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Solid stocks and ETFs for your retirement portfolio

A CN locomotive moves in the railway yard in Dartmouth, N.S.

Andrew Vaughan/THE CANADIAN PRESS

While some dream of hitting it big overnight on the stock market, more realistic investors buy solid stocks and exchange-traded funds that can help them build wealth for retirement.

We asked experts for their top picks.

Mike Ser and Andy Man, co-founders of Ser Man Traders, a training and development centre for traders, Vancouver

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True North Commercial Real Estate Investment Trust: This is a Canadian REIT that consists of Canadian commercial real estate and pays a dividend yield of 9.46 per cent. "We like it because we believe that Canadian real estate over the long term will hold its value and is a good safe place to invest," Mr. Ser says. It would be good for retirement because it generates a steady income for retirees and allows their retirement portfolio to grow steadily, he says.

Chartwell Retirement Residences: This REIT is the largest owner and operator of seniors' residences in Canada and pays a dividend yield of 3.79 per cent. "We like it because one of the largest demographics are seniors and more of them will be moving to retirement communities," Mr. Ser says. "The company is the largest player in Canada and is primed to take advantage of the demand for its facilities and services. It would be good for retirement because it's a relatively low-risk sector with steady, long term growth.

Regions Financial Corp.: Regions is a U.S. bank and financial services company with a dividend yield of 2.26 per cent. "We believe U.S. interest rates will start going up from now on," Mr. Man says. "As interest rates rise, U.S. banks have more opportunity to make more money on their investments, and this will make bank stocks attractive to investors. The U.S. banks have been beaten down so much due to historical low interest rates, but things are starting to change, and we believe with Regions' strong fundamentals, it will benefit."

Iain Butler, chief investment adviser, Motley Fool Canada, Collingwood, Ont.

Canadian National Railway Co.: "Great companies don't always make great investments, but when you consider CN, you can be sure you're adding that coveted combination to your retirement portfolio," Mr. Butler says. "The company's competitive strengths are unquestionable, and management has done a wonderful job of converting these strengths into enviable long-term returns for shareholders. Unless you think rail is soon to be replaced – it's not – expect those returns to continue for decades."

Brookfield Asset Management Inc.: This relatively under-the-radar Canadian firm invests in infrastructure, power generation facilities, office buildings and other real assets. "Where Brookfield stands out is with its extensive scale and unrivaled ability to operate the assets it owns," Mr. Butler says. "These qualities allow it to invest where others can't, limiting competition, thereby providing superior returns on its capital."

Agrium Inc.: This agricultural company, which helps growers increase crop yields, consists of two divisions: wholesale and retail. "Income is an important component to any retirement portfolio, and over the long term Agrium stands to generate a pile of it for its investors," Mr. Butler says. "Within wholesale, the company produces fertilizer, and once its pending merger with Potash Corp. [of Saskatchewan Inc.] closes, it's going to produce a whole lot more fertilizer. The crown jewel, however, is the company's retail division and the unrivalled global distribution network it provides. Where wholesale is somewhat volatile, retail serves as a stable, cash-generating machine."

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Ludovic Siouffi, portfolio manager and insurance adviser, Canaccord Genuity Wealth Management, Vancouver

Mr. Siouffi says, "Limited to three picks, I would go for ETFs over stocks to get enough diversification."

Horizons Active Canadian Dividend ETF: Horizons ETF Management (Canada) Inc. "uses a methodology called GPS (growth, payout and sustainability) to own Canadian stocks that pay dividends but also focuses on the quality of the dividend, the growth potential of the dividend and the corporate strength of the company to sustain that dividend," Mr. Siouffi says. Sample holdings include Exchange Income Corp., Enbridge Income Fund Holdings Inc. Class B, Telus Corp. and Cineplex Inc.

PowerShares High Yield Equity Dividend Achievers Portfolio ETF: "This is a high-yield play that tracks a yield-weighted index of U.S. companies that have increased their annual dividends for at least 10 consecutive years," Mr. Siouffi says. "It only invests in stocks that have proven to have sustainable dividend yields."

iShares Canadian Universe Bond Index ETF: This ETF seeks to provide income by replicating the performance of the FTSE TMX Canada Universe Bond Index. "Nothing fancy or high risk, but rather a 'boring' income play, as one needs to start drawing income from the portfolio," Mr. Siouffi says. "The initial weighting on this portion [in a portfolio] could be less than 10 per cent and increase over time, given one's time horizon."

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