Retiring in Canada: Create $750/Month in Dividend Income to Supplement CPP

If you’re retiring in Canada, what would you do with an additional $750 every month coming in from dividend income? That could make a huge difference to a retirement budget. It could cover bills, fund a weekend getaway or just give more flexibility to the budget. For Canadians collecting CPP, it makes retirement savings stretch further.

In order to reach that dividend income goal, investors need to pick the right stocks today and give the investments time to grow.

Fortunately, there’s no shortage of options on the market that can help reach that $750 per month goal. Here are three of them to consider.

Scotiabank offers an established dividend

Bank of Nova Scotia (TSX: BNS) is one of Canada’s big bank stocks. It’s also Canada’s most international bank, with operations in over a dozen markets around the world.

Those global operations, alongside wealth management and capital markets, give investors exposure to different sources of revenue.

It also means that Scotiabank can use that revenue to pay out a handsome quarterly dividend. In fact, the bank has paid dividends continuously since 1833. Today, the bank provides a yield of 3.5%.

For those retiring in Canada and looking to build dividend income, the appeal is simple. Scotiabank operates an established, diversified business that supports its recurring quarterly dividend, while also leaving room for growth.

Given the current yield, a $72,500 investment will generate approximately $2,500 annually.

Enbridge provides a growing payout

Another top contender for dividend income-seekers is Enbridge (TSX: ENB). Enbridge is one of the largest energy infrastructure companies on the planet.

Enbridge’s operations include pipelines, utilities and renewable energy. The pipeline business generates the bulk of the company’s revenue, operating one of the largest and most complex pipeline networks on the planet.

The sheer necessity and volume of crude and natural gas hauled also gives Enbridge plenty of defensive appeal.

That defensive appeal extends to the company’s other businesses, which include a growing renewable energy operation and one of the largest natural gas utility businesses in North America.

Regulated operations and long-term contracts help Enbridge to generate a recurring and stable revenue stream. This allows the company to invest in growth initiatives and pay out a handsome quarterly dividend.

As of the time of writing, Enbridge pays out a yield of 5.7%. The company has also provided over three decades of consecutive annual increases to that dividend.

Using that same $72,500 example from above will provide investors with just over $4,100 each year in dividends.

XEI adds monthly distributions

Rounding out the dividend income options is the iShares S&P/TSX Composite High Dividend Index ETF (TSX: XEI).

The fund offers a simpler way to hold a basket of Canadian dividend stocks. XEI tracks the S&P/TSX Composite High Dividend Index and pays monthly distributions.

The ETF carries a 0.22% management expense ratio, making it an inexpensive option for investors who prefer less individual stock selection or want more diversification.

As of the time of writing, XEI offers a yield of 3.4%. Our $72,500 investment example works out to a little over $2,400 in annual distributions from the fund.

Retiring in Canada with an extra $750 in monthly dividend income

With an equal allocation of $72,500 in each investment, here’s what our dividend income portfolio will look like.

In total, that works out to $753.40 a month.

Prospective investors considering retiring in Canada without that full amount to invest can opt to invest what they can and reinvest any dividend income received. This allows the portfolio to continue compounding until needed.