Retirees: 3 Safe Dividend Stocks to Help Top Up CPP Payments

The Canadian Pension Plan (CPP) is a monthly benefit provided by the government and taxed as income for when you retire. It’s an excellent program that you can start as early as age 60 and receive for the rest of your life.

The thing is, many Canadians continue to take out their CPP starting at 60, missing out on enormous income if they wait until 70. This increases as you age, as the amount you receive each month is based on your average earnings throughout your working life. The maximum amount you can receive, the government says, stops at 70. So, there’s no benefit to waiting after that.

CPP is getting better

In 2019, the CPP started its enhancement program. There will be higher benefits in the future, providing “greater financial stability,” as small increases to the amount contributed to the program take effect. The first phase is currently underway, with a second phase starting in 2024 through to 2025.

As of writing, however, the maximum monthly amount that could be receive at age 70 is $1,855.33. Still, that’s over $500 more than the average you would receive at age 65! At age 70, this would total $22,263.96 as of writing.

Granted, this isn’t enough to live on. And, unfortunately, it’s becoming harder to Canadians to save during inflation and high interest rates that push prices upwards, and savings down. So, that’s why today, we’re going to look at three safe stocks to consider to help top up your retirement benefits.

Grab Dividend Aristocrats

If you want safe income that’s as stable as your CPP payments, then you want Dividend Aristocrats. These are Canadian stocks that have increased their dividends each year for at least the last five years. And there are three that I want to focus on now.

Royal Bank of Canada (TSX: RY), Great-West Lifeco (TSX: GWO) and Slate Grocery REIT (TSX: SGR.UN) are all strong options for retirees. Royal Bank stock is the largest of the Big Six banks, providing decades of dividends and growth during that time. Shares are down during this economic downturn, providing a turnaround in returns in the near future when a bull market comes down once more. You’ll therefore get a deal on the dividend, while the stock trades at 12.3 times earnings with a 4.3% yield as of writing.

Great-West stock is another strong choice, as it continues to expand its insurance, and wealth and asset management industries. The stock also looks undervalued trading at 14.3 times earnings as of writing. This again should provide investors with a deal on this passive-income stock, bringing in a dividend yield at 5.5% as of writing.

Finally, if you really want to top up your monthly payments, consider grabbing a monthly passive-income stock like Slate Grocery REIT. The real estate investment trust focuses on grocery-anchored properties throughout the United States. It continues to expand, though costs have cut back earnings lately. This again leaves investors open to a discount with shares trading at 6.85 times earnings and offering a whopping 8.9% dividend yield.

Bottom line

If you were to invest $5,000 into each stock and add on your annual income, let’s break down exactly what you could get below.

In total, retirees could have income of $23,197.27 in annual passive income alone through CPP and dividend income. Add on returns, and you could incredibly income coming your way for the rest of your retirement.