A 3% Dividend Stock for any Retirement Safety Net

Retirement can be more scary than it is relaxing. And that really shouldn’t be the case. We’ve all worked hard for a relaxing retirement, yet many of us might get there and have no idea how we’re going to fund it! Add in that most Canadians are living longer, and it becomes even more terrifying.

However, a dividend stock can act as a retirement safety net. That’s because it provides consistent, predictable income that doesn’t depend on selling shares or timing the market. So let’s look at one that will always remain in my back pocket.

RY

Royal Bank of Canada (TSX: RY) is the country’s largest bank and one of the most influential financial institutions in North America. It holds operations spanning personal and commercial banking, wealth management, insurance, capital markets, and tech-driven financial services. The scale gives it a level of stability and earning power that few companies on the TSX can match, and its history of dividend growth reflects that strength.

RY has spent the last few years transforming itself for the next decade of growth. The dividend stock successfully integrated HSBC Canada, significantly expanding its customer base, deposits, and fee-generating assets. It has also invested heavily in wealth management, U.S. operations, artificial intelligence (AI)-driven banking tools, and risk-management systems to manage in a high-rate world. Its balance sheet remains one of the strongest in the sector, with a CET1 capital ratio consistently above regulatory requirements and a liquidity profile that gives it a significant buffer against volatility.

Into earnings

Royal Bank’s most recent earnings reinforced just how powerful its business model is. In Q3 2025, the bank reported record net income of $5.4 billion, up 21% year over year, and adjusted earnings per share (EPS) increased 17% year over year. Revenue strength was broad-based as personal and commercial banking saw higher spreads and loan growth, wealth management hit double-digit profit growth, insurance jumped 45%, and capital markets delivered strong results – all despite a choppy macro backdrop. Importantly, expenses remained flat in key divisions thanks to efficiencies gained from the HSBC integration, giving RY additional operating leverage.

Credit quality was also manageable in the quarter. While provisions for credit losses increased year over year, as expected in a higher-rate environment, these fell significantly quarter over quarter, showing stabilization. The CET1 capital ratio held at 13.2%, liquidity levels remained strong, and the bank returned $3.1 billion to shareholders through dividends and buybacks. With stable margins, growing fee income, and successful integration of new customers and assets, the earnings picture signalled that RY is well positioned heading into 2026.

A retirement gem

Royal Bank is widely viewed as a dividend stock that offers a true retirement safety net, and there are several reasons why. The dividend stock has over 150 years of uninterrupted dividend payments! This is an extraordinary record even in global terms. Its dividend is backed by durable cash flow from diversified business lines like mortgages, deposits, wealth management fees, insurance income, and capital markets activity. No single segment drives the entire bank, which reduces vulnerability during sector-specific downturns. And with a payout ratio recently at 45%, Royal Bank keeps its dividend well covered while leaving room for continued hikes.

What’s more, RY benefits from powerful structural tailwinds that support safety and growth over decades, not just years. Canada’s population growth has hit record levels, driving long-term demand for loans, accounts, and investment products. Wealth management continues expanding as Canadians save for retirement, and RBC’s dominant position in that segment fuels recurring fee income. Layer in a strong balance sheet, strict regulation, and a long history of navigating crises from recessions to credit shocks, and it becomes clear why Royal Bank is often the first stock financial planners recommend.

Bottom line

For retirees and long-range investors alike, RY provides stability, income reliability, and slow-and-steady capital growth that makes it one of the safest anchors on the TSX. In fact, here is what investors could bring in right away from a $7,000 investment.

COMPANYRECENT PRICENUMBER OF SHARESDIVIDENDTOTAL ANNUAL PAYOUTFREQUENCYTOTAL INVESTMENTRY$215.9932$6.16$197.12Quarterly$6,911.68

So if you’re looking for a dividend stock to buy now, compound, and help you fuel retirement, RY is the one for you.

The post A 3% Dividend Stock for any Retirement Safety Net appeared first on The Motley Fool Canada.

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More reading

• 3 Canadian Bank Stocks Delivering Decades Upon Decades of Dividends
• If You Believe in Santa Claus Rallies, Put These Stocks on Your Wish List
• RBC vs. TD: Which Canadian Bank Stock Is the Better Buy?
• Bank of Montreal vs. RBC: Which Canadian Bank Stock is the Better Buy?
• Canadian Bank Stocks: Buy, Sell, or Hold?

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.