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Highlights
- One of the banks mentioned here posted an improvement in the credit quality of its performing loans, and the bank was also ranked second in the top 100 most diverse and inclusive companies.
- One of the housing companies listed, catering to senior citizens, posted an average occupancy rate of 81.6 per cent in long-term care units.
- Among them, the highest ROE was 56.08 per cent, and the highest dividend yield was 16.79 per cent.
Each year, a good chunk of the Canadian population reaches the 50th birthday milestone and progresses towards the retirement age. At and above this age, citizens look for a passive or secondary income to support their livelihoods. Some analysts believe that investing in the financial market with a proven investment strategy will fetch good returns.
Citizens and investors at this age have a lower risk-taking appetite and capacity and look for stocks with proven business models, years of existence, and consistent dividend-paying histories. Stable and consistent dividend and profitable return ratios are perfect for investors above 50.
On that note, let us investigate some of the stocks to buy.
- Royal Bank of Canada (TSX: RY)
Royal Bank serves as a global financial institution and is one of Canada’s largest banks. The bank has a diversified banking business model with banking clients spanning across Canada and the US.
As per the recent update, the Royal Bank of Canada was ranked second in the top 100 most diverse and inclusive companies. This was as per the Refinitiv diversity and inclusion Index.
The bank will likely roll out a quarterly dividend of C$ 1.08 per share on November 24. It posted earnings per share (EPS) of 10.62 and a return on equity (ROE) of 18.67 per cent on September 15.
In the third quarter of the fiscal year 2021, Royal Bank posted a Common Equity Tier 1 (CET1) ratio of 13.6 per cent, and the bank also posted a net income of C$ 4.3 billion, up 34 per cent Year-over-Year (YoY). The provisions of the performing loans also improved the credit quality of the bank in the same quarter.
The one-year stock return of the bank was 31 per cent. The stock price reached its 52-week high of C$ 134.23 (August 25) and closed at C$ 128.43 apiece on September 14.
- Labrador Iron Ore Royalty Corporation (TSX: LIF)
The steel corporation derives revenue from royalty income and commission interests. Labrador Iron Ore Royalty produces iron ore pellets, and iron ore concentrates catering to clients around the globe.
The steel company paid its shareholders a quarterly dividend of C$ 1.75 on July 26. The three-year average dividend growth rate stands at 39.51, and the dividend yield was 16.79 per cent on September 15.
Benefitting from increased iron ore prices and premium pellets, Labrador Iron Ore posted a royalty revenue of C$ 78.8 million in Q2 FY21, up from C$ 46.2 million in Q2 FY20. The net income increased by 126 per cent YoY in Q2 FY21.
The stock price of the steel scrip on September 14 traded close to 78 per cent above its 52-week low of C$ 23.57 (November 12, 2020). It closed at C$ 41.67 on September 14. Over the past year, the stock price of the company expanded by 58 per cent.
The price-to-earnings (P/E) ratio of Labrador Iron was 8.2 and posted an ROE of 56.08 per cent and return on assets (ROA) of 40.56 per cent on September 15.
Also Read: 5 Canadian stocks paying the highest dividend in 2021
- Enbridge Inc. (TSX: ENB)
The oil and gas company uses its midstream assets to transport hydrocarbons throughout Canada and the US. Enbridge also owns and runs wind projects both onshore and offshore and distributes regulated natural gas.
The oil and gas distribution company held a market cap of C$ 102.3 billion, and dividend yield stood at 6.61 per cent on September 15. The company rolled out a quarterly dividend of C$ 0.835 on September 1.
The senior management of Enbridge commented that it joined hands with the Government of Ontario seeking to expand and provide access to natural gas to the indigenous communities.
The adjusted EBITDA of the company was C$ 3.3 billion, and its cash flow from operating activities was C$ 2.2 billion in Q2 FY21.
On a YTD basis, the stock price of Enbridge increased by 24 per cent and reached its 52-week high of C$ 51.34 on September 8. At the market close on September 14, the stock price was C$ 50.5
The company posted a debt-to-equity (D/E) ratio of 1.26, ROE was 10.71 per cent, and EPS was 3 on September 15.
One-year chart of stock performance, volume and moving average exponential of Enbridge (Source: Refinitiv)
The above stock price depicts the one-year chart of Enbridge. The price gained from a low of C$ 35.92 apiece in mid-November 2020 to reach C$ 50.5 on September 15. It appears to be an uptrend forming a series of highs and lows.
- Great-West Lifeco Inc. (TSX: GWO)
The C$ 36.48 billion market cap (September 15) insurance company provides group and individual insurance services in Canada, Europe, and the US. On September 30, the insurance company will issue a quarterly dividend of C$ 0.438. The dividend yield was 4.46 per cent.
One of the subsidiaries of Great-West Lifeco completed the acquisition of ClaimSecure Inc. This acquisition is believed to increase the plan members receiving insurance by 1.25 million individuals.
On September 14, the stock price of Great-West Lifeco closed at C$ 39.24 and returned nearly 49 per cent over the past year.
The insurance company posted an EPS of 3.48, a price-to-book (P/B) ratio of 1.65, and an ROE of 15.22 per cent (at the time of writing).
Also read: 5 low-risk TSX stocks to add to your portfolio
- Sienna Senior Living Inc. (TSX: SIA)
Sienna Senior Living owns 35 long-term care residential units in Ontario and eight senior citizen residences in British Columbia. The company caters to the housing requirements of senior citizens and operates only in Canada.
On September 15, a monthly dividend of C$ 0.078 is expected to be paid, and the dividend yield stood at 6.13. The company posted a P/B ratio of 2.39 on September 15.
On a quarter-to-date (QTD) basis, the stock price of the housing company dipped by roughly seven per cent. However, over the past year, it increased by nearly 28 per cent. On September 14, the closing price was C$ 15.27.
The revenue posted by Sienna Senior Living was C$ 162.7 million in Q2 FY21, and its net operating income was C$ 34.4 million in Q2 FY21. The average occupancy in long-term care units was 81.6 per cent during the same quarter.
Bottom line:
The stocks mentioned in this story have proven and sound business models and have consistent dividend-paying histories. As and when a chunk of the population reaches over and above the 50-year milestone, they could do with a secondary source of income in the form of returns and dividends. Hence these are few stocks that one could consider as they progress towards retirement.
