As a retiree, cultivating reliable sources of income is quite important. Most Canadian retirees have access to government pensions, though to fully sustain a decent lifestyle, they also need their own savings and investments.
One way to turn your savings into a source of income is through dividend stocks, ideally with a monthly payment frequency. To make a sizeable income, you would need to invest a significant amount in the right dividend stock.
A retail fuel company
Parkland (TSX: PKI) is a healthy choice for more than just its monthly payouts. It’s a Dividend Aristocrat, and even though its dividend-growth record has been quite decent and offers more than just enough to outpace inflation. This makes up for the relatively low yield of 3.5%, despite the current discounted condition of the stock.
At this yield, you will need to invest $100,000 just to get a decent yearly income of about $3,500. Spread out over 12 months, the $291 sum might be enough to augment other income sources, though not enough to replace any of them.
While it has diminished since the pandemic, the stock also has decent capital-appreciation potential. The company is the largest independent fuel retailer, which is an advantage worth considering when you are assessing this potential investment.
A mortgage company
Mortgage companies make decent dividend investments. Mortgage defaults are rarer than many people think, especially for companies like Atrium Mortgage Investment (TSX: AI) that target essentially the same pool as most conventional lenders (banks) but with a different strategy — customized solutions.
This makes them attractive to borrowers looking for unconventional mortgages, and the company gets to charge a premium for customized financial solutions.
The company is currently offering a juicy yield of 6.98%. So, if you invest $100,000 in the company, you can start a monthly income stream of about $581. That’s a powerful number and close to the average CPP or OAS pensions.
While dangerously close to 100%, the payout ratio hasn’t broken through that barrier once in the last decade, which indicates financial stability.
A high-yield REIT
Most REITs offer monthly dividends, but few offer a yield as high as Inovalis REIT (TSX: INO.UN) is offering right now. The 9.98% yield is dangerously close to the double digits, and the reason for such a high yield is the slump its stock is currently experiencing. The share price has already fallen almost 20% from its peak and may fall further.
You can start a passive income of about $831 a month at this yield. This is a substantial enough sum, mainly if supported by the dividends from the other two investments. Inovalis also offers dividend sustainability potential. The REIT managed to maintain its payouts through 2020, which was difficult for office properties (Inovalis’s real estate focus) due to home office/remote work prevalence.
Foolish takeaway
The three dividend stocks can collectively offer you about $1,703 a month with $300,000 invested. That’s a yield/return of about 6.8%, disregarding any capital-appreciation the stocks may offer. This makes them intelligent stocks for retirees who wish to start an income stream to augment their pensions.
