Running out of money in retirement is a fear shared by many retirees and investors alike. Fortunately, it’s also something that can be avoided entirely, provided investors start early and invest often.
It also requires picking the right stocks to invest in to avoid running out of money in retirement. To make sure that never happens, here’s a look at some of the stocks that investors can buy today and hold forever.
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You need this as a cornerstone
Every portfolio needs a defensive anchor, and that’s what Canadian Utilities (TSX: CU) offers. Utility stocks are superb defensive picks to consider, thanks to their lucrative business model.
In short, Canadian Utilities offers utility service. In exchange for that service, the utility is compensated based on terms set out in regulated contracts.
This means that irrespective of how the market fares, Canadian Utilities generates a recurring and stable revenue stream. That revenue stream allows it to invest in growth and pay out a juicy quarterly dividend.
As of the time of writing, that dividend works out to a yield of 4.79%. Prospective investors should note that even a $2,500 investment in Canadian Utilities will generate a few shares each year through reinvestments.
That’s a key point new investors often overlook. Those reinvested dividends work on autopilot to quietly grow any eventual income all on their own.
Even better, Canadian Utilities has a long-established history of providing investors with juicy annual bumps to that dividend. That streak currently extends to 53 consecutive years, the longest on the market.
Do you want to avoid running out of money in retirement? Consider Canadian Utilities.
Put the passive in passive income
Another option for those investors looking to avoid running out of money in retirement is to invest in real estate investment trusts (REITs) — more specifically, RioCan Real Estate (TSX: REI.UN).
RioCan is one of the larger REITs in Canada, with a portfolio of nearly 190 properties. Most of those properties are in major metro markets, and an increasing number of those are classed as mixed-use residential. Those mixed-use properties provide would-be investors with an opportunity to become a landlord without any of the added costs and risks.
And like a landlord collecting monthly rent, RioCan offers a tasty monthly distribution to investors. As of the time of writing, that distribution works out to a tasty 6.42%.
For prospective investors, this means a $4,000 investment will generate an additional share each month, solely through reinvestments.
Over a longer period, that could prove a lucrative way to generate an income stream to avoid running out of money in retirement.
Energize your long-term portfolio
One final option for investors looking to alleviate fears about running out of money in retirement is Enbridge (TSX: ENB). Enbridge is one of the largest energy infrastructure companies on the market.
The company is best known for its pipeline business, which generates the bulk of its revenue. That segment, which includes both crude and natural gas elements, is extremely defensive in nature.
Part of the reason why Enbridge is a defensive stock stems from the sheer necessity of the oil and gas it transports across its network. In terms of volume, Enbridge transports one-third of all North American-produced crude and one-fifth of the natural gas needs of the U.S.
Perhaps best of all, Enbridge doesn’t set prices for using its network based on those volatile commodity prices.
This means that irrespective of which way oil prices move, Enbridge still generates a recurring revenue stream that leaves room for investment and its quarterly dividend.
Enbridge also boasts a growing renewable energy portfolio and natural gas business. Both provide additional defensive appeal.
In terms of income, Enbridge offers a quarterly dividend paying a juicy 5.65%. And like Canadian Utilities, Enbridge has an established cadence of providing increases going back three decades.
In short, Enbridge is a must-have investment for any investor looking to avoid running out of money in retirement.
Avoid running out of money in retirement
No stock is without some risk, and that includes the trio of options noted above. Fortunately, the above can offer growth and defensive appeal in addition to a juicy yield.
In my opinion, one or all of the above should be core holdings in any well-diversified portfolio.
