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The 3-Stock Portfolio to Retire Comfortably

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Path to retirement
Path to retirement

Written by Demetris Afxentiou at The Motley Fool Canada

Finding the right mix of investments to start investing is one of the most daunting tasks for new investors. Part of that confusion is because of the sheer number of investment options that are available. Fortunately, that means there are plenty of candidates to help investors retire comfortably.

Here are three great options for any portfolio.

Start with a solid base from which to expand

The importance of adding one or more defensive stocks to your portfolio can’t be stressed enough. Typically, defensive stocks offer some protection from the volatility of the market, while also boasting a mature business model.

There are several great options here to consider but one that springs to mind is Bank of Montreal (TSX:BMO)(NYSE:BMO).

Bank of Montreal is one of the largest banks in Canada. BMO also happens to be one of the oldest companies in the country, with a history of paying out dividends without fail for nearly two centuries.

The bank’s business consists of both domestic and international segments. In short, the former provides a solid base of revenue for the bank, while the latter provides incredible growth potential. That international growth is focused on the U.S. market, where BMO recently acquired the Bank of the West.

The US$16.3 billion deal will expose BMO to several new state markets, including California.

Oh, and let’s not forget that BMO offers a quarterly dividend with a yield of 4.06%.

Add a sprinkle of solid income and growth

Telus (TSX:T)(NYSE:TU) is the second option to consider. Telus is one of the largest telecoms in the country, and unlike BMO, is solely focused on the Canadian market. The company offers subscription services to customers across the country in different segments including wireless, wireline, internet, and TV.

Telecoms are great defensive investments, rarely impacted by the economic slowdowns. In fact, during the pandemic, the sheer necessity of the services Telus provides increased. In short, there are now more of us working and learnings from home than ever before, requiring a fast, stable internet connection. Further to this, the ongoing rollout of 5G has us consuming more data than ever before.

In other words, the services that telecoms like Telus provide have elevated to the level of necessity.

Throw in a juicy quarterly dividend that carries a yield of 4.35%, and you have one excellent stock to help you retire comfortably.

Add some future growth potential

One of the most pressing issues impacting the planet right now is global warming. And more than ever before, the need for us to get off fossil fuels and turn to renewables is finally going mainstream.

This is where the appeal of a stock like TransAlta Renewables (TSX:RNW) comes into play.

The opportunity to invest in a renewable stock like TransAlta has never been greater, and this is true for a few reasons. First, renewable energy stocks adhere to the same lucrative model as their fossil fuel peers. Think reliable, recurring revenue streams that are backed by decades-long regulated contracts.

In the case of TransAlta, the company has over 40 facilities across Canada, the U.S., and Australia. Many of those facilities have contract expiration dates at least two decades out.

Finally, because it’s already a renewable energy company, TransAlta doesn’t need to spend billions on transitioning to clean energy. Instead, it can provide investors with a tasty dividend.

That dividend, which is paid out on a monthly cadence, works out to a yield of 5.36%.

You can retire comfortably

No investment is without risk, and that includes the stocks mentioned above. Fortunately, the trio of stocks are all established players in their respective fields. Additionally, they all offer a necessary service which makes them great defensive options. Finally, they are all largely immune to the volatility of the markets.

In other words, they are great options for any portfolio and can help you retire comfortably one day.

Buy them, hold them, and retire comfortably.

The post The 3-Stock Portfolio to Retire Comfortably appeared first on The Motley Fool Canada.

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More reading

Fool contributor Demetris Afxentiou has no position in any of the stocks mentioned. The Motley Fool recommends TELUS CORPORATION.

2022

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