Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

3 Low-Risk Stocks for Your Retirement Portfolio

Published 2022-03-15, 02:54 p/m
© Reuters.  3 Low-Risk Stocks for Your Retirement Portfolio
AQN
-
FTS
-

Retirees who plan to earn a steady dividend income need to be cautious nowadays. The uncertainty related to the pandemic and the ongoing Russia-Ukraine conflict will likely keep the volatility elevated in the market. Further, fear of inflation and interest rate hikes could pressure the equity market.

Nevertheless, a few dividend-paying Canadian companies continue to generate stellar cash flows and enhance their shareholders’ returns through higher dividend payments. So if you are considering adding stocks to your retirement portfolio, keep Fortis (TSX:TSX:FTS)(NYSE:FTS), Algonquin Power & Utilities (TSX:AQN)(NYSE:AQN), and TC Energy (TSX:TSX:TRP)(NYSE:TRP) on your radar.

These companies have been consistently paying and increasing their dividends. Moreover, they have resilient cash flows, implying investors can rely on them for regular income. Let’s look at these stocks in detail.

Fortis Fortis is unquestionably a top investment in all market conditions. Its low-risk and high-quality asset base has consistently generated predictable cash flows and supported its payouts. For context, Fortis has uninterruptedly increased its dividends in the last 48 consecutive years. Moreover, thanks to the increased visibility over its future cash flows, it projects to increase its dividends further at a decent rate.

Fortis operates 10 regulated utility businesses that account for almost all of its earnings. This implies that its payouts are well protected. Moreover, the company projects its rate base to continue to increase at a compound annual growth rate (CAGR) of 6% in the medium term, which will drive its EBITDA and dividend payments.

Overall, its low-risk business, growing rate base, expansion of renewables capacity, and investments in infrastructure provide a solid base for earnings growth. Fortis expects to grow its dividends by 6% each year through 2025. Moreover, it offers a dividend yield of 3.6%.

Algonquin Power & Utilities Speaking of low-risk stocks, Algonquin Power & Utilities is another top bet to generate worry-free income. Its conservative business mix, long-term contracts, and regulated asset base help it to generate predictable cash flows and drive dividend payments.

Notably, Algonquin Power & Utilities’ earnings have grown at a decent rate over the past several years. Meanwhile, the company has raised dividends for 11 years in a row.

Looking ahead, Algonquin Power & Utilities expects its rate base to increase at a mid-teens rate, which will expand its high-quality earnings base. Further, the expansion of its renewable capacity bodes well for future growth. The company expects its adjusted net income to increase by 7%-9% over the next five years, implying that its dividends could continue to grow.

TC Energy Energy infrastructure company TC Energy owns a resilient portfolio of regulated and contracted assets that support its dividend payouts. Notably, TC Energy has increased dividends for 22 consecutive years. Further, it expects to increase it by 3%-5% in the future years.

Notably, TC Energy offers a solid dividend yield of over 5% at current price levels.

Its diversified asset base, high utilization rate, and momentum with existing assets indicate that it could continue to deliver strong earnings. Furthermore, $24 billion secured capital project revenue escalators and additional sanctioned projects will likely drive its financials, in turn, its dividends.

The post 3 Low-Risk Stocks for Your Retirement Portfolio appeared first on The Motley Fool Canada.

Fool contributor Sneha Nahata has no position in any of the stocks mentioned. The Motley Fool recommends FORTIS INC.

This Article Was First Published on The Motley Fool

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.