Retirees: How You Can Earn $600 a Month in Dividends With Less Than $100K in Savings

It’s crucial to save enough for retirement to lead a comfortable life during your non-working years. So, Canadian retirees can consider investing in dividend stocks to create a predictable stream of cash flow.

While dividends are not guaranteed, you can still find a plethora of stocks that have high yields that are also sustainable. Let’s see how you can earn at least $7,200 a year in annual dividends, translating to a monthly payout of more than $600 with less than $100,000 in savings.

Here are three top TSX stocks that enjoy high yields and issue monthly dividend payouts.

Slate Grocery stock

A pure-play grocery-focused real estate investment trust (REIT), Slate Grocery (TSX: SGR.UN) pays investors a monthly dividend of $0.095 per share, indicating a forward yield of 8.6%. With $2.4 billion in assets, Slate Grocery has 117 properties in the U.S. spanning 15.3 million square feet.

Grocery is a recession-resistant sector with a proven ability to outperform in periods of economic volatility. Moreover, all purchase methods that include e-commerce require brick-and-mortar stores to facilitate the delivery of goods to customers.

Slate Grocery and its peers also benefit from strong tenant demand, low vacancy rates, and limited new construction, resulting in consistent rent growth and cash flows.

Slate Grocery’s portfolio comprises the largest global grocers, including Kroger and Walmart. It has also deployed $900 million toward highly accretive acquisitions since 2021, which should drive future cash flows higher.

TransAlta Renewables

A major player in the clean energy space, TransAlta Renewables (TSX: RNW) pays shareholders a monthly dividend of $0.078 per share, which indicates a yield of 7.1%. A Calgary-based company, TransAlta is a renewable energy giant with facilities located in Canada, Australia and the U.S.

These facilities are diversified across verticals such as wind, hydro, solar and gas. Similar to most other utility companies, a majority of TransAlta’s cash flows are tied to long-term power-purchase agreements, enabling it to enjoy stable cash flows across economic cycles.

Down from 45% all-time highs, RNW stock is priced at 19.7 times forward earnings, which is quite cheap.

Freehold Royalties

The final monthly dividend stock on my list is Freehold Royalties (TSX: FRU). It pays shareholders a dividend per share of $0.08 each month, indicating a yield of 7.8%. Freehold Royalties reported record revenue of $393 million in 2022, which was an increase of 170% compared to its five-year average. Its funds from operations also surged to $316 million in 2022, up from $190 million in 2021.

With a payout ratio of less than 60%, Freehold Royalties expects to return $160 million to investors in 2023, while funds from operations are forecast between $250 million and $280 million.

Freehold Royalties has a diversified list of payors. The top 10 payors account for 50% of sales, while no single payor accounts for more than 20% of revenue.

The final takeaway

You can invest $31,000 in each of these stocks to earn $600 in monthly dividends, indicating an annual payout of over $7,200. If dividends are raised 5% each year, your payout would double in the next 14 years, increasing your average yield to 15.5% on a total investment of $93,000.