Retirement can be a time to relax and enjoy the fruits of your labour. But it can also be a time when you need to make sure you have a steady stream of income to cover your expenses. One way to do this is to invest in dividend stocks.
Dividend stocks are shares of companies that pay out a portion of their profits to shareholders on a regular basis. This can provide you with a reliable source of income that you can use to supplement your retirement savings. Let’s look at a great option to consider on the TSX today.
Slate Grocery REIT for passive income
One dividend stock that is a great option for Canadians is Slate Grocery REIT (TSX:SGR.UN). Slate Grocery is a real estate investment trust (REIT) that owns and operates a portfolio of grocery-anchored retail properties in the United States. The company has a strong track record of dividend growth, and it is well positioned for future growth.
Slate Grocery REIT has a long track record of creating profit, even in some of the hardest of times. This included during pandemic, when its role as an essential service provider became an asset. The stock has focused more and more on grocery chains rather than retail, mainly because of this essential service it provides.
This has allowed Slate stock to increase not only its portfolio but its dividend as well. The stock currently holds a dividend yield of 8.4%, with the dividend remaining stable throughout the last five years, despite going through the COVID-19 pandemic. So, if you’re looking for a stable passive-income stream in retirement, you can certainly count on Slate stock.
Creating a monthly passive-income stream
Now, let’s use Slate Grocery REIT as an example to create a monthly passive-income stream. Let’s say you’re a Canadian making $50,000 per year. You don’t have any debts and can therefore afford to put aside $500 each month towards investing. That can be through a Tax-Free Savings Account (TFSA), a Registered Retirement Savings Plan (RRSP), or other investing option.
You take those funds and invest in Slate stock, collecting passive income over the next 20 years. In that time, you take the dividend income and reinvest it back into the stock year after year. Over time, you see not just your investment in Slate Grocery REIT increase but your dividend income as well.
A basic example
Let’s say you were to invest that $500 each month for the next 20 years. And in that time, let’s say your shares in Slate REIT remain flat, and your dividend remains the same. So, you’re merely collecting passive income in that time and putting aside savings.
In that time, investing $6,000 each year over 20 years would mean putting aside $120,000 in investments. Again, as a basic example, let’s say shares remain the same, as does the dividend. Here is what you could be making at the very least in 20 years without even reinvesting your dividend income.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| SGR.UN | $13.50 | 8,889 | $1.14 | $10,133.46 | monthly |
So, in what would amount to a worst-case scenario, even with putting all that cash aside each and every month and spending your passive income instead of reinvesting it, you would still end up with $10,133.46 in annual passive income. That would amount to a monthly passive income of $844.45!
Bottom line
Here’s the thing, this is a worst-case scenario because you can reinvest, and you can see shares increase during this time. But this just shows you that even if Slate Grocery REIT doesn’t move up a cent, and the dividend remains steady as well, you could still create immense passive income each and every month. Nearing double what you’ve been investing each month. That will certainly create a large passive-income stream to hold in retirement.
