The TSX is great place to find dividend income for retirement. Yields tend to be higher in Canada and you can choose from a wide mix of sectors and industries. Here’s why stocks like Fortis (TSX: FTS), Canadian Natural Resources (TSX: CNQ), Royal Bank of Canada (TSX: RY), and Granite Real Estate Investment Trust (TSX: GRT.UN) are worth a look.
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Fortis: A top dividend stock for retirees
Fortis may not be the most exciting company. However, when the market turns volatile, it becomes an investor’s beacon of safety.
Fortis has one of the most defensive businesses in Canada. Nine regulated transmission/distribution utilities across North America provide very sustainable and predictable earnings. Fortis also has a foreseeable 7% annual growth target for the five years ahead.
You can’t get better than 52 years of consecutive dividend increases for reliability. Certainly, the stock trades at a premium today and lower yield of 3.4%. However, this is the best place to hide when the stock market is volatile.
Canadian Natural Resources: Up near the top
If Fortis is the best, Canadian Natural Resources has to be a close second. Certainly, it is in the energy business, so it has higher exposure to fluctuating commodity prices. With oil prices hitting over $100 per barrel recently, that is certainly a positive. However, that can swing the other way, so retirees needs be aware that this stock is a little more volatile.
Yet, Canadian Natural has built its business to be sustained for years ahead. It has decades of energy reserves, industry-leading low-cost operations, and a fortress (and quickly improving) balance sheet.
Canadian Natural has paid 26 consecutive annual dividend increases. Like Fortis, it’s a little pricey today. It only yields 3.7%. However, you might be able to pick it up on an energy price pullback.
Royal Bank of Canada: A dividend staple like Fortis
Royal Bank of Canada is another dividend legend that sits up at the top with Fortis. With a market cap of $305 billion, it is Canada’s largest bank. It is arguably one of Canada’s best banks as well.
Recent mistakes by competitors have allowed Royal to take market share and further entrench its dominant position. Its focus on its strengths (which include retail/commercial banking, wealth management, and capital markets) has paid off with a top return on equity ratio, a leading balance sheet, and strong capital ratios.
Since 2011, Royal Bank has grown its dividend by 140%! That is an average dividend growth rate just below 10%. Right now, Royal stock yields 3%. However, if the economy tightens due to recent geopolitical risks, it will likely be one of the safest banks to hold.
Granite REIT: A top stock for monthly income
If you want exposure to real estate, but safety like Fortis, Granite Real Estate Investment Trust is an attractive dividend stock.
Like Fortis stock, Granite is best-in-class in its sector. The REIT has a highly attractive portfolio of industrial and logistics properties that span Canada, the United States, and Europe. Its occupancy sits over 98%, and it has a track record of growing cash flows per unit by the mid-to-high single digits.
Granite has a sector-leading balance sheet that affords it to be opportunistic in acquisitions and share buybacks when the stock is cheap. Granite has raised its distribution for 15 consecutive years. It yields nearly 4.5% after a recent pullback and looks like a good buy for long-term investors. It pays distributions monthly, so it’s a solid stock for a retiree’s monthly income supplement.
