According to the Canada Revenue Agency, the average CPP (Canada Pension Plan) payment for a 65-year-old starting the payout is $816.52 in 2024. Comparatively, the maximum CPP payment stands at $1,364.60, both of which are not enough to lead a comfortable life in retirement.
It’s evident that Canadian retirees should have alternate passive income streams to supplement their CPP payments. A low-cost way to add a recurring and stable income stream is to invest in blue-chip dividend stocks. Here are two such TSX dividend stocks you can buy right now and earn passive income for life.
Brookfield Renewable Energy stock
Valued at $22.4 billion by market cap, Brookfield Renewable (TSX: BEP.UN) offers you a tasty dividend yield of 5.7%. The TSX dividend stock has underperformed the broader markets in recent years, as interest rate hikes have raised the cost of debt significantly for capital-intensive companies, including Brookfield.
In the first quarter (Q1) of 2024, Brookfield Renewable reported funds from operations (FFO) of US$296 million or US$0.45 per unit, up 8% year over year. Given that it pays a quarterly dividend of US$0.355 per share, BEP has a payout ratio of less than 80%.
Brookfield Renewable attributed its strong results to the robust performance of its hydro fleet and growth initiatives, which should drive FFO higher by 10% in 2024. In the March quarter, Brookfield advanced commercial priorities and secured contracts to deliver an incremental 5,200 gigawatts per year of generation.
It also finalized a landmark deal with Microsoft to deliver more than 10,500 gigawatts of renewable capacity between 2026 and 2030. This agreement is eight times larger than the largest single corporate power purchase agreement signed by Brookfield and should fuel Microsoft’s data centre growth while supporting investments in AI (artificial intelligence) powered cloud services.
Brookfield Renewable expects to add roughly 7,000 megawatts of new renewable capacity in 2024, and its asset-recycling activities should generate US$1.3 billion in net proceeds, which would be used to strengthen the balance sheet and invest in growth projects.
Analysts remain bullish on BEP stock and expect shares to surge over 20% in the next 12 months.
Polaris Renewable stock
Valued at $271 million by market cap, Polaris Renewable (TSX: PIF) is another clean energy company that offers you a tasty dividend yield of 6.4%. In the March quarter, it generated $20.6 million in revenue from energy sales due to its inflation-linked power-purchase agreements.
Its adjusted earnings before interest, tax, depreciation, and amortization stood at $15.7 million, up from $15.3 million in the year-ago period.
Polaris generated close to $9 million in operating cash flow and ended Q1 with $45.6 million in cash. Comparatively, its dividend payout in the quarter totalled $4.25 million, given a quarterly dividend of $0.202 per share.
In the last eight years, Polaris Renewable has raised dividends by 60%, enhancing the yield at cost in this period. Priced at 19.5 times forward earnings, Polaris Renewable stock is quite cheap, given analysts expect adjusted earnings to expand by 78% annually in the next five years. Due to its cheap multiple, the TSX dividend stock trades at a 90% discount to consensus price target estimates.
