Canadians starting Canada Pension Plan (CPP) and Old Age Security (OAS) payments will have income for life. However, the combined monthly benefit of $1,545.26 (at age 65) might not avert financial dislocation. Fortunately, there is a remedy to augment retirees’ benefits in Canada and increase financial security in retirement.
The minimum requirement for dividend investors is to ensure that the investment choices can produce pension-like income like the CPP and OAS. BCE (TSX:BCE) and TC Energy (TSX:TRP) are excellent choices if you want decades, if not lifelong, passive income.
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Industry-leading footprint
BCE, the largest telco in Canada, is a no-brainer choice for future retirees. The $40.7 billion company has the size, scale, and industry-leading service footprint. More importantly, the dividend yield is a mouth-watering 8.94%. If you invest today, the 5G stock trades at less than $50 at only $44.61.
The three core business segments, Bell Wireline, Bell Wireless and Bell Media, contribute to revenues. BCE’s cumulative net income in the last four years is $9,999,000,000, or $2,499.75 billion annually. Because of consistent profitability and strong capital structure, the Dividend Aristocrat has raised its dividend for 16 consecutive years.
In the first quarter (Q1) of 2024, operating revenues and net earnings declined 0.7% and 42% to $6 billion and $462 million, respectively, compared to Q1 2023. Free cash flow (FCF) was flat at $85 million. Still, the board approved a 3.1% dividend hike after the first quarter.
According to Mirko Bibic, president and chief executive officer (CEO) of BCE, management expected the operational results due to a more intense competitive market environment and sluggish economy. He added that the industry delivered the highest-quality services at decreasing prices despite persistent inflation.
Furthermore, Bibic said the quarterly results were on plan and reflect a focused company undergoing transition. He assures BCE will focus on day-to-day execution to serve customers, grow subscribers’ profitability, and prudently manage costs.
The long-term plan is to continue the premium product and premium loading strategy. Household bundling and personalization, the core focus in the last five years, should continue to drive a better customer experience.
Spinoff soon
TC Energy is turning a new leaf after shareholders approved the spinoff of the liquids pipeline business and the creation of South Bow. “This is an important milestone as we continue to move forward with our plan to separate into two highly focused, premier energy infrastructure companies,” said François Poirier, president and CEO of TC Energy.
According to Poirier, the two independent investment-grade, publicly listed companies will continue to deliver shareholder value through compelling dividends. In the post-separation period, TC Energy and South Bow will pursue and execute tailored strategies targeted to distinct customer sets. The timetable is from the late third quarter to the mid-fourth quarter of 2024.
Like BCE, TC Energy is a Dividend Aristocrat. Its dividend-growth streak is 22 years. If you invest today, the share price is $52.81, while the dividend yield is 7.27%.
Generous quarterly payouts
The average dividend yield of BCE and TC Energy is 8.105%. A $20,000 investment in each will generate a pension-like passive income of $810.50 every quarter. If finances allow, increase your holdings to boost the quarterly payouts further.
