This 1 Stock Could Rake in $15,000 Retirement Income Per Year

Raking in $15,000 retirement income annually is possible if you start saving and investing today. If you opt for a single stock investment, BCE stock can deliver the amount you seek.

| More on:
A golden egg in a nest

Image source: Getty Images.

COVID-19 altered, if not completely changed, retirement expectations of Canadians. If that were not the case, why then did the household savings rate increase during the pandemic? BMO Economics estimates excess savings to be around $150 billion. Instead of spending their pandemic money, people are hoarding it and saving for the future.

Would-be retirees know that the Canada Pension Plan (CPP) and Old Age Security (OAS) are only partial replacements to the average pre-retirement income. They must figure out how to augment the pensions, generate more income, and not outlive their savings.

Dividend investing is the way to accomplish such an objective. If you were to stick to single stock investment, the logical choice is none other than BCE (TSX:BCE)(NYSE:BCE). With its 5.86% dividend yield, you can gradually accumulate shares over time and rake in $15,000 retirement income per year.

Market dominance

BCE is TSX’s number one telecom stock. The telecommunications sector is stable, very much like the railway industry. This $54 billion company, along with Telus and Rogers Communications, forms the oligopoly. New entrants must have massive financial resources to build and match the infrastructure of the Big Three, especially BCE.

I fondly describe BCE as the Coca-Cola of the telecom industry, because it dominates the market like the soft drink king. BCE owns the largest network of data centres and retail outlets in Canada. Bell LTE is also the country’s national network.

BCE’s three business segments (Bell Wireless, Bell Wireline, and Bell Media) practically fill the communication needs of the entire population of Canada. The core businesses combined to generate nearly $24 billion average revenue over the last three years. During the same period, the average net income was $2.9 billion.

Dividend history

Canada’s Big Five banks are favourite dividend stocks, because each one has been paying dividends for more than 100 years. BCE’s dividend sequence is just as impressive. The company began operations in 1880, and the sharing of earnings started one year after. BCE hasn’t missed paying dividends since — 140 years and counting.

The top-tier telco stock’s total return over the last 45 years is 66,212.96% (15.38% CAGR). BCE is an ideal holding for present and future retirees. If you were to invest today, the share price is $59.71. As mentioned earlier, you can start small and accumulate shares if finances allow. You can also keep reinvesting the quarterly dividends.

Power of compounding

You should own at least $256,000 worth of BCE shares at the current dividend yield to generate $15,000 in annual income. To illustrate the power of compounding, a $50,000 investment today would be worth $156,173.60 in 20 years. You have to understand that building wealth or retirement funds is a long-drawn activity.

Make it a habit to set aside a fixed amount every month for investment purposes. A matured but ever-growing company that provides vital communications products and services will not disappoint. Dividend payments are regular, and you won’t worry much about the market’s ups and downs. BCE, the number one telco stock, can deliver the much-needed income you seek in retirement to boost your CPP and OAS pensions.

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 Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends ROGERS COMMUNICATIONS INC. CL B NV and TELUS CORPORATION.

More on Dividend Stocks

Two seniors float in a pool.
Dividend Stocks

TFSA: How to Earn $1,890 in Annual Tax-Free Income

Plunk these investments into your TFSA to earn passive income and avoid the taxman.

Read more »

Engineers walk through a facility.
Dividend Stocks

1 TSX Stock I Wouldn’t Touch With a 10-Foot Pole

AtkinsRéalis (TSX:ATRL) is one TSX stock I'd never invest in.

Read more »

edit Woman in skates works on laptop
Dividend Stocks

3 No-Brainer Stocks to Buy Under $30

These three stocks all offer a huge deal for investors looking for dividends, as well as growth that will last.

Read more »

You Should Know This
Dividend Stocks

How to Convert a $300 Monthly Investment Into $338 in Monthly Income

If you want a certain amount in monthly passive income, invest a similar amount today and leave the rest to…

Read more »

Increasing yield
Dividend Stocks

3 Income Stocks With Big Yields to Consider in April 2024

If you haven’t yet made your March investments, here are three income stocks to buy the dip and lock in…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

RRSP Investors: Don’t Miss Out on This Contribution Hack!

This hack has so many benefits for you -- not just when you put it in your RRSP but for…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

Passive Income: 2 Safe Dividend Stocks to Own for the Next 10 Years

Dividend stocks such as Manulife and Fortis can help you generate a stable and recurring passive-income stream.

Read more »

Young woman sat at laptop by a window
Dividend Stocks

3 Dividend Stocks Everyone Should Own for the Long Haul

For investors looking for top-tier dividend stocks to buy and hold for the long term, here are three of my…

Read more »