The Canada Pension Plan, or CPP, is a monthly taxable benefit that aims to replace a portion of your income when you retire. To qualify for the CPP payout, you must be over the age of 60 with at least one valid contribution made to the retirement plan.
How much will retirees receive from the CPP?
The amount of money you receive each month depends on factors such as the average earnings throughout your working life, contributions to this retirement account, and the age you decide to start withdrawing the retirement pension.
The standard age to start the pension is 65. But you can begin the CPP payout as early as age 60 or delay it until you reach 70.
The Canada Pension Plan has been gradually enhanced since 2019 so that Canadian employees can benefit from higher benefits and greater financial stability in retirement. Individuals should note that the CPP enhancement is applicable to those who work and contribute to the pension plan in 2019 or after.
In 2024, the maximum monthly amount a 65-year-old starting the payment would receive is $1,364.60, while the average monthly payout is much lower at $758.32. We can see that the CPP payouts are quite low, given the monthly cost of living for Canadian individuals is well over $1,000 if we exclude rent.
It’s evident you need to have multiple sources of income to lead a comfortable life in Canada. One way to create a passive-income stream for life is by investing in quality dividend stocks such as Canadian Natural Resources (TSX:CNQ). Valued at $93 billion by market cap, Canadian Natural Resources stock currently offers you a tasty dividend yield of 4.7%.
Is CNQ stock a good buy right now?
Canadian Natural Resources acquires, develops, and sells crude oil, natural gas, and natural gas liquids. Its midstream assets include two pipeline systems and a 50% working interest in an 84-megawatt cogeneration plant at Primrose.
In 2023, the company’s strong capital program and cash flows allowed it to pay shareholders an annual dividend of $4 per share. Despite the cyclical nature of its business, CNQ has raised dividends by more than 20% annually in the last 24 years, showcasing the resiliency of its cash flows.
It should end the first quarter (Q1) of 2024 with a net debt of $10 billion, after which CNQ aims to distribute 100% of free cash flow to shareholders.
Its prudent capital budget for 2024, low maintenance capital requirement, and a long-life, low-decline asset base should allow CNQ to increase adjusted earnings to $8.05 per share in 2024 from $7.41 per share in 2023.
Canadian Natural’s strategy of maintaining a diversified portfolio of low-decline assets provides it with the flexibility to maximize shareholder value.
CNQ reported adjusted earnings of $2.9 billion in Q3, while adjusted funds flow stood at $4.7 billion. After accounting for capital expenditures and dividends, its free cash flow stood at $2.7 billion in the September quarter.
In the last three quarters, CNQ has returned more than $6 billion to shareholders through dividends and buybacks. Analysts remain bullish on the TSX stock and expect shares to surge by more than 12% in the next year.
