If you aim to protect your retirement income, the focus should be on stocks offering stability, income, and capital preservation. Investing in high-quality Canadian dividend stocks with defensive business models will ensure a steady stream of cash and shield your portfolio from market volatility.
With that in mind, here are two Canadian stocks that can help you protect your retirement income by offering sustainable payouts.
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Fortis
Investors seeking stocks to protect their retirement income could consider Fortis (TSX: FTS) stock. This leading electric and gas utility company operates a defensive model and has a history of rewarding its shareholders with steady dividend growth. Thanks to its low-risk earnings base and growing dividends, Fortis is a no-brainer stock for income seekers in all market conditions.
With 10 regulated utilities across North America, Fortis earns most of its income from its rate-regulated assets. Further, its high-quality assets generate highly predictable and growing cash flow, which supports its quarterly distributions. In addition, this blue-chip company primarily focuses on energy transmission and distribution, which remains largely immune to the risks associated with power generation, adding stability to its operations.
Thanks to its low-risk, regulated business model and growing rate base, Fortis has increased its dividend for 51 consecutive years. Moreover, FTS stock currently offers a well-protected yield of 3.6%.
Looking ahead, Fortis’ growing rate base is expected to drive steady earnings growth and support higher dividend payouts. Management projects its rate base will expand at a compound annual growth rate (CAGR) of 6.5% through 2029, giving it the capacity to raise dividends by 4% to 6% each year.
At the same time, Fortis is well-positioned to benefit from rising electricity demand, particularly from industries like manufacturing and data centres.
In short, Fortis is set to generate strong earnings and cash flow, which should continue driving its dividend growth. And with its stable, defensive business model, it will add balance and resilience to your portfolio.
Enbridge
Enbridge (TSX: ENB) is a reliable dividend stock for retirees seeking to protect their income. While operating in a volatile oil and gas sector, this energy infrastructure provider’s vast network of pipelines and natural gas assets connects major demand and supply zones in North America, ensuring high asset utilization and resulting in higher earnings and distributable cash flow (DCF).
Nearly all of Enbridge’s EBITDA is secured through regulated returns or long-term contracts, shielding it from volatile commodity prices. This framework delivers reliable DCF, the foundation for its dividends. Moreover, it also maintains a sustainable payout ratio of 60% to 70% of DCF.
This strategy has paid off for decades. Since 1995, Enbridge has increased its dividend every year, navigating recessions, market crashes, and regulatory shifts. Further, its quarterly payout of $0.9425 per share reflects an attractive yield of 5.5%.
Enbridge’s growing scale and diversification suggest that it will pay and increase its dividend in the coming years. About 80% of its EBITDA is insulated from inflation through regulated mechanisms, while its assets support critical energy demand across power generation, industrial hubs, and data centres. Beyond traditional pipelines, the company is also building a foothold in renewables, securing contracts that will support its growth.
Overall, Enbridge is a reliable stock for investors looking for steady income without taking too much risk.
