Given the average annual CPP (Canada Pension Plan) payout is less than $10,000 in 2023, it’s crucial to create multiple passive-income streams in retirement. According to a 2019 report, Canadian couples over the age of 65 spend $48,453 per household. After adjusting for inflation in recent years, this number might be over $50,000 in 2023.
While the spending amount will vary depending on location, housing, health, and other personal circumstances, we can see that just relying on the CPP is far from ideal.
In case you have accumulated wealth for retirement, it’s time to put the dry powder to use by investing across asset classes and instruments. You can either invest in debt instruments amid a rising interest rate environment, or you can also supplement retirement payouts by investing in quality high-dividend stocks trading on the TSX.
In addition to regular dividends, you stand to benefit from capital gains as well over time. Here are two such TSX dividend stocks to buy and hold right now.
Slate Grocery REIT
Slate Grocery (TSX: SGR.UN) owns and operates grocery-anchored real estate properties in the United States. With $2.4 billion of real estate infrastructure assets, its recession-resistant portfolio and strong credit tenants provide Slate Grocery with durable cash flows, allowing the company to pay an annual dividend of $1.15 per share, indicating a yield of 8.7%.
Despite an inflationary environment, Slate Grocery explained the demand for its well-located spaces has driven leasing momentum in the first quarter (Q1), which has boosted occupancy rates and cash flows. The company expects its below-market rents to help it grow organically while a strong liquidity position enables it to expand via strategic high-quality acquisitions.
New deals in Q1 of 2023 were completed at 17.1% above comparable average in-place rent, while renewals were finalized at 8.4% above expiring rent.
While rental sales were up 30.3% year over year at $50.78 million, net operating income rose by 23.8% to $39.8 million in Q1 of 2023. Slate’s revenue in the March quarter increased as its total leasing area surged by 43.6% year over year.
Enbridge stock
A Canada-based energy giant, Enbridge (TSX: ENB), currently offers investors a tasty dividend yield of 7.2%. Enbridge is part of the highly cyclical energy sector, but its predictable cash flows have allowed the company to raise its dividend by 10% annually in the last 28 years.
In the last 20 years, ENB stock has gained 293%. However, after adjusting for dividends, total returns are much higher at 820%. Comparatively, the TSX index has returned 400% in dividend-adjusted gains since July 2003.
Despite its outsized gains, Enbridge stock is priced at 16.2 times forward earnings, which is not too steep. A majority of the company’s cash flows are backed by long-term contracts. Moreover, these contracts are indexed to inflation, making ENB a top stock for income-seeking investors.
Enbridge continues to invest heavily in capital expenditures and is focused on expanding its presence in the clean energy space, which should drive future cash flows higher.
Its expansion plans should enable Enbridge to increase cash flows by 3% annually through 2025, after which they are forecast to increase by 5% each year. Given this visibility, investors should expect Enbridge to keep increasing the dividend as well.
