Retirees: Here’s How to Boost Your CPP Pension

Enbridge stock, which has a dividend yield of 7.66%, is an example of a prime candidate to consider to boost your CPP pension.

Karen Thomas, MSc, CFA

Karen is a stock market enthusiast focused on uncovering those stocks that she believes the market has mispriced. She does this through fundamental and quantitative analysis of companies and their industries, as well as a study of future opportunities and trends. She holds a Masters degree in Finance, the CFA designation, and has over 20 years of experience in the investment management industry. Having worked at a major pension fund, as well as two leading mutual fund firms as an analyst and portfolio manager, she has solid investing expertise which she aims to share with her readers.

Published November 21, 2023 4:20 pm EST

The idea of retirement is an exciting but stressful time for most. Will we have enough money to live a life of comfort and ease in our golden years? One of the most worrisome thoughts that many of us grapple with is related to our finances. The CPP pension is a nice start, but not necessarily enough to achieve this comfort, as the maximum monthly CPP payments we can get if we start it at 65 years old is just over $1,300.

In this article, I will discuss ways that we can boost our CPP pension through investing in the stock market. This entails investing in a few reliable dividend stocks that are proven dividend payors. It’s not rocket science, but worth the time and effort to get that CPP pension boost.

Retirees sip their morning coffee outside. — Source: Getty Images

Fortis: Boost your CPP payments with this 4.19% yield

I’m often drawn to Fortis Inc. (TSX:FTS) for its dividend history, predictability and reliability, and for its defensive business. It’s what we need in retirement – safe, reliable income. And Fortis is the poster child for this.

Fortis is a regulated utility that provides energy to its customers in North America. This means that its revenue is highly predictable, with rates of return that can be counted on. In turn, this makes for smooth and steady cash flows, earnings, and dividends. It’s a business profile that’s summed up nicely in Fortis’ 50-year history of dividend increases.

There will never be a time when we don’t need energy. And Fortis is firmly entrenched as one of the prime suppliers. So, looking ahead, we can continue to be confident in Fortis’ ability to provide a nice boost to our CPP pensions. Some might call this stock boring. I call it a windfall that keeps paying year after year.

At this time, Fortis stock is yielding 4.19%. It’s a healthy yield and one that we can expect to continue to grow over time as the company continues to institute the yearly dividend increases that it’s known for.

Enbridge: A 7.66% yield to significantly boost your CPP pension

As one of North America’s top energy infrastructure giants, Enbridge Inc. (TSX:ENB) is another company that benefits from predictability. You see, Enbridge’s infrastructure is an essential part of what makes business and living in North America as we know it possible. It’s true that the fossil fuel industry has gotten a bad rap lately. But it’s also true that the industry is rapidly cleaning up and that oil and gas will be needed for many more years.

At this time, Enbridge stock is yielding a very generous 7.66%. This yield reflects the company’s strong dividend, but also investors’ lack of faith, which has driven Enbridge’s stock price lower. But, in my view, this is a disconnect that will rectify when the market realizes a few things.

First of all, Enbridge is a successful cash generator, with a relatively low-risk operation. In the first nine months of 2023, Enbridge’s adjusted EBITDA increased 6.3% to $12.3 billion. This was largely driven by higher volumes and increased economic interests in various pipelines. Additionally, in the last five years, Enbridge’s free cash flow has more than doubled to $6.4 billion.

In addition to these strong cash flow numbers, Enbridge’s business has some risk mitigating factors that increase its cash flow predictability and reliability. Again, really great characteristic that retirees should look for when attempting to boost their CPP pensions. This includes the fact that Enbridge’s cash flow profile is diversified across different businesses. Also, 98% of the company’s EBITDA is underpinned by long-term contracts or “take or pay” contracts (with the added feature of inflation protection and cost sharing provisions).

So, it’s these characteristics as well as Enbridge’s defensive business that makes me comfortable recommending Enbridge stock to boost your CPP pension.

The bottom line

The CPP pension is a nice income stream to receive in retirement. But it only adds up to an annual income of just over $15,500. Clearly, we need supplements to this to achieve a more livable retirement. The stocks that I mentioned in this article, Fortis and Enbridge, are a great place to start to boost your CPP payments.