Retiree Passive Income: Which of These 2 Energy Stocks is a Better Buy?

Two energy stocks with long-life energy infrastructure assets are excellent sources of passive income in retirement.

| More on:
green power renewable energy

Image source: Getty Images

Canadians cherish Old Age Security (OAS) because it assures a monthly income stream at age 65. Those who contributed to the Canada Pension Plan (CPP) would have more funds during their golden years. However, even if you’re receiving both benefits, it won’t guarantee a comfortable retirement life.

People who are forward-looking or want to secure their financial futures save and invest. For that purpose, the federal government introduced the Registered Retirement Savings Plan (RRSP) in 1957 followed by the Tax-Free Savings Account (TFSA) in 2009. Because the OAS and CPP are partial replacements for the average pre-retirement income, these investment accounts should help Canadians boost their future income.

Create a retiree’s passive income

Most Canadians building retirement wealth prefer to hold dividend stocks in their RRSPs or TFSAs as money growth in both is tax-free. For a reliable income source, pipeline stocks in the energy sector are logical choices. Today, you can choose TC Energy (TSX:TRP) or Pembina Pipeline (TSX:PPL).

The companies are major players in North America’s oil and gas midstream industry. Apart from their critical roles in the energy supply chain, both stocks provide superior dividend cash flow. The dividend offer of TC Energy is 6.22%, while Pembina’s yield is 5.69%.

Assuming you have $100,000 in savings to invest right now, the table below shows the number of shares you can buy and retiree passive income you can create.

CompanyPriceNo. of SharesDividend per ShareTotal PayoutFrequency
TRP$57.851728$3.60$6,217.81Quarterly
PPL$46.772138$2.66$5,689.67Monthly

Your investment in TC Energy and Pembina Pipeline will produce $6,217.81 and $5,689.67 yearly assuming dividend yields remain constant. However, the dividend payout frequency differs. Thus, you’d receive $1,554.45 every quarter from TRP and $474.14 monthly from PPL.

Multiple growth platforms

TC Energy stands tall in North America because of its diversified, high-quality assets that serve as growth platforms. The $57.9 billion conglomerate operates a pipeline network (natural gas and oil, and liquids), provides energy solutions, and owns seven power generation facilities.

The long-life energy infrastructure assets generate consistent cash flows and enable dividend growth. TC Energy has increased its dividends for 21 consecutive years. President and CEO, François Poirier, said, “Demand for our services across our North American portfolio remains high.” He expects the strong utilization, availability, and overall asset performance to continue for years.

Top monthly income stock

Besides its dividend growth streak of 10 years and attractive dividend yield, Pembina Pipeline is popular with income investors for its monthly payout scheme. The $25.8 billion energy transportation and midstream service provider is highly diversified and constantly pursuing new growth projects.

Management expects cash flow from operating activities in 2023 to exceed dividends and Pembina Pipeline’s capital investment program needs, like in 2022. The Board approved a 3.6% dividend hike this year due to record-setting financial results.

Boost your pensions

TC Energy and Pembina Pipeline are generous passive income providers. Canadians can boost their retirement income sources like OAS and CPP by saving and investing in either dividend aristocrat.

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 Pembina Pipeline. The Motley Fool has a disclosure policy.

More on Energy Stocks

The sun sets behind a high voltage telecom tower.
Energy Stocks

2 Utilities Stocks With Sought-After Stability

Here's why Fortis and Hydro One are two top utilities stocks long-term investors may want to consider right now.

Read more »

Choose a path
Energy Stocks

Algonquin Power Stock: A Smart Investment or a Value Trap?

Does APQ stock have more surprises for investors like last year?

Read more »

Oil pumps against sunset
Energy Stocks

Canadian Energy Stocks: Here’s Your Best Bet in February 2023

Want to bet on energy stocks in 2023? Try this Canadian stock for solid income and growth.

Read more »

a person watches a downward arrow crash through the floor
Energy Stocks

Why ARC Resources Stock Plunged 17% in January 2023

Should you buy ARC Resources stock now?

Read more »

oil tank at night
Energy Stocks

Is CNQ Stock a Buy in February 2023?

Canadian Natural Resources stock has many things going for it, including its strong dividend history, as well as cash flow…

Read more »

tsx today
Energy Stocks

TSX Today: What to Watch for in Stocks on Thursday, February 2

More corporate earnings reports could give further direction to TSX stocks today.

Read more »

oil and gas pipeline
Energy Stocks

Better Buy: Suncor Stock or Enbridge?

Amid the favourable environment, would you be better off investing in ENB or SU energy stock right now?

Read more »

Electric car being charged
Energy Stocks

Your Play to Get in on the 2023 EV Boom

Here's why Magna International may be the best way for Canadian investors to ride the EV boom.

Read more »