Considering how expensive everything is now, it is safe to say that one of the most important things Canadians think of as they go to sleep is their finances. Rather, it is the one thing keeping plenty of Canadians up at night. Whether you’re making a retirement plan, planning to pay your mortgage off, or simply shopping for groceries, finances are increasingly stressful these days.
If only there were a way to make money while you’re asleep. Technically, that’s not impossible. By investing in and building a portfolio of high-quality dividend stocks, you can actually achieve that. While it might be a bit slow to deliver returns at the start, disciplined and intelligent investing can make you a much wealthier individual down the line.
The TSX has no shortage of dividend stocks. The real key to success is identifying stocks with the potential to keep paying for decades down the line. Today, I will discuss two dividend stocks that you can consider as foundations for such a portfolio.
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Capital Power
Capital Power Corp. (TSX: CPX) is a $10.6 billion market-cap North American power producer headquartered in Calgary. The company primarily engages in developing, acquiring, and operating power plants. It also owns a portfolio of natural gas, coal, solid fuel, and renewable energy generating facilities. Most of the company’s revenue comes through the sale of natural gas and the electricity it produces.
As of this writing, CPX stock trades for $67.89 per share and pays investors $0.691 per share, each quarter, translating to a 4.1% dividend yield. Capital Power stock also has a 12-year track record for dividend growth. The stock expects more growth, as the company continues to expand its portfolio in the US.
While it is not immune to the impact of commodity prices, Capital Power stock looks like a solid bet for investors seeking long-term holdings with reliable dividends.
BCE
BCE Inc. (TSX: BCE) is a $30.3 billion market-cap giant in the Canadian telco sector. It is one of the Big Three Canadian telcos, and a pioneer for 5G infrastructure and technology in Canada. BCE accounts for around a third of the market share for wireless carriers in Canada. The company also has a sizeable media segment, which gives it an advantage over its closest industry peers.
BCE recently slashed its dividends to align with more sustainable financial practices. The decision was to help BCE’s overall financial situation, which has struggled due to headwinds in recent months. Despite the cut, it pays investors $0.4375 per share each quarter, translating to a 5.4% dividend yield. As of this writing, BCE stock trades for $32.53 per share and I think it is too attractively priced to ignore.
Foolish takeaway
Building a sizeable portfolio of income-generating assets like dividend stocks can be an excellent way to create a passive income stream. A collection of solid and reliable dividend stocks held in a Tax-Free Savings Account (TFSA) can make things even better. The tax-sheltered status of the account means that you do not have to pay any of the earnings from dividends or capital gains as taxes.
By reinvesting the dividends you earn to buy more shares, you can unlock the power of compounding to accelerate your wealth growth. Capital Power stock and BCE stock can be formidable long-term holdings when building a dividend-focused portfolio in a self-directed TFSA.
