Canadian retirees look for ways to supplement their retirement income in their golden years. Stock market investing, specifically dividend investing, can be an excellent way to compensate for the shortfall in standard pensions. The top Canadian dividend stocks offering high yields can present an exceptional way to generate steady income.
If you create and build a portfolio of reliable dividend stocks in a Tax-Free Savings Account (TFSA), it can be the perfect self-directed pension for your retirement. The money you earn from investments held in a TFSA does not incur taxes. You can withdraw the amount as needed to handle expenses you might otherwise think twice about as a retiree. The best part? Your TFSA earnings won’t trigger any clawbacks with your standard pension programs.
Against this backdrop, I will discuss two high-quality dividend stocks that can be solid foundations for such a TFSA portfolio.
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Enbridge
Enbridge (TSX: ENB) is a darling investment for many Canadian retirees. The $150.73 billion market-cap giant is a diversified energy company. It owns an extensive network of midstream assets that are responsible for transporting a lot of the hydrocarbons produced and consumed in North America. Besides the energy industry, it has a regulated natural gas utility business and Canada’s largest natural gas distribution under its belt.
The defensive nature of its utility segment offers stable cash flows that can offset the volatility of energy transportation. To make things even better, Enbridge has a growing renewable energy portfolio that sets it up for a stronger future in a greener energy industry. As of this writing, ENB stock trades for $69.11 per share and boasts a 5.45% dividend yield. The stock has increased payouts for over 30 consecutive years, making it a dream come true for investors seeking passive income that can beat inflation.
Telus
Telus (TSX: T) is another mainstay in many investor portfolios. The $33.49 billion market-cap company is a giant in the Canadian telecom sector. It is one of the Big Three Telcos in Canada, accounting for around a third of the market share with its services nationwide. If you’re looking to line your nest egg till retirement, Telus stock can be an excellent investment.
The business’s offerings include wireless and wireline internet, TV, and several other revenue streams that make it a highly defensive investment. The company is actively expanding services and upgrading its infrastructure. It is also targeting various niche markets with digital solutions to further diversify its revenue streams. Telus stock can be an excellent way to future-proof dividend income.
As of this writing, Telus stock trades for $21.82 per share and boasts a 7.63% dividend yield that you can lock into your portfolio today.
Foolish takeaway
When you’re at the stage where you are still building up your TFSA portfolio, it might feel tempting to withdraw the cash lining your account balance.
Instead of withdrawing the money, I would advise reinvesting it through a dividend-reinvestment program. This way, you can buy more shares of dividend stocks and unlock the power of compounding to accelerate your wealth growth.
By the time you retire, you can have a sizeable nest egg that generates a lot of income. You can then start withdrawing the extra money whenever you need without worrying about paying taxes on it.
