Retirees: 2 Incredibly Easy Ways to Boost Your CPP Payments

Canada’s best dividend paying stocks, like Automotive Properties REIT (TSX:APR.UN), can be the basis of a prosperous retirement.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Despite improvements made to the plan under Liberal Prime Minister Justin Trudeau, I still wouldn’t count on the Canada Pension Plan (CPP) as my only source of income come retirement.

The current maximum you can expect from CPP is $1,154 per month, based on a standard retirement at age 65. That amount should slowly go up over time, but not much more than the rate of inflation. Thus, we can expect the purchasing power of that amount to stay relatively the same going forward.

If you and your spouse both retire at age 65, you’re looking at approximately $2,300 per month in total CPP income, which works out to just a hair under $28,000 annually. Even if the rest of your financial lives are in order, that still likely won’t be enough for a comfortable middle class retirement.

The good news is there are a couple of very easy ways to increase your income during your golden years. Let’s take a closer look.

Delay CPP

You’re rewarded substantially for being patient with your CPP. Working a couple extra years past the traditional retirement age increases your monthly payments substantially.

A couple who qualify for maximum payments but delay taking that income will see their monthly income increase by 16.8%. That’s enough to turn the maximum income from just under $28,000 to $32,348. Add in other income sources like Old Age Security, Guaranteed Income Supplement, or a workplace pension and we’re suddenly talking about the difference between a sparse retirement and one that can afford a little more luxury.

Remember, most folks need less to live on during their golden years. Commuting costs go down to virtually zero. You don’t need to keep up a wardrobe for work. Taxes go down because incomes are usually lower. And let’s not forget the big one – you no longer have to save for retirement once you’re retired.

Invest well

A few smart investments can turn a relatively small amount of cash into a dependable monthly income stream.

Let’s take a closer look at one of my favourite dividend payers, Automotive Properties REIT (TSX:APR.UN), a company that is slowly buying up auto dealership real estate. It then rents these locations back to the dealership operator on a long-term triple net lease, meaning the operator is responsible for maintaining the property.

Automotive Properties has grown like a weed since its 2015 IPO, with the number of properties owned more than doubling in the four years since. The portfolio today consists of 61 different locations spanning more than 2.3 million square feet in gross leasable space. More than 80% of that space is located in or near Canada’s six largest cities.

It’s obvious investors like this expansion plan. Shares are up close to 30% thus far in 2019, including reinvested dividends. Even after such a nice run-up, the stock is still reasonably valued. It trades for just over 11 times 2019’s estimated adjusted funds from operations.

And finally, Automotive Properties pays a succulent $0.067 per share monthly dividend, enough for a 7.1% yield. The payout ratio is approximately 80%, which is quite safe for a REIT. In fact, I wouldn’t be surprised if the distribution is increased soon.

A $30,000 investment in Automotive Properties would generate an additional $2,130 in annual income. That’s the equivalent a retiree giving themselves a nice 5% to 10% raise. Double the investment and we’re talking some serious money here. It’s enough for a nice vacation or two.

The bottom line

To maximize your CPP, a couple of options work best. You can work a little longer and invest in some of Canada’s best monthly paying dividend stocks. The latter don’t get much better than Automotive Properties REIT.

Should you invest $1,000 in Automotive Properties Real Estate Investment Trust right now?

Before you buy stock in Automotive Properties Real Estate Investment Trust, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Automotive Properties Real Estate Investment Trust wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

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 AUTOMOTIVE PROPERTIES REIT. The Motley Fool owns shares of AUTOMOTIVE PROPERTIES REIT. AUTOMOTIVE PROPERTIES REIT is a recommendation of Dividend Advisor.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Dividend Stocks

A close up color image of a small green plant sprouting out of a pile of Canadian dollar coins "loonies."
Dividend Stocks

I’d Put $15,000 in These 3 Dividend-Growth Champions for Increasing Income Potential

Want to offset some volatility? Here are three defensive dividend-growth champions that can generate a juicy yield right now.

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

Transform Your TFSA Into a Cash-Creating Machine With $7,000

Discover how the Tax-Free Savings Account can be your golden goose for generating cash without losing your investment.

Read more »

monthly desk calendar
Dividend Stocks

How I’d Invest $10,000 in Canadian Value Stocks for Monthly Dividend Income

A $10,000-diversified portfolio of value stocks focusing on dividend safety, yield, growth, and payment schedules can provide a reliable source…

Read more »

a person watches a downward arrow crash through the floor
Dividend Stocks

Is This Correction Your Chance? Top 4 Canadian Dividend Stocks on Sale

Stocks may be down, but now is your chance to get some of these top dividend stocks on sale.

Read more »

Confused person shrugging
Dividend Stocks

Where to Invest $2,500 in the TSX Today

These TSX stocks offer attractive dividends and a shot at decent upside on a rebound.

Read more »

Pile of Canadian dollar bills in various denominations
Dividend Stocks

Invest $25,000 in These Dividend Stocks for $1,956.66 in Annual Passive Income

Dividends stocks can make a huge difference, even if shares don't move an inch. And these might be the best.

Read more »

Pile of Canadian dollar bills in various denominations
Dividend Stocks

Got $5,000? 5 Income Stocks to Buy and Hold Forever

These income stocks have a solid dividend-payout history that can help you earn stress-free passive income.

Read more »

grow money, wealth build
Dividend Stocks

Why I’d Invest $10,000 in This Undervalued Dividend-Growth Stock for Decades of Income

This undervalued dividend stock offers a high yield of over 8% and can help you earn more than $200 in…

Read more »