Even if you combine the two most common government pensions, that is, the Canada Pension Plan (CPP) that you pay into throughout your work life and the Old Age Security (OAS) pension paid to Canadian residents 65 years or older, the amount may not be enough to cover your monthly expenses as a retiree. You can boost it by delaying your payments till you are 70, but even that might not be enough.
Considering that a relatively small minority of Canadians receive a private pension from their employers, the onus of boosting your pension income may fall on you, and one of the best ways to do it is by investing in reliable and generous dividend stocks. With enough capital, the right dividend stocks can generate enough to supplement your pension income.
An energy stock
TC Energy (TSX:TRP) is one of the largest pipeline companies in Canada whose business model leans quite heavily toward natural gas transportation. It controls over 93,000 kilometres of natural gas pipeline, which transports about a quarter of the natural gas consumed in North America.
It also has a sizable oil pipeline business, but the company is planning to spin it off and emerge as a pure-play natural gas midstream giant. It also has a power business with about 4.2 GW of production capacity.
Like the handful of other midstream giants in Canada, TC Energy is quite stable. It didn’t rise up explosively during the post-pandemic bullish phase, like many other energy stocks in the country. It has displayed decent long-term growth potential and is quite resilient against adverse market conditions.
However, the most important characteristic of the stock, especially if you are buying it to boost your pension income, is its dividends. It has been growing its payouts for 22 consecutive years and is currently offering dividends at a highly attractive 6.9% yield.
A telecom stock
BCE (TSX:BCE) is one of the three Canadian telecom giants and one of the best 5G stocks you can buy in the country.
It has a massive reach, and even if it doesn’t translate strongly enough into profits yet, it has set the stage for long-term future growth on the expected Internet of Things (IoT) wave, when millions of devices may need to connect with the internet, and BCE will have access to a large slice of this new market.
BCE hasn’t been a good pick from a growth perspective, at least in the last five years. However, it’s perhaps the best dividend stock you can buy in the telecom sector.
The company has been growing its payouts for 14 consecutive years, and it’s currently offering dividends at an attractive 7% yield. The yield is boosted by the 25% discount the stock is currently trading at.
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Foolish takeaway
For retirees, these dividend stocks can be a good way to convert parts of their nest egg into income-producing assets. With $50,000 in each of the two stocks, they can generate a monthly income of about $580. They can significantly boost your pension income and may just be enough to bridge the gap that exists between your pension and expenses.
