The Canada Pension Plan (CPP) and Old Age Security (OAS) are monthly benefits in the golden years but not necessarily income in retirement. Since the CPP and OAS replace only a part of the average worker’s income, they can’t be your sole income source in retirement.
People delay retirement because of lack of savings or retirement funds. You can overcome the fear and be confident of retiring if you have a nest egg that can fund you for years. Better still, you can retire on your own terms if you plan ahead and take control of your finances.
Saving and investing for retirement
The Tax-Free Savings Account (TFSA) is available to Canadians who want to save for retirement or build retirement wealth. You can put your money to work through the tax-advantaged account. Also, maximize the limits yearly for best results.
Consider purchasing dividend stocks to hold in the account. Alaris Equity Partners Income Trust (TSX: AD.UN) and Fiera Capital Corp. (TSX: FSZ) suit your TFSA because their high yields can substantially increase investing profits and enable your TFSA balance to grow faster.
Long-term funding
Alaris provides private businesses with long-term capital or becomes their permanent equity partners. This $686.8 million private equity firm boasts a unique investment structure and is highly selective when extending financial support. The clients are mostly lower middle market companies producing over $3 million in cash flows.
Management focuses on well-run companies with industry-leading positions in business and professional services, healthcare, and industrial. These companies retain operating control and are given an indefinite time horizon to achieve their full potential and deliver healthy returns. More importantly, the businesses are asset-light with a low risk of obsolescence.
In 2022, Alaris reported record revenue of $190 million, although earnings fell 9.4% to $130.7 million versus 2021. Still, its President and CEO, Steve King, said it was another record year of performance. With the current macroeconomic headwinds, Alaris targets recession-resistant companies with little or zero debts.
If you invest today, the TFSA stock trades at $15.09 per share (-1.83% year to date) and pays a lucrative 9.15% dividend. Alaris hasn’t missed paying dividends since it changed the payout frequency to quarterly in March 2020. Your 2023 TFSA limit of $6,500 can buy 430 shares and generate $148.20 in passive income every quarter.
Hefty dividend payout
Fiera Capital delivers customized multi-asset solutions and helps create sustainable wealth for clients. The $675.6 million investment management firm caters to client institutions, financial intermediaries, and private wealth clients in North America, Europe, and selected Asian markets.
In 2022, revenues and net earnings declined 9.1% and 65.4% year over year to $681.4 million and $25.4 million, respectively. Fiera Capital’s founder, Board Chairman, and CEO, Jean-Guy Desjardins, said last year was marked by challenging macroeconomic circumstances.
As of this writing, the stock underperforms with its 20.4% year-to-date loss. However, at $6.54 per share, the dividend yield is a hefty 13.5%. You must have a high-risk appetite to invest in Fiera, although it has consistently paid dividends since 2011.
Financial independence
Not everyone can retire on their own terms, although investment accounts like the TFSA can help Canadians attain financial independence and do so.
