Your maturing guaranteed investment certificate (GIC) may be preparing to hand you a pay cut disguised as paperwork. The principal is coming back exactly as promised, yet reinvesting it at today’s lower rates could leave the next income stream looking considerably less impressive.
The Bank of Canada reported that the typical posted rate among Canada’s six largest banks was 2.70% for a one-year GIC and 2.75% for a five-year GIC on August 12. At 2.75%, a $7,000 renewal would earn approximately $192.50 during the first year. Safe? Yes. Particularly ambitious? Let’s not get carried away.
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Don’t abandon safety
A GIC protects the original deposit and locks in the return. Dividend stocks do neither. Their prices fluctuate, dividends can be reduced, and selling during a market decline could turn a temporary loss into a permanent one.
That makes GICs useful for emergency savings and money needed within the next few years. The mistake is automatically renewing every dollar intended to produce retirement income for decades. A fixed payment gradually loses purchasing power, while a growing dividend can help the income stream keep moving.
Investors should also check where the maturing GIC is held. If it sits inside a Tax-Free Savings Account (TFSA), buying a stock within the same account won’t create a new contribution. Withdrawing the cash and re-contributing it during the same year could cause an over contribution unless sufficient room already exists.
An income stream built to grow
For money that won’t be needed for at least five years, Enbridge (TSX:ENB) offers a useful bridge between fixed income and full-throttle growth investing. Enbridge stock operates pipelines, natural gas utilities, storage facilities, and renewable power assets. Much of its cash flow comes from regulated rates or long-term contracts rather than daily commodity-price guesses.
Enbridge’s second-quarter adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) increased to $4.8 billion from $4.6 billion, while distributable cash flow reached $2.95 billion. Management reaffirmed its 2026 guidance and expanded the secured project backlog to $41 billion, providing future assets that could generate additional cash flow once completed.
That cash supports a $0.97 quarterly dividend, or $3.88 annually. Enbridge stock has increased its payout for 31 consecutive years, including a 3% raise for 2026. Management expects the dividend to consume between 60% and 70% of distributable cash flow, leaving some money available for reinvestment.
The higher income has a bill
At a recent $71.74, a $7,000 investment would purchase 97 full Enbridge shares for $6,958.78. Those shares would produce $376.36 annually, or an average of $31.36 per month. That’s nearly twice the first-year income from renewing the full $7,000 at the typical posted five-year GIC rate.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | ANNUAL DIVIDEND | ANNUAL TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
|---|---|---|---|---|---|---|
| ENB | $71.74 | 97 | $3.88 | $376.36 | Quarterly | $6,958.78 |
The stock isn’t being offered from a clearance bin. Fair value sits at $76, leaving only modest valuation upside from the recent price. The appeal is primarily the 5.4% yield and potential dividend growth, not a heroic rebound calculation.
Enbridge ended the quarter with debt-to-EBITDA of 5.1 times. Higher interest costs already weighed on adjusted earnings, while pipeline projects face construction, regulatory, and political risks. Unlike GIC interest, the dividend isn’t guaranteed, making diversification across several Canadian dividend stocks wiser than asking one pipeline to fund retirement alone.
Bottom line
A maturing GIC doesn’t require an all-or-nothing decision. Keep the money that must remain safe in guaranteed products, then begin moving longer-term capital toward growing income assets. Waiting until rates fall further may preserve the decision for another day, but it won’t build the paycheque needed for the years ahead.
