Early retirement is a pipedream for most people except for a few who can leave the workplace on or before 60 years old. The hurdle in retirement is being financially comfortable for the rest of your sunset years. Canadians have a good chance of making it a reality through tax-advantaged savings accounts.
The Registered Retirement Savings Plan (RRSP) and Tax-Free Savings Account (TFSA) are excellent tools for building retirement wealth or a substantial nest egg. Most RRSP and TFSA investors prefer to hold dividend stocks not so much for capital gains but for reliable passive income streams.
High-dividend stocks are available on the TSX for those with early retirement goals. Furthermore, you can invest in three dividend aristocrats of different sizes, or market values, today.
Small-cap
Exco Technologies Limited (TSX:XTC) in the auto parts industry has raised its dividends for 17 consecutive years. This $301.5 million company is a designer, developer, and manufacturer of automotive interior trim components and assemblies. The products are primarily for passenger and light truck vehicles.
XTC trades at $7.75 per share and pays a quarterly dividend; the current dividend yield is 5.3%. Management reported impressive results for Q1 fiscal 2023. Its President and CEO, Darren Kirk, said, “Exco’s results showed strong improvement as automotive industry supply constraints continue to ease.”
In the quarter that ended December 31, 2022, consolidated sales and net income rose 37.7% and 66.7% to $139.1 million and $4.5 million, respectively, versus Q1 fiscal 2022. Kirk adds, “While global macro conditions are certainly slowing, we believe our various capital investment and margin enhancement activities will enable our results to continue to improve through the balance of the year.”
Mid-cap
Capital Power (TSX:CPX) in the utility sector is a defensive asset. The $4.9 billion growth-oriented wholesale power producer focuses on sustainable energy. It owns and operates high-quality, utility-scale generation facilities, including renewables and thermal.
CPX has a dividend growth streak of nine years, and at $41.48 per share, you can partake in the 5.61% dividend yield. In 2022, the company’s net cash flows from operating activities reached a record $935 million. Revenues and net income increased 25.3% and 47.1% year over year to $28.5 billion and $128 million, respectively.
Its President and CEO, Brian Vaasjo, said, “Our growth outlook remains excellent given political support for renewable energy both in the United States and Canada.” Management anticipates potential uprates, expansion, and contract extensions for its three natural gas facilities in Ontario.
Large-cap
BCE (TSX:BCE) is a no-brainer buy-and-hold 5G stock. You get value-for-money ($59.17 per share) from this cash cow that pays a mouth-watering 6.44% dividend. The $55.4 billion telecommunications company started paying dividends in 1881 and has raised them for 14 straight years.
While net earnings in Q4 2022 dipped 13.8% to $567 million versus Q4 2021, free cash flow jumped 64.2% year over year to $376 million. The highlight in 2022 was the record 854,000 new direct fibre connections, resulting from BCE’s accelerated capital expenditure program.
Save and invest early
High-dividend stocks held in an RRSP or TFSA can help Canadians retire early because of tax-free money growth. Remember, though, successful early retirees started saving and investing while they were young.
