My CERB: Get $2,000 Every Month in 2 Easy Steps

The CRA will end its $2,000 cash benefit in September. Better than the CRA CERB is My CERB, which can get you $2,000 every month for decades.

| More on:
Canadian Dollars

Image source: Getty Images

The Canada Revenue Agency (CRA) will finally withdraw the $2,000 Canada Emergency Response Benefit (CERB) in September. Yes, you read it right. After extending the popular cash benefit by eight weeks, Prime Minister Justin Trudeau has decided to end the CERB, as the economy no longer needs emergency cash.

Canadians are gradually returning to work, as businesses re-open in the pandemic world with new safety measures. The CRA CERB was always temporary, but you can create a personal “My CERB” that is permanent.

Get $2,000 every month in My CERB

The CRA has spent more than $60 billion from its benefits pool to give out CERB payments. Like the CRA, you can create your benefits pool, which can give you CERB-like $2,000 in monthly payments in the long term.

The Canadian government encourages you to save a certain amount through the Tax-Free Savings Account (TFSA). If you are in your mid-30s and have never opened a TFSA, you can open it now and save up to $69,500. From next year onward, you can add $5,000-$6,000 every year, depending on the annual contribution limit.

The next question is where to invest this amount. It’s a little contrarian to what other analysts guide, but my pandemic stock pick is RioCan REIT (TSX:REI.UN).

RioCan: A once-in-a-decade buying opportunity

RioCan has a portfolio of 221 retail, office, and residential properties, with an aggregate net leasable area of 38.6 million square feet. The REIT earns revenue by renting these properties and returns this cash to shareholders through dividends. It collects around 75% of its rent from retailers, theatres, and restaurants.

The pandemic-driven lockdown has hit non-essential retail, theatre, and restaurant businesses. RioCan faced three major challenges in the second quarter because of the pandemic:

  • Rent collection: It collected 73.3% of its gross rent and made $19.1 million in provision for rent abatements and bad debts.
  • Reduction in fair value: Its investment properties’ fair value fell by 3.1%, or $451.7 million.
  • Occupancy rate: Its occupancy rate fell from 97.1% in the second quarter of 2019 to 96.4% in the second quarter of 2020.

The above challenges reduced RioCan’s stock price by 40% year to date to $15.8, a level that was last seen in 2009. However, the REIT has maintained its dividend per share, which increased its dividend yield to 9.1%.

As the economy reopens, RioCan’s rent collection is increasing. In July, it collected 85% of the billed gross rents. By next year, the REIT will also improve its occupancy rate. In the meantime, it has sufficient cash to withstand the crisis and continue paying the current dividend rate.

With the stock down to its 11-year low, it’s a once-in-a-decade opportunity to earn a 9% dividend yield for another 10-20 years and above.

Building my $2,000 CERB

If you invest $69,500 in RioCan now, you will get a monthly dividend income of $520. As the economy recovers, the RioCan stock will return to its pre-pandemic levels, probably by next year. This represents an upside potential of 70%, which means your $69,500 will grow to $118,000.

If you keep contributing $5,000 every year in your TFSA, you can invest that amount in Enbridge (TSX:ENB)(NYSE:ENB). Enbridge is North America’s largest pipeline operator and earns over 80% of its revenue by transporting natural gas and oil through its pipelines. Its stock price is affected by oil prices, but it has stable cash flows. It not only has a history of paying regular a dividend, but also growing it at an average annual rate of 14% in the last 10 years.

Enbridge has an average annual dividend yield of over 6%. If you invest $6,000 every year in Enbridge, you can earn around $1,500 in monthly dividend income in the next 10 years.

My CERB is better than the CRA CERB

You can earn $2,000 every month in dividend income from RioCan and Enbridge in the next 10 years. This amount will be exempt from your taxable income. Moreover, that amount will grow regularly and will continue for decades.

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 Puja Tayal has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Enbridge.

More on Dividend Stocks

thinking
Dividend Stocks

Should You Buy BCE Stock for its 8.6% Dividend Yield?

Down over 20% from all-time highs, BCE stock offers you a tasty dividend yield in 2024. But is the TSX…

Read more »

grow dividends
Dividend Stocks

How Long Would It Take to Turn $20,000 Into $100,000 With TSX Dividend Stocks?

Here's how high-quality TSX dividend stocks and the power of compound interest can help grow your investments by 400% or…

Read more »

Paper airplanes flying on blue sky with form of growing graph
Dividend Stocks

2 Soaring Stocks I’d Buy Now With No Hesitation

These two stocks may be the most expensive on the market, but they're high for a reason! And I'm still…

Read more »

Hour glass and calendar concept for time slipping away for important appointment date, schedule and deadline
Dividend Stocks

Invest $374.50 Each Month to Create Passive Income of $288 in 2024

Investing a specific amount each month to create passive income this year is possible with monthly dividend payers.

Read more »

Happy retirement
Dividend Stocks

2 Stocks to Help Turn $100,000 Into $1 Million

If you want to reach $1 million, $100,000 can certainly get you there. Even if you invest in some low…

Read more »

warning or alert
Dividend Stocks

Income Alert: These Stocks Just Raised Their Dividends

There's no shortage of companies that raised their dividends recently. Here's a trio of options to consider buying now.

Read more »

Business success with growing, rising charts and businessman in background
Dividend Stocks

Don’t Look Now, But These 3 TSX Stocks Look Poised for a Nice Rally 

Three TSX stocks are in a downtrend amid headwinds. 2024 may be rocky for them, but they are poised for…

Read more »

protect, safe, trust
Dividend Stocks

3 Safe Dividend Stocks to Beat Inflation

These three dividend stocks are excellent buys to beat inflation, given their solid underlying businesses and high yields.

Read more »