2 Dividend Aristocrats That Could Set You Up for Life

Do you desire long-term income stream minus the stress from market volatility? The Fortis stock and North West Company stock are two dividend aristocrats with defensive qualities that could set you up for life.

| More on:

The vaccine breakthrough came in December 2020, yet provinces in Canada are bracing to return to hard lockdowns. COVID-19 cases are rising again. Prime Minister Justin Trudeau urges vigilance over the holidays, despite the start of a complex vaccination project.

In the stock market, income investors still worry about a market crash. COVID-19’s second wave could unsettle the landscape and trigger another selloff. If you’re saving for the long term, seek the safety of Dividend Aristocrats. Fortis (TSX:FTS)(NYSE:FTS) and North West Company (TSX:NWC) could set you up for life.

Rare find

Utility stock Fortis is probably in the investment portfolio of nearly all risk-averse investors. The company doesn’t pay the highest dividend, but it indeed offers capital protection and dividend safety. You’re buying peace of mind more than anything else.

The business model is low-risk and recession resistant, because 97% of the company’s utility assets are regulated. Fortis has been operating since 1885 and engages in electric transmission, energy distribution, and regulated power generation. Its market cap stands at $24.38 billion today.

Fortis is a perennial top-of-mind choice of income investors. The defensive asset has increased its dividends for 46 straight years. Management plans to grow dividends by 6% annually through 2024. The goal is achievable, given the secure cash flow and insulation from economic fluctuations. If you invest now, the dividend yield is 3.88%. Your income stream should be lasting for years on end. Fortis is a rare find.

Niche play

The North West Company is a consumer-defensive stock and is as reliable as Fortis when it comes to dividend payouts. It has a market cap of $1.64 billion with supermarket format stores, wholesaling, and retailing as its core businesses. Allied operations are shipping and air cargo.

One compelling reason to invest in North West is that it operates in a near monopoly. The company caters to the needs of underserved rural communities and neighborhoods. Its services start in northern Canada and western Canada and go as far as rural Alaska, the Caribbean, and the South Pacific islands.

North West’s history dates back to 1668 — 352 years ago. Because its outbound supply chain is well established, it has no difficulty reaching remote stores or pursuing expansion opportunities. Over the last 10 years, the compounded CAGR per year is 6%.

The current share price is $33.66, which represents a 28% year to date. If you initiate a position today, North West pays a fantastic 4.29% dividend. Furthermore, the business model is proven and recession-proof. Assuming you invest your life savings of $280,000, the lifetime monthly income is $1,001.

Same pedigree

If there’s elevated market volatility, the best counter is to move to safer ground. Fortis and North West Company are not only Dividend Aristocrats but must-own assets for the long haul. The companies come from different sectors but possess the same defensive qualities and lasting income potentials.

Fortis’s deep moat stems from its extensive infrastructure that delivers cost-effective energy to homes and businesses throughout North America. North West rules the retail industry in hard-to-reach locations and geographically challenged communities. Having both in your portfolio should calm your fears and protect your capital against market disruptions.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

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

More on Dividend Stocks

Technology
Dividend Stocks

TFSA Investors: 3 Dividend Stocks I’d Buy and Hold Forever

These TSX dividend stocks are likely to help TFSA investors earn steady and growing passive income for decades.

Read more »

four people hold happy emoji masks
Dividend Stocks

Love Dividend Growth? Check Out These 2 Income-Boosting Stocks

National Bank of Canada (TSX:NA) and another Canadian dividend-growth stock are looking like a bargain going into December 2024.

Read more »

An investor uses a tablet
Dividend Stocks

A Dividend Giant I’d Buy Over Enbridge Stock Right Now

Enbridge stock may seem like the best of the best in terms of dividends, but honestly this one is far…

Read more »

how to save money
Dividend Stocks

Got $1,000? The 3 Best Canadian Stocks to Buy Right Now

If you're looking for some cash flow from your $1,000 investment, these are the ideal investments to make.

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

A Dividend Giant I’d Buy Over BCE Stock Right Now

Don't get sucked in by BCE's 10% dividend -- the stock is a total yield trap. Buy this instead.

Read more »

Retirees sip their morning coffee outside.
Dividend Stocks

Consider Sienna Senior Living for a Stable Monthly Income

Buying this Canadian dividend stock could help you build a dependable monthly income portfolio for the long term.

Read more »

Female raising hands enjoying vacation, standing on background of blue cloudless sky.
Dividend Stocks

Best Beginner-Friendly Stocks to Buy Now in Canada

These top TSX stocks have delivered attractive long-term returns.

Read more »

customer uses bank ATM
Dividend Stocks

Here’s the Average TFSA and RRSP at Age 65 for Canadians

The TFSA and RRSP together make an ideal pairing for retirees, but is the average even enough?

Read more »