Canadian dividend-paying stocks can help retirees generate a steady income stream to cover day-to-day expenses. However, dividends aren’t guaranteed, as companies may reduce or suspend payouts when they face financial difficulties. For this reason, retirees should focus on dependable dividend stocks backed by resilient business models, consistent earnings, strong cash flow, and the financial strength to support payouts.
With these factors in mind, here is a 5.8% dividend stock that can pay you through retirement.
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The 5.8% dividend stock offering worry-free income
While the TSX has several dividend stocks retirees can rely on, Enbridge (TSX: ENB) stands out for its 5.8% yield, a long record of dividend increases, and the potential to keep rewarding shareholders with higher annual payouts.
The energy infrastructure company benefits from a diversified business model and a relatively low-risk operating structure, which help support the consistency of its dividend payments.
Enbridge has distributed dividends for more than 70 years and has increased its annual payouts every year since 1995. Its diverse operations support its reliable payouts. It operates liquid pipelines, natural gas infrastructure, gas utilities, and renewable energy. This diverse revenue base helps Enbridge capitalize on energy demand and deliver solid earnings and distributable cash flow (DCF).
Also, most of Enbridge’s earnings before interest, taxes, depreciation, and amortization (EBITDA) come from regulated businesses or long-term take-or-pay contracts. These arrangements help shield the company from fluctuations in oil and natural gas prices, allowing it to generate relatively consistent cash flow even during periods of energy market volatility.
With diversified operations and growing earnings and DCF per share, Enbridge is well positioned to keep paying and growing its dividend. Furthermore, its targeted dividend payout ratio of 60% to 70% of DCF is sustainable in the long term, making it a worry-free income stock for retirees.
Enbridge is well-positioned to pay you through retirement
Enbridge appears well-positioned to generate consistent earnings and increase DCF per share over time. This will help it maintain and grow its distributions. As new projects come online, Enbridge expects them to strengthen its existing operations and support its long-term growth plans.
Further, Enbridge’s $41 billion backlog of secured capital projects will support its payouts. Many of these projects are backed by long-term contracts or regulated business models, helping the company maintain a more predictable stream of earnings. Its existing assets also continue to generate recurring cash flow, thanks in part to high utilization rates.
Enbridge could also benefit from rising energy demand, particularly from data centers and increased natural gas consumption, as well as continued investment in renewable energy.
Given its solid prospects, ENB’s adjusted earnings per share (EPS) are forecast to grow 4% to 6% in 2026.
In the long run, management aims for average annual growth of 5% in adjusted EBITDA, EPS, and DCF per share. Its growing earnings and DCF per share will help sustain its dividend growth streak.
Overall, Enbridge’s 5.8% yield, diversified operations, predictable cash flows, solid project backlog, and rising energy demand make it a valuable addition to a retirement income portfolio.
