Retired income investors shouldn’t wait for the next market correction before jumping into the equity waters. If you’ve got too much cash on hand, it may make sense to do just a bit of buying here and there so that you won’t be left behind should this bull market continue taking the broader basket of stocks to higher highs.
The TSX Index is finally having a moment to shine. And while a correction could easily hit tomorrow or next week, I’d argue that continued gains are also possible as the economy gears up for a world of lower rates, perhaps much lower rates for 2025. Even if you think the rally has legs, you should also be ready for the odd 10% correction (or half of a correction) to come your way.
In essence, have a plan for a continuation of the bull run, but don’t let your guard down in case the markets stumble unexpectedly. In short, hedge your bets and have a plan to invest, regardless of the broad stock market’s trajectory.
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Get ready for low rates with 6-7% yielders
Indeed, low rates are good news for most stocks. The REITs (real estate investment trusts) also stand to walk away as big winners as they gain the ground they’ve shed in past years. While the number of investments yielding north of 6% could fall drastically with every rate cut from the Bank of Canada and U.S. Federal Reserve, I’d argue that most of the yield compression will be due to share price appreciation.
So, if you’re looking to jolt your passive-income portfolio, like the yields that you see today, and are encouraged by recent momentum, the following income stars may be worth picking up in preparation for the fourth quarter (Q4) of 2024.
TC Energy
TC Energy (TSX:TRP) is a solid pipeline company whose shares still yield a very bountiful amount. At writing, TRP shares yield 6.1%. Of course, the yield has already compressed by quite a bit due to the latest upward spike. Over the past three months, TRP stock has soared more than 20%. While such a sudden parabolic surge is to be viewed cautiously, I think that the valuation still makes sense, with the name going for 19.4 times trailing price to earnings (P/E) at the time of writing.
Though the firm has been quite active in selling some of its assets, I’d not count on the dividend growth to fade away anytime soon. As rates fall and TC focuses more on core assets, the dividend could continue to grow by leaps and bounds. All considered, TC Energy is an impressive income star that may also be a robust dividend grower through the next decade.
SmartCentres REIT
SmartCentres REIT (TSX:SRU.UN) has been on a run of its own, now up close to 23% in the past three months. However, unlike TC Energy, SRU.UN shares are nowhere close to all-time highs, still down over 30% from peak levels hit all the way back in 2016.
If you’ve got a long time horizon and want a low-rate winner, SRU.UN stands out as a deep-value buy that’ll pay you (6.89% yield today) for your patience. The distribution looks safe, and the payout ratio could continue to drop as Smart looks to take its growth back into high gear.
Of all the growth REITs, Smart stands out as one to pick up if you’re looking for big, growing passive income.
