Since retirees lack regular income, they are generally unable to absorb capital losses, which makes them risk-averse investors. They tend to protect their capital while earning a stable passive income. Therefore, retirees should consider investing in companies with solid fundamentals, consistent dividend payouts, and healthy growth prospects. Against this backdrop, let’s examine two high-quality Canadian dividend stocks that are ideal for Canadian retirees.
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Enbridge
Enbridge (TSX:ENB) is a diversified energy company that manages extensive pipeline networks, delivering oil and natural gas from major production regions to refining hubs and end-use markets across North America. The company’s tolling framework and long-term take-or-pay contracts shield its financials from market volatility, ensuring stable and predictable cash flows from its assets. It also operates low-risk natural gas utility businesses and renewable energy assets that supply power under long-term power purchase agreements (PPAs).
Meanwhile, the company generates approximately 98% of its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) from regulated assets and long-term contracts, with minimal exposure to fluctuations in commodity prices. Additionally, nearly 80% of its adjusted EBITDA is indexed to inflation, thereby protecting its financials against rising costs. Backed by stable cash flows, the company has paid uninterrupted dividends for 70 years and has increased them at an annualized rate of 9% since 1995. ENB stock currently distributes a quarterly dividend of $0.9425 per share, translating into a forward yield of 5.4% as of the September 30 closing price.
Despite the growing transition towards clean energy, the Organization of the Petroleum Exporting Countries (OPEC) projects that oil and natural gas will remain over 50% of the energy mix by 2050. Therefore, the growing energy demand could drive the demand for Enbridge’s services. Meanwhile, the company has identified $50 billion in growth opportunities and plans to invest $9 billion to $10 billion annually to expand its asset base. Amid these expansions, management expects the company’s adjusted EBITDA and DCF (discounted cash flow) per share to grow at a mid-single-digit rate over the medium term, enabling continued dividend growth.
Fortis
Another attractive dividend stock that I believe would be ideal for retirees is Fortis (TSX:FTS), which operates a highly regulated utility business. It serves 3.5 million customers across Canada, the United States, and the Caribbean, meeting their electric and natural gas needs. With most of its assets regulated and 93% tied to low-risk transmission and distribution operations, the company’s financials are less vulnerable to economic cycles and market volatility.
Besides, its expanding rate base has boosted its financial growth, thereby driving its stock price growth. Over the last 20 years, the electric and natural gas utility company has delivered an average total shareholders’ return of 9.5%. Additionally, it has raised its dividend uninterruptedly for 51 years and currently offers a healthy forward dividend yield of 3.5%.
Additionally, Fortis is expanding its rate base through its $26 billion capital investment plan, with $2.9 billion invested in the first two quarters of this year. These investments could expand its rate base at a 6.5% CAGR (compound annual growth rate), reaching $53 billion by 2029. Further, the company could also benefit from its improved operating efficiency and favourable customer rate revisions. Amid these growth prospects, Fortis’s management is optimistic about raising its dividend by 4–6% annually through 2029, thereby making Fortis an attractive option for retirees.
