According to a survey conducted by Bank of Montreal, a household spends $4,000 each month on average in major Canadian cities. Comparatively, the maximum CPP (Canada Pension Plan) payment in 2024 is $1,364.60, while the average payout is much lower at $758.32.
It’s evident that retirees can’t just bank on pension programs such as the Canada Pension Plan to secure their expenses in retirement. So, it’s crucial to have multiple streams of income to supplement the CPP payout.
One low-cost strategy to begin a recurring income stream is by investing in fundamentally strong dividend stocks. Here are two quality TSX dividend stocks you can buy right now and boost your CPP pension this year.
Manulife Financial stock
One of the largest companies in Canada, Manulife Financial (TSX:MFC) offers you a tasty dividend yield of 5%. An insurance giant, Manulife increased APE (annual premium equivalent) sales by 20% year over year in the fourth quarter (Q4) of 2023, driven by double-digit growth across business segments. The increase in APE was attributed to demand in growth markets such as Asia. Further, large and midsized group insurance sales in Canada and a rebound in demand from affluent customers in the U.S. drove APE growth in Q4.
The company’s stellar results allowed Manulife to deliver a core return on equity of 16.4%, which is above its medium-term target of 15%. It was the third consecutive quarter where Manulife reported an ROE of more than 15%.
Since Manulife resumed its buyback program in 2022, it has returned $8.7 billion of capital to shareholders via dividends and buybacks. It plans to launch a new program where Manulife will purchase up to 2.8% of its common shares. The insurance behemoth also increased its quarterly dividends by 9.6% year over year and currently pays shareholders an annual dividend of $1.60 per share.
Priced at 8.8 times forward earnings, MFC stock is really cheap, given analysts forecast earnings to grow by 11.7% annually in the next five years.
Brookfield Renewable Partners stock
Another high-dividend stock is Brookfield Renewable Partners (TSX:BEP.UN), which yields 6.2%, given its annual dividend payout of US$1.42 per share. In Q4 of 2023, Brookfield Renewable reported funds from operations, or FFO, of US$0.38 per share, an increase of 9% year over year. In the last 12 months, it reported a record FFO of US$1.1 billion or US$1.67 per share, an increase of 7% year over year.
In 2023, BEP paid shareholders an annual dividend of US$1.352 per share, indicating a payout ratio of 81%, which is not too high, given the company’s struggles with headwinds such as rising interest costs and inflation.
In Q4, BEP commissioned nearly 50% of its 5,000 megawatts of new capacity, which should drive future FFO higher. It is also positioned to generate strong cash flows due to the acquisitions completed in Q4, which should add US$100 million in incremental FFO each year.
Brookfield Renewable Partners continues to focus on its capital-recycling program and sold assets for US$800 million last year, representing over three times the invested capital.
The company explains, “We take a disciplined and practical approach to asset rotation, looking to sell assets when they are in demand and attracting valuations at or above our internal assessments regardless of technology or geography.”
