dividend payouts since 1833. The company has also raised its dividends at an annualized rate of 5% over the last 10 years and currently offers a forward dividend yield of 5.9%.
The financial services company has adopted a strategy of expanding its business in highly profitable North American markets while focusing on consolidating its operations and improving its operating efficiency in Latin America. It has acquired a 14.9% stake in KeyCorp, thus efficiently deploying its capital in the United States and boosting its shareholder value. Also, falling interest rates could boost economic activities, which could drive credit demand and benefit the company. So, I believe BNS is well-equipped to continue paying dividends at a healthier rate, making it an ideal buy for retirees.
