The ability to enjoy a comfortable retirement is a common concern of retirees or soon-to-be retirees. According to a recent CIBC survey, 79% of Canadians aged 35 to 54 are worried about not having enough money to retire when they want.
The fact is that it is very difficult to live comfortably on only CPP and OAS payments. Currently, the maximum monthly OAS benefit you can receive is $613.53, and the most from CPP is $1,175.83 per month. These benefits total $1,789.36 per month, or $21,472.32 annually. While this may cover your basic needs, any unexpected expense could derail your lifestyle significantly.
By creating a portfolio with stocks that pay a hefty dividend and/or offer significant growth opportunities, you could supplement your OAS and CPP benefits and create a monthly income stream that will provide you with a more enjoyable lifestyle. Even better, if these stocks are held in a TFSA, the income will be 100% tax free!
Growth opportunity
Few companies are more synonymous with this country than Canadian Tire (TSX: CTC.A). The $9.11 billion company, which was founded in 1922, has grown to be one of the country’s largest and most successful retail chains.
Although the growth of e-commerce has crippled many retailers, Canadian Tire’s brick-and-mortar stores have shown resilience. The company currently has nearly 1,700 stores located across the country.
One of the company’s keys to success is that its stores carry multiple distinct consumer brands, each with annual revenue over $100 million. The brands are carried at Canadian Tire stores and its subsidiaries, including Sport Chek and Mark’s. Several of the company’s crucial acquisitions have helped drive consumers into its stores.
The annual growth rate estimate for Canadian Tire in the next five years is more than 17%, and some analysts have predicted the stock could gain between 19.8% and 31.06% over the next year.
As of this writing, the stock is trading at $152.11, down slightly from its high of $157.36 in November 2019. The current dividend yield is 3.06%.
Large dividend
If you prefer to stack your TFSA with heavy dividend payers, look no further than Vermilion Energy (TSX: VET)(NYSE: VET). The company pays a dividend of 14.61%!
The Calgary-based company produces petroleum and natural gas throughout the world, including Canada, France, the Netherlands, Germany, Ireland, Australia, the United States, and Central and Eastern Europe.
The company’s stock has been on a downward trend since 2014. Six years ago, the stock was trading above $70, which is a far cry from its price of $18.72, as of this writing. While the decline in the stock price is concerning, the company hasn’t slashed its dividend payouts once in 18 years.
Analysts tracking Vermilion stock have a 12-month price target of $24.41 on the stock. If these analysts are correct, this target represents an upside potential of 30% from the current price. The analysts also believe that the company can sustain its dividend payments in the short term, especially if the company is able to expand profit margins over the next few years via cost efficiencies.
