Want to Retire With a Steady Income? These Canadian Dividend Stocks Can Provide it

Canadian investors can prepare for favourably taxed retirement income by building a solid portfolio of dividend stocks over time.

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Retirement income can come from pensions, government benefits, and your savings. Pensions could be from a company plan or the Canada Pension Plan (CPP) that you made payments to during your working years. Government benefits might include the Guaranteed Income Supplement (GIS) and the Old Age Security (OAS) pension. If you plan to retire early, note that the GIS or OAS will not come into play until you’re in your 60s.

In any case, savings put into Canadian dividend stocks can help provide a good portion of steady income in your retirement. This is because eligible Canadian dividends are taxed at lower rates than your job’s income.

For example, Canadian retirees living in Ontario can earn up to $53,359 in eligible dividends this year without paying any taxes if that’s their only source of income. Moreover, the earlier you invest, the more opportunities you have in buying dividend stocks at an attractive initial dividend yield during bear markets or market downturns.

Through the Canadian Dividend Aristocrat list, you can explore dividend stock ideas for potential steady income through retirement. Here are a couple of ideas that are good buys now.


Canadian Imperial Bank of Commerce (TSX:CM), or CIBC, is one of the Big Five Canadian banks that has paid common stock dividends for 155 years. As far as I can see, in the last 20 years, it has maintained or increased its dividend.

Particularly, its 10-year dividend-growth rate is 6.1%. Its decade’s long earnings-per-share growth rate is about 5%. It’s reasonable for investors to expect a long-term earnings or dividend-growth rate of 5-6% from the bank stock. Just note that the dividend growth can be bumpy. For example, like the other big banks, CIBC froze its dividend around the global financial crisis, but it was able to raise its dividend by 12% in fiscal 2022.

The dividend stock is experiencing a downturn. It’s down approximately 30% from its high in February 2022. Higher interest rates in the last year or so and an increased risk of a recession this year are concerns that are weighing the stock. On the bright side for investors, the risk-on atmosphere has pushed CIBC’s dividend yield higher to 6%, which is attractive for current and future income generation.

Over the next five years or so, the solid dividend stock has a good chance of delivering total returns of about 13% per year and potentially end the period with a yield on cost of roughly 7.7%.


Enbridge (TSX:ENB) stock is another good choice for high retirement income. In the last year or so, the large energy infrastructure stock has been stable. Essentially, it has traded in a sideways range between largely $50 and $55 per share.

The dividend stock has a long-term track record of increasing its dividend. Its dividend-growth streak is 27 consecutive years with a three-year dividend-growth rate of 5.2%. Over the next few years, ENB stock should be able to increase its dividend by 3-5% per year.

At $53.60 per share, analysts believe the stock is fairly valued and offers a juicy yield of 6.6%.

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 Kay Ng has no position in any of the stocks mentioned. The Motley Fool recommends Enbridge. The Motley Fool has a disclosure policy.

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