Retirees: Give Yourself a Raise With These 3 Passive-Income Machines

You won’t believe how much income high-yield stocks like Inter Pipeline Ltd. (TSX:IPL), Rogers Sugar Inc. (TSX:RSI), and Fiera Capital Corp (TSX:FSZ) can generate.

| More on:
Retirement

Image source: Getty Images

In today’s world of ultra-low interest rates, it’s hard to convert capital into a sustainable income stream.

Many folks who first retired in the 1980s or 90s are seeing this first hand. After being able to count on GICs paying 10% interest rates back in the 80s, that number soon fell to 6%, then 4%, and finally all the way down to 2%, where we’re sitting today. A million-dollar nest egg only spins off $20,000 per year at a 2% return. That’s not enough to fund a middle-class retirement.

I have a better solution. Retirees can put their capital into some of Canada’s finest high-yield stocks — companies that pay 5%, 6%, or even 8% yields. This one little move can double or triple a retiree’s income versus more traditional fixed-income sources and give them potential for upside as their stocks rise over time.

Let’s take a closer look at three of Canada’s top income plays.

Inter Pipeline

Inter Pipeline (TSX:IPL) is an income-generating machine of a stock, which has the added bonus of being undervalued today.

The company’s assets include three pipelines that transport bitumen from the oil sands, various conventional oil pipelines, natural gas processing facilities, and fuel storage assets. It is also investing some $3.5 billion into the Heartland Petrochemical Complex, which plans to convert cheap Alberta propane into various types of resin used for manufacturing certain kinds of plastics. The only issue is paying for Heartland on its own; the price tag might prove to be a little much.

The good news is while investors wait for Heartland, they’re treated to one of Canada’s best dividends. Inter Pipeline currently pays investors $0.143 per share each month, which is good enough for a 6.9% dividend. The company has also raised its dividend each year since 2009, one of the best dividend-growth streaks you’ll see in Canada today.

Oh, I almost forgot. The stock could easily be taken over sometime soon, which would be a nice short-term profit for anyone getting in today.

Fiera Capital 

Fiera Capital (TSX:FSZ) has quietly become one of Canada’s largest asset managers by acquiring much of its competition. The good news is there are plenty of boutique asset managers left to buy in North America, never mind Europe or Asia. Despite having $150 billion or so under management, Fiera is still poised to become bigger.

So far in 2019, Fiera has made two acquisitions and started a strategic partnership with Natixis, one of the world’s largest asset managers. Analysts think these acquisitions will add plenty to the bottom line in 2020, with their earnings expectations increasing from $1.29 per share in 2019 to $1.46 per share in 2020.

Shares only trade at a hair over seven times projected 2020 earnings, making Fiera one of Canada’s cheapest stocks.

Although management has paused dividend growth for a little while to focus on paying down debt, Fiera still offers retirees an impressive 8.2% yield.

Rogers Sugar

There are few stocks more boring than Rogers Sugar (TSX:RSI), which should bode well for a retiree looking to lock in a succulent dividend without much risk to their capital.

Rogers shares have sold off a bit lately, thanks to recent sub-par quarterly results. The maple syrup part of the business didn’t perform up to expectations, and Rogers will try to get it back on the right path by investing a little more capital into it. Investors didn’t like that, but the good news is the core sugar business continues to meet expectations.

Even if the maple syrup business continues to be weak for a little while, Rogers Sugar investors don’t have to worry about the stock’s 6.8% yield. It’s solid.

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 Nelson Smith owns shares of INTER PIPELINE LTD and FIERA CAPITAL CORP.

More on Dividend Stocks

Golden crown on a red velvet background
Dividend Stocks

A Canadian Dividend Aristocrat That’ll Pay Passive Income Investors Through a 2023 Recession

CIBC (TSX:CM)(NYSE:CM) stock looks like a dividend bargain to pick up right now.

Read more »

hand using ATM
Dividend Stocks

Should You Buy Royal Bank Stock at Current Levels?

RY stock has dropped 20% since January, underperforming broader markets. Is Canada's biggest bank still a buy?

Read more »

edit Safety First illustration
Dividend Stocks

2 Safe Stocks to Own and Keep Receiving Passive Income

Canadian investors will likely keep receiving rock-steady passive income from two Dividend Aristocrats, notwithstanding the intensifying market pressure.

Read more »

Increasing yield
Dividend Stocks

3 TSX Stocks With High Dividend Yields

Due to their stable cash flows and high dividend yields, these three stocks are excellent buys in this volatile environment.

Read more »

Upwards momentum
Dividend Stocks

3 Strong Buys Right Now With Growth Prospects Intact

Three TSX stocks are strong buys right now because the companies' growth prospects are intact despite the shaky market environment.

Read more »

Profit dial turned up to maximum
Dividend Stocks

Get More Income From This REIT Selloff

Income investors can build their Canadian REIT positions slowly over this downturn to lock in high yields.

Read more »

calculate and analyze stock
Dividend Stocks

RRSP Investors: 2 Oversold TSX Stocks to Buy Now and Hold for Decades

RRSP investors can now buy top TSX dividend stocks at cheap prices.

Read more »

Cogs turning against each other
Dividend Stocks

Beginners: 1 Safe Canadian Stock to Buy and Hold Forever

Are you new to investing? This might be one of the safest buy-and-hold investments to own right now.

Read more »