Jobs that offer a traditional workplace pension have become less common over the past decade. This means that building a reliable retirement income stream from a portfolio of dividend-paying investments has become a priority for many Canadians. Fortunately, there’s no shortage of great Canadian dividend stocks to choose from.
Choosing the right Canadian dividend stocks today can help create that steady income stream tomorrow, fueled by predictable cash flow, long-term dividend growth, and defensive appeal.
Here’s a look at three Canadian dividend stocks to consider buying today that can help to build your own pension income stream.
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Fortis: Income and stability wrapped in a defensive shell
Fortis (TSX:FTS) is one of the most recognized Canadian dividend stocks on the market. The company has earned that reputation thanks to decades of boring consistency.
Utility stocks like Fortis developed that reputation thanks to their uneventful business models. In short, Fortis provides a service that’s backed by regulated contracts spanning decades. Fortis is then paid a reliable and recurring amount for providing that service.
Finally, Fortis uses that predictable revenue stream to pay its dividend and invest in growth.
Again, it’s boring, but it’s also incredibly reliable and very necessary. Utility bills aren’t something that can be traded down like retail. They also don’t witness significant growth.
When it comes to dividends, Fortis offers a quarterly dividend with a yield of 3.3% as of the time of writing. It’s not the highest yield on the market, but it’s well-covered, stable, and growing.
In fact, Fortis has provided annual upticks to that dividend for an incredible 53 consecutive years without fail.
That fact alone makes Fortis one of the top Canadian dividend stocks to own.
BMO: Long-term income from a major Canadian bank
It would be nearly impossible to mention the top Canadian dividend stocks to own to build a pension and not mention one of Canada’s big bank stocks. The banks offer reliable income, steady growth from international markets, and significant defensive appeal.
And among the big banks, Bank of Montreal (TSX:BMO) is the one for investors to consider right now. BMO is the oldest of the big banks and has been paying dividends for nearly two centuries without fail.
Like Fortis, BMO has also provided investors with annual increases, with the current streak coming in over a decade. As of the time of writing, BMO’s quarterly dividend carries a 3.2% yield.
BMO’s diversification helps it to generate consistent earnings even when certain parts of the economy slow down. That appeal is furthered by the bank’s growth into the U.S. market.
In fact, over the past several years, BMO has grown to become one of the largest lenders in that market, with a presence in 32 state markets. Not only does that provide access to millions of additional customers and billions of deposits, but it also provides diversification from its massive domestic footprint.
Enbridge: High-yield income for your DIY pension
The final pick among the top Canadian dividend stocks to consider is Enbridge (TSX:ENB). Enbridge is one of the largest energy infrastructure companies on the planet. The company is also known for its high-yield dividend and impressive payment history.
Enbridge has provided annual upticks to its dividend for over three decades without fail. The company has also paid dividends, without interruption, for over seven decades.
Like the other two Canadian dividend stocks mentioned above, Enbridge offers a reliable dividend, defensive appeal, and growth prospects.
The bulk of Enbridge’s revenue is generated from its pipeline business, which includes both crude and natural gas segments. The business generates a recurring revenue stream backed by long-term contracts that leaves room to invest in growth and pay that dividend.
Beyond its pipeline business, Enbridge also operates a renewable energy business and a natural gas utility. Both offer a similar defensive appeal along with regulated, contracted revenue streams.
How to structure your dividend-based pension
A dividend pension blends stability, yield, and long-term growth. Fortis provides the foundation with recurring, low-volatility income. BMO adds a mix of income and growth potential. And finally, Enbridge delivers the higher yield, which helps to boost the blended yield and income potential across the portfolio.
By combining these three Canadian dividend stocks, a pension-like income stream becomes possible and can grow over time.
