Retirement on Your Mind? These Dividend Stocks Should Be, Too

Is retirement on your mind? Have you planned what you will do with all that free time off work? When it comes to retirement, we often talk about money and savings. But rarely do we talk about how we will spend those hours in our hands. While retirement and the idea of a permanent vacation might look like a dream, many retirees get bored after a few months. They lose a sense of identity as they worked all their life either as a salesperson, developer, or architect. 

While we will discuss retirement financing later, let’s first discuss your hobbies, bucket lists, and intentions to keep your zeal and passion alive.

Project retirement 

In the same way you plan on passive income post-retirement, also plan your daily routine. Like you plan your day with a To Do List, create a simulation of a day in the life of retired John. Make sure you give yourself time for rest, as you may not have the same energy. 

Create a folder on your personal drive under the name Project Retirement. And just as you explored career options in your early 20s, explore your retirement options. You could set some time for your hobby, bucket list, and work you are good at. Instead of going out to work, you could take up remote part-time work. 

With technology at your side, you can complete that book you wanted to write or the masterpiece you wanted to create without much physical effort.    

While Project Retirement remains a work in progress, ensure it has adequate financing. 

Two dividend stocks for your retirement income 

While you take a long break from your high-paying work, make your money work for you. The lifelong investments can convert into monthly or quarterly retirement income with these dividend stocks. 

Enbridge stock

Enbridge (TSX:ENB) stock is trading closer to its 52-week low as the Bank of Canada’s latest interest rate hike pulled down stocks with leverage. While a high-interest rate might slow its dividend growth, it has enough cash flow to continue paying regular dividends. The pipeline operator has been paying regular dividends for 67 years. It has thrived during the 1980s stagflation, 2007 recession, 2014 oil crisis, and pandemic. The current macroeconomic situation is far better.

Enbridge is looking to tap the North American natural gas export market with its upcoming gas pipelines. Once these pipelines are operational, they could increase Enbridge’s cash flow and give it more flexibility to grow dividends. Now is a good time to add some lump sum amount and lock in a 7.36% dividend yield for the rest of your retirement, higher than its 6.5% average yield. 

An 0.8% dividend yield difference can be good enough. If you invest $20,000 today, you can get 412 Enbridge shares at $48.50/share instead of 370 shares at $54. It can also make a $150 difference in annual dividend income. 

CT REIT 

While building your passive income pool, diversify your investments across sectors to reduce industry-specific risk. CT REIT (CRT.UN) is a good option to add to your passive income pool as it is among the few REITs that grow their distributions at an average annual rate of over 3%. This growth is funded by a long-term lease with parent Canadian Tire, which allows it to increase rent by 1.5%.

Since Canadian Tire occupies over 92% of its leasable area, rental income is secure. The volatility is in the remaining 8% leasable area, but these third-party tenants also have a good credit ranking. The REIT is trading low as the rising interest rate has increased its mortgage rate. You can invest $20,000 now and lock in a 5.86% yield, higher than its 5.25% average yield. 

Expected retirement income from these two stocks 

A $40,000 investment could fetch you $216 in monthly passive income. This income can take care of your utility bills. Consider building similar small income pools for all your expenses and keep some emergency funds for your Retirement Project.