An important part of investing for retirement is selecting the right investments that can provide a reliable income stream for years. In fact, finding those right investments early on can mean the difference between retiring with a decent nest egg or needing to continue working.
Fortunately, there are plenty of great options to consider when investing for retirement. Here’s a look at some of the stellar options to buy now.
Source: Getty Images
Generate a recurring income stream sooner than you think
Long-term investors investing for retirement should always strive to include one or more defensive stocks. Utilities are great examples of this, and Fortis (TSX:FTS) is the utility to consider.
Fortis is one of the largest utilities in North America. The company boasts operations in the U.S., Canada, and the Caribbean.
Part of the reason why Fortis is a great defensive option is thanks to its business model. Fortis’s facilities are bound by long-term regulated contracts, which provide a recurring and stable revenue stream. That revenue stream allows the company to invest in growth and pay a generous dividend.
As of the time of writing, that dividend works out to a respectable 3.93%. And investors who are investing for retirement income can take solace in the fact that Fortis has provided an annual uptick to that dividend for a whopping 49 consecutive years.
That also means that Fortis is on track to become only the second Dividend King in the market when that 50th consecutive increase comes. Oh, and to top that off, Fortis plans to continue those annual bumps over the next few years.
In other words, Fortis is a superb option to buy today and forget about for a decade or more.
Set your portfolio on autopilot
I would be remiss if I didn’t mention at least one of Canada’s big banks when investing for retirement. There are plenty of reasons to consider investing in Canada’s big banks.
In short, they offer a mature and secure domestic market, a growing international presence, and pay out juicy dividends. So, then, what bank should investors consider when investing for retirement?
That bank to consider right now is Bank of Montreal (TSX:BMO). BMO is the oldest of Canada’s big banks. In fact, BMO has been paying out an appetizing quarterly dividend for nearly two centuries without fail.
Today, that yield works out to an impressive 4.77%. This means that a $30,000 position in BMO (as part of a larger, well-diversified portfolio) will generate an income of approximately $1,400 in just the first year.
Prospective investors should keep one more thing in mind. If they aren’t ready to draw on that income yet, they can reinvest that income until needed. This allows those who are investing for retirement with a longer timeline to increase that eventual income stream.
Another point to mention is BMO’s growth potential. Earlier this year, the bank completed the acquisition of U.S.-based Bank of the West. The deal provided BMO greater access to the U.S. market. As a result, BMO now boasts a presence in 32 state markets, including a strong presence in California.
The acquisition also expanded BMO’s branch network in the U.S. by approximately 500 new locations, adding 1.8 million new customers. This makes BMO one of the larger banks in the lucrative U.S. market.
Investing for retirement isn’t as complicated as it seems
No stock is without at least some risk. Fortunately, there are some stocks, like BMO and Fortis, that can provide growth and income even in a volatile market. Both stocks hold defensive appeal and have a solid history of dividend payouts.
In short, both are great options when investing for retirement. In my opinion, one or both should be part of any well-diversified portfolio.
