Retirees: Supplement CPP With 3 Stocks That Pay You Every Month

Equity investors can supplement CPP payouts by creating a portfolio of monthly paying dividend stocks such as Savaria.

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The Canadian government has two major pension plans for retirees, including the Canada Pension Plan, or CPP. The CPP has a monthly payout and aims to replace a portion of your income in retirement.

But here’s why it’s not enough for retirees to completely depend on the pension plan.

How much does the CPP pay each month?

Your CPP payout depends on several factors, such as the average earnings during employment, contributions towards the CPP, and the age at which you begin these payments. In 2022, the maximum monthly payout for retirees starting pension at the age of 65 is $1,253.59, while the average monthly payout is lower at $727.61.

So, the maximum annual CPP payment for Canadians stands at $15,043, which is not enough to lead a comfortable life in retirement. It’s quite evident you need multiple income streams to supplement the CPP payments.

One way to create a passive-income stream is by purchasing dividend stocks that have a monthly payout. Let’s take a look at three such TSX stocks that pay investors a dividend each month.

Savaria

Savaria (TSX:SIS) is a small-cap TSX stock that is trading at a discount due to its depressed valuation. The company is expected to increase sales from $661 million in 2021 to $830 million in 2023. Its adjusted earnings per share are also forecast to more than double from $0.37 to $0.83 in this period.

Valued at less than 1.4 times forward sales and 19 times forward earnings, SIS stock is attractively priced considering its growth estimates.

One of the largest players in the accessibility space, Savaria manufactures products that allow individuals to maintain their personal mobility at home, in a vehicle, and even in public spaces.

Savaria pays investors a monthly dividend of $0.043 per share, translating to a dividend yield of 3.3%.

Northwest Healthcare

A healthcare-focused real estate investment trust (REIT), Northwest Healthcare (TSX:NWH.UN) continues to acquire and expand its base of cash-generating properties. With more than $10 billion of assets under management, Northwest Healthcare owns and operates over 230 properties in the Americas, Europe, the United Kingdom, Australia, and New Zealand.

These properties include core infrastructure hospitals, specialty hospitals, multi-tenant medical office buildings, specialty clinics, and life science properties, among others.

Northwest Healthcare is a top defensive play, as healthcare is a recession-proof sector, allowing the company to generate cash flows across business cycles.

With a monthly dividend payout of $0.067 per share, Northwest Healthcare offers investors a tasty dividend yield of 8%.

Exchange Income

The final monthly dividend stock on my list is Exchange Income (TSX:EIF). With a monthly payout of $0.21 per share, its forward yield is close to 5.2%.

Exchange Income is a diversified company that operates in the aviation services and aerospace segment. It began paying investors a dividend back in 2004 and has grown these payouts consistently in this period.

Its conservative approach, robust balance sheet, and diversified portfolio have allowed Exchange Income to increase its dividend by 16 times in the last 18 years.

Valued at less than one times sales and 16 times forward earnings, Exchange Income is very cheap. It’s expected to increase sales from $1.4 billion in 2021 to $2.26 billion in 2023. Comparatively, adjusted earnings might expand from $2.26 per share to $3.93 per share in this period.

The Foolish takeaway

Investing $25,000 in each of these stocks will allow investors to generate almost $350 in monthly income via dividends. You can identify several other companies that have a monthly payout and create a diversified portfolio of income-generating dividend stocks.

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 Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool recommends NorthWest Healthcare Properties Real Estate Investment Trust. The Motley Fool has a disclosure policy.

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