Retirees: Is CPP Enough to Live on?

The Canada Pension Plan, or CPP, was introduced more than five decades back to help residents replace a portion of their taxable income in retirement. In 2024, the maximum CPP payout for a 65-year-old is $1,364.60, while the average payout is much lower at $758.32. Comparatively, on average, Canadian households would need close to $4,000 each month to lead a comfortable life in retirement.

It’s evident that just relying on the CPP during retirement is not advisable. You need to supplement the pension plan with additional sources of income. A low-cost way to begin a passive-income stream is by investing in blue-chip dividend stocks.

Here are two TSX dividend stocks you can buy and supplement the CPP in retirement.

Manulife Financial stock

Valued at $59 billion by market cap, Manulife Financial (TSX: MFC) is among the largest companies in Canada. It pays shareholders an annual dividend of $1.60 per share, translating to a forward yield of almost 5%.

Despite an uncertain macro environment, Manulife recorded double-digit, top-line growth with record APE (annual premium equivalent) sales. Its stellar performance allowed Manulife to grow core earnings by 17% while the return on equity stood at 15.9%, in line with the company’s medium-term target.

Moreover, Manulife’s adjusted book value per share grew by 9% while its LICAT (life insurance capital adequacy test) ratio stood at 137%. Generally, a LICAT ratio of more than 100% is favourable.

Asia was a key region for Manulife, where it saw double-digit growth across new business metrics. In 2023, Manulife acquired CQS, a company with multisector alternative credit capabilities. The acquisition is expected to complement Manulife’s fixed-income and multi-asset solutions business.

Manulife generated remittances of $5.5 billion and returned $4.3 billion of capital to shareholders via dividends and buybacks. Priced at 8.8 times forward earnings, Manulife stock is very cheap, given its earnings are forecast to rise by 11.7% annually in the next five years.

Moreover, Manulife is a dividend-growth stock that has raised payouts by almost 12% annually in the last decade.

Brookfield Renewable Partners stock

Down 50% from all-time highs, Brookfield Renewable (TSX: BEP.UN) offers you a tasty dividend yield of 6.2%. The pullback in the last two years has been largely driven by rising interest rates and inflation, driving shares of capital-intensive companies lower.

Brookfield Renewable is among the largest clean-energy companies in the world that offers it a wide competitive moat and predictable earnings. Its resilient cash flows have enabled BEP to increase dividends by at least 5% annually in the last 13 years. Going forward, it expects dividends to increase between 5% and 9% each year.

Brookfield’s long-term power-purchase agreements are indexed to inflation, allowing it to increase funds from operations, or FFO, per share by at least 2% each year. Additionally, its focus on margin enhancements will translate to annual growth of roughly 3%, while a robust pipeline of development projects will power cash flow expansion by 3-5%.

Analysts remain bullish on BEP stock and expect it to gain 26% in the next 12 months.