The world has changed for current and future pensioners in recent decades. For example, defined-benefit plans (DBP) have experienced a sharp decline in the private sector. That has increased pressure on the average Canadian to set up their own retirement. That is why I want to explore a passive income strategy and target two cheap TSX dividend stocks in this piece. I want to stash $20,000 in a Tax-Free Savings Account (TFSA) to churn out passive income.
Why pensioners should seek out passive income in 2023 . . .
Future Canadian retirees are going to find it harder and harder to secure employment that guarantees the kind of pensions the previous generation enjoyed. However, even those in that demographic cohort have seen big changes heightening the pressure on retirees. The cost of living in Canada has exploded in recent years, particularly after the COVID-19 pandemic. This means that even new retirees have been forced to find part-time employment to provide supplementary income. A passive income strategy might be a more attractive avenue for these pensioners.
These two cheap TSX stocks are perfect for our pensioner passive income portfolio
Sienna Senior Living (TSX:SIA) is the first monthly dividend stock I’d suggest to construct our make-shift passive income portfolio. This Markham-based company provides senior living and long-term care (LTC) services in Canada. Shares of this TSX dividend stock have climbed 2.1% in 2023 as of early afternoon trading on July 6
This company released its first quarter fiscal 2023 earnings on May 11. It delivered same property net operating income (NOI) of $34.7 million – up 9.9% compared to the previous year. Meanwhile, same property occupancy increased 300 basis points to 88.2% in the first quarter of fiscal 2023. Total adjusted revenue grew 14% to $199 million.
Shares of Sienna Senior Living were trading at $11.24 at the time of this writing. For our hypothetical, we can snatch up 900 shares of this TSX dividend stock for a purchase price of $10,116. This stock currently offers a monthly distribution of $0.078 per share. That represents a monster 8.3% yield. Pensioners can now generate monthly passive income of $70.20 in our TFSA.
Chartwell Retirement Residences REIT (TSX:CSH.UN) is a Mississauga-based real estate investment trust (REIT) that indirectly owns and operates a complete range of seniors housing communities, from independent supportive living, assisted living, and long-term care. This REIT was down marginally in early afternoon trading on July 6.
Its shares were trading at $9.25 per share at the time of this writing. We can purchase 1,068 shares of Chartwell Retirement REIT for a total price of $9,879. Chartwell REIT currently offers a monthly dividend of $0.051 per share, which represents a tasty 6.5% yield. This purchase allows us to make tax-free monthly passive income of $54.46.
An income stream for retirees
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| SIA | $11.24 | 900 | $0.078 | $70.20 | Monthly |
| CSH.UN | $9.25 | 1,068 | $0.051 | $54.46 | Monthly |
These investments in cheap TSX dividend stocks will allow pensioners to generate monthly passive income of $124.66 in our TFSA. That works out to tax-free annual passive income of $1,495.92.
