Planning for a secure and prosperous retirement doesn’t need to be a complex task. In fact, if you stick to the right investment strategies and start your investment journey early in life, you could easily expect to live your post-retirement life with financial freedom.
In this article, I’ll highlight two of the best Canadian dividend stocks to buy now that can help you make $1,000 in monthly passive income to enhance your life after retirement.
Freehold Royalties stock
When investing in dividend stocks for retirement planning, you should ideally stick to well-established businesses with a robust business model and strong growth prospects. With that in mind, Freehold Royalties (TSX:FRU) could be a great Canadian dividend stock to create a steady source of monthly passive income. This Calgary-headquartered oil and gas royalty firm makes most of its revenue (nearly 63% in 2022) from its Canada, while another large portion comes from the United States market.
After rallying by 204% in the previous couple of years, FRU stock has seen a 16.3% downside correction in 2023 to currently trade at $13.28 per share with $2 billion in market cap. The recent big declines in the prices of energy products amid a gloomy global economic outlook could be the main reason for the dismal year-to-date performance. Despite these temporary challenges, Freehold’s key focus on prudently managing debt and acquiring long-life, quality assets boosts its long-term growth outlook, which should help its stock turn positive again.
At the current market price, this Canadian energy stock offers a very impressive 8.1% annualized dividend yield and distributes its dividend payouts every month.
Dream Industrial REIT stock
Besides Canadian energy stocks, you can also consider investing a portion of your retirement portfolio in some fundamentally strong REITs (real estate investment trusts). Top Canadian REITs can help you earn reliable passive income for years, as they typically distribute a large portion of their earnings among investors through dividends. Considering that, I find Dream Industrial REIT (TSX:DIR.UN) attractive to invest in for the long term.
This Toronto headquartered open-ended REIT has a market cap of $3.5 billion, as its stock trades at $13.40 per share with 15.7% year-to-date gains. In addition, this monthly dividend stock offers an attractive 5.2% annualized dividend yield.
In the last three years (from 2020 to 2022), Dream Industrial’s average revenue-growth rate has been 24% YoY (year over year), despite facing COVID-19-related difficulties in between. During the same period, the average YoY growth in its adjusted earnings was at 40%, reflecting strength in its business model. Moreover, Dream Industrial REIT’s reliable tenant base, consistently expanding asset base, and resilient financial position makes its stock very attractive for retirement planning.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | INVESTMENT | DIVIDEND PER SHARE | TOTAL PAYOUT | DIVIDEND FREQUENCY |
| Freehold Royalties | $13.28 | 5,556 | $73,784 | $0.09 | $500 | Monthly |
| Dream Industrial REIT | $13.40 | 8,572 | $114,865 | $0.05833 | $500 | Monthly |
| Total | $188,648 | $0.14833 | $1,000 | |||
| Prices as of June 27, 2023 |
Bottom line
If you buy 5,556 shares of Freehold Royalties and 8,572 shares of Dream Industrial REIT, you can expect to earn $1,000 in monthly passive income from their combined dividends. To buy these many shares at their respective current market prices, however, you’ll need to invest a large amount of cash (about $188,648) in these companies.
While this example should give you a fair idea of how you can earn reliable monthly passive income after retirement by investing in Canadian dividend stocks, you should always avoid pouring such a large sum of money into a couple of stocks. Instead, you must consider diversifying your retirement portfolio by including several other quality dividend stocks from different industries in it.
