The average monthly CPP (Canada Pension Plan) amount for a 65-year-old retiree starting the payment in 2024 is $815, which suggests that the annual CPP payout is around $9,780. We can see that just depending on the CPP during your retirement is not viable, given that monthly living costs in major Canadian cities are well over $1,000.
It is imperative for current and future Canadian retirees to boost their CPP payments with other income streams. One low-cost way to generate a steady stream of recurring income and supplement the CPP is by investing in blue-chip dividend stocks. Here are two TSX dividend stocks that can help you supplement your CPP in retirement.
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Brookfield Infrastructure Partners stock
Valued at $21.6 billion by market cap, Brookfield Infrastructure Partners (TSX: BIP.UN) owns and operates cash-generating assets in sectors such as utilities, data centres, transportation and midstream. These assets are located in the Americas, Europe, and Asia-Pacific regions.
Despite a challenging macro environment, Brookfield Infrastructure reported funds from operations (FFO) of US$1.22 billion in the first six months of 2024, up from US$1.10 billion in the year-ago period. On a per-unit basis, its FFO has increased from US$1.44 to US$1.55 in this period. Comparatively, its dividend payout in the last two quarters totalled US$0.81 per share, indicating a sustainable payout ratio of 67%.
Brookfield Infrastructure pays shareholders an annual dividend of US$1.62 per share, which translates to a forward yield of over 4.5%. Moreover, these payouts have almost doubled in the last 10 years, enhancing the effective yield significantly.
Brookfield’s organic FFO growth in Q2 stood at 7% due to inflation-linked increases across its utilities and transportation assets, in addition to the commissioning of more than US$1 billion of new capital from its capital backlog over the last 12 months.
In the June quarter, Brookfield Infrastructure deployed US$200 million of growth capital expenditures to expand its rate base in its utility business and increase capacity in other segments. These growth investments should drive future cash flows and dividends higher, making Brookfield one of the top investments right now.
Fortis stock
Fortis (TSX: FTS) is one of the most popular dividend stocks in Canada. It pays shareholders an annual dividend of $2.64 per share, indicating a yield of 4%. Fortis is part of the recession-resistant utilities sector, allowing it to generate durable cash flows across market cycles. Further, the Canadian utility giant has increased its dividends every year for 50 consecutive years.
The growth story for Fortis is far from over, as it plans to invest $4.8 billion in capital expenditures this year. In fact, it has allocated $25 billion towards capital expenditures over the next five years and is on track to expand its rate base by $12 billion to $49 billion through 2028.
These organic investments should drive the company’s adjusted earnings higher. According to Bay Street, adjusted earnings for Fortis are forecast to expand from $3.09 per share in 2023 to $3.34 per share in 2025. Priced at 18.4 times forward earnings, FTS stock is reasonably valued and is a low-risk investment for retirees.
