4 Low-Risk Dividend Stocks for Retirees

These four low-risk dividend stocks are ideal for retirees, given their solid underlying businesses, impressive track records, and healthy growth prospects.

| More on:
Two seniors float in a pool.

Source: Getty Images

With no regular source of income, retirees will usually have less appetite for risk. So, they should look to invest in dividend stocks with solid underlying businesses and consistent dividend growth. These four dividend stocks can deliver risk-free passive income given their solid underlying businesses, impressive track records, and healthy growth prospects.

Canadian Utilities

Canadian Utilities (TSX:CU) earns substantial earnings from low-risk electricity and natural gas transmission and distribution businesses. Thus, its financials are less susceptible to macroeconomic volatility, allowing it to raise its dividends consistently. The company has raised its dividends for 51 years, representing the longest Canadian public company with dividend growth. Meanwhile, its forward yield stands at an impressive 5.7%.

Further, CU expects its rate base to grow 3 to 4.4% until 2026 and 4 to 5% in the long run. The company, which currently operates renewable energy facilities with a total production capacity of 1.3 gigawatts, has $2.4–$2.6 billion of renewable projects in the developmental stage. So, given its healthy growth prospects and solid underlying businesses, I believe CU’s future dividend payouts to be safe.

Enbridge

Enbridge (TSX:ENB) would be another safe bet, given its stable cash flows and consistent dividend growth. The midstream energy company earns most of its cash flows from cost-of-service contracts and regulated assets and is less susceptible to commodity price fluctuations. So, the company has been paying dividends uninterruptedly for 69 years while raising the same for 29 years. Besides, it currently offers a quarterly dividend of $0.915/share, translating into a forward yield of 7.4%.

Further, Enbridge is looking to expand its utility business by acquiring three natural gas utility assets in the United States. It is also continuing with its $24 billion secured capital program, which could expand its midstream and renewable energy business in the coming years. These growth initiatives could boost Enbridge’s financials, thus allowing it to continue its dividend growth.

Bank of Nova Scotia

Another reliable dividend stock is the Bank of Nova Scotia (TSX:BNS), which has been paying dividends uninterruptedly since 1833. Amid the challenging macro environment, the company has improved its operating metrics. In the first quarter of fiscal 2024, its Common Equity Tier 1 (CET1) ratio has increased from 11.5% to 12.9%, while its liquidity coverage ratio has increased from 122% to 132%.

Besides, BNS’s management is strengthening its balance sheet, scaling priority businesses, and implementing productivity initiatives, which could boost its financials in the coming quarters. With inflation showing signs of easing, the United States Federal Reserve could slash interest rates later this year. Falling interest rates could drive credit demand, benefiting BNS. So, I believe the company is well-positioned to continue paying dividends at a healthier rate. Currently, its forward yield stands at 6.5%.

Pizza Pizza Royalty

Pizza Pizza Royalty (TSX:PZA) would be my final pick, given its asset-light business model. The company owns and operates Pizza Pizza and Pizza 73 brand restaurants through franchisees. It collects royalties from its franchisees based on their sales. So, its financials are less susceptible to rising commodity prices and wage inflation, thus delivering stable and predictable cash flows. Meanwhile, the increase in menu prices to accommodate higher expenses could increase its royalty income.

Further, PZA is expanding its restaurant network and expects to increase its restaurant count by 3 to 4% this year. Besides, its menu innovations, restaurant renovation program, and marketing initiatives could boost its same-store sales in the coming quarters. Given its healthy outlook, I believe PZA’s future payouts are safer. It currently pays a monthly dividend of $0.0775/share, with its forward yield at 7%.

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 Rajiv Nanjapla has no position in any of the stocks mentioned. The Motley Fool recommends Bank of Nova Scotia and Enbridge. The Motley Fool has a disclosure policy.

More on Retirement

Senior uses a laptop computer
Retirement

Dividend Fortunes: 2 Canadian Stocks Leading the Way to Retirement

These two TSX stocks with an excellent track record of dividend growth are ideal for your retirement portfolio.

Read more »

Canada day banner background design of flag
Retirement

RRSP Wealth: 2 Great Canadian Dividend Stocks to Buy in November

Investors in these stocks have received annual dividend increases for decades.

Read more »

Close up of an egg in a nest of twigs on grass with RRSP written on it symbolizing a RRSP contribution.
Dividend Stocks

3 Evergreen RRSP Stocks Every Canadian Investor Should Own

If you're looking into RRSP stocks, it's quite likely you've come across these on many, if not all, of the…

Read more »

Hand Protecting Senior Couple
Retirement

These 2 Dividend ETFs Are a Retiree’s Best Friend

These two dividend ETFs could provide retirees with a diversified and stable income stream, while providing some price appreciation.

Read more »

coins jump into piggy bank
Retirement

Here’s the Average RRSP Balance at Age 44 for Canadians

Holding stocks like Alimentation Couche-Tard (TSX:ATD) in an RRSP is a good way to build your wealth.

Read more »

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

Where to Invest Your $7,000 TFSA Contribution

The TFSA is attractive for investors who want to generate tax-free passive income.

Read more »

RRSP Canadian Registered Retirement Savings Plan concept
Retirement

Here’s the Average RRSP Balance at Age 34 for Canadians

It's never too early or too late to work on your retirement savings. How do you fare against the average…

Read more »

customer uses bank ATM
Dividend Stocks

3 Stocks Retirees Should Absolutely Love

Being a retiree doesn’t mean you should not invest in stocks. These stocks can give you the financial freedom for…

Read more »