Investors looking to generate steady passive income could consider dividend stocks. But for Canadian retirees, the focus should not only be on owning shares that pay dividends. The primary objective is to secure reliable income stocks that can withstand economic cycles and market fluctuations. This means prioritizing companies with strong fundamentals, time-tested business models, consistent profitability, and a proven record of paying and growing their dividends year after year.
Of course, no investment comes without risk. Yet, dividend stocks supported by strong fundamentals often provide greater stability than more speculative assets. They tend to weather market volatility better, offering a dependable income even during uncertain times.
Thus, for retirees seeking both income and peace of mind, here are three Canadian dividend stocks to consider now.
Fortis
Fortis (TSX:FTS) is one of the most reliable dividend stocks for retirees to generate regular income. This utility company operates a rate-regulated business, generating predictable cash flows regardless of market conditions. Additionally, it focuses on energy transmission and distribution, which reduces exposure to risks associated with power generation and fluctuations in commodity prices.
Thanks to its defensive business model and growing cash flow, Fortis has consistently raised its dividend payments for 52 years. Currently, FTS offers a yield of about 3.6%.
Looking ahead, Fortis’s $28.8 billion capital plan will enable the company to expand its regulated asset base and strengthen its earnings. Management projects the company’s rate base to expand at a compound annual growth rate (CAGR) of 7% through 2030. This will support steady earnings growth and drive a 4% to 6% increase in dividends during the same period.
Furthermore, Fortis is well-positioned to benefit from the increasing demand for electricity from data centres, mining, and the manufacturing industry, enabling it to deliver strong growth in the years ahead.
Telus
Telus (TSX:T) is a compelling dividend stock to own for retirement income. This Canadian telecom leader has a history of consistently paying and growing its dividends through the multi-year dividend-growth program. Since 2004, Telus has paid over $24 billion in dividends. Additionally, the company has raised its quarterly dividend multiple times since 2011, and offers a high yield of over 8%.
Telus’s payouts are supported by its ability to consistently deliver profitable growth and strong cash flow growth. Also, it maintains a sustainable payout ratio of 60-75% of free cash flow. The company expects its annual dividend growth to be in the range of 3-8% through 2028.
Its robust wireless network, bundled offerings, and expansion of the TELUS PureFibre broadband infrastructure will drive its subscriber base, support customer retention, and keep churn rate low. Additionally, its focus on acquiring margin-accretive customers and implementing cost-reduction initiatives bodes well for future earnings growth. Moreover, its revenue diversification initiatives are supporting its growth and will drive future distributions.
Brookfield Renewable Partners
Brookfield Renewable Partners (TSX:BEP.UN) is a dependable dividend stock for retirement. It is one of the leading players in the renewable energy sector, boasting a strong track record of consistent dividend growth. Its payouts are supported by its long-term contracts, robust cash flow, and inflation-linked revenues. Moreover, it offers an attractive yield of 4.8%.
The company is well-positioned to benefit from surging global demand for clean energy, driven by digitalization and the rise of AI. Its strategic investments in technologies that enhance grid reliability and accelerate the adoption of low-cost wind and solar energy ensure a solid growth trajectory. Brookfield’s diversified portfolio, spanning hydro, solar, wind, battery storage, and nuclear, provides both stability and opportunities for expansion.
The company’s efficient operations, stable revenues from contracted assets, and disciplined approach to capital recycling reflect its ability to sustain and grow dividends. With management targeting annual dividend increases between 5% and 9%, Brookfield Renewable Partners offers investors a combination of dependable income and long-term capital appreciation, making it an appealing addition to any retirement-focused portfolio.
