It is a lot better for the government of you take your pension at a later date, because they get to compound that money for a few years longer, and they also assume you will take fewer years of the payment, as you are that much closer to death, at least actuarially speaking.

So, given that, the government juices your payments if you take them later than 65 but cuts them if you take it earlier than 65. Sounds logical enough, but what most retirees miss entirely is the magnitude of these payments at the age of 70 versus 65.

The difference is a huge 42% cumulative gain when you take your pension at the age of 70, and that additional cash can significantly impact your quality of life.

Let’s do some quick math to understand the numbers. The maximum monthly CPP payment at age 65 in 2019 is $1,155, which converts to $13,860 annually.

Now, assume that a retiree waits until the age of 70 to take their CPP payment. Their annual payment will increase by 42%, giving them a total of $19,681. That’s an increase of $5,821 per year for life, indexed to inflation.

Assuming our retiree lives to the ripe age of 100, which is entirely possible with all the medical advances these days, that extra annual payment bump equates to a monster $105,336 extra CPP payments over the retiree’s lifetime.

In very simple terms, the government will pay you an extra hundred grand for being smart enough to delay CPP by just five years. But this leads to the usually associated dilemma of how one goes about creating a retirement income stream of at least the same amount as the CPP payment they would get from the age of 65 to 70.

Well, that part is straightforward if you have saved up at least $250,000 and are willing to invest it all in high-quality blue-chip stocks that pay out a sizeable dividend and keep growing that dividend by 5-7% per year.

The trick is to know which stocks you can absolutely trust to deliver your retirement when you absolutely cannot afford to make any mistakes.

A diversified portfolio

First, you need to think about diversification across different geographies, different currencies, and different types of business that are less correlated to each other and more or less stable in any environment.

My strong view, which is backed up by decades of historical data, is that utilities, banks, and real estate companies do well in any environment because no matter what, people still need a roof over their head (real estate), they need electricity and gas (utilities), and they need to have a bank account and collect a paycheck and pay bills (banking).

While I could go on and on about top stocks that make the cut, I will let you read about them in this recent article of mine and focus on one pick in the utilities sector.

My no-brainer pick is Canadian Utilities, the definitive best-of-breed Dividend Aristocrat in Canada that has increased its dividend annually for the last 47 years.

This streak of increases is all the more impressive when you consider that this period included the Great Market Crash of 1987, the dot.com bust of 2001, and the Great Global Recession of 2009.

Investor takeaway

The company pays an impressive 4.25% dividend at the time of writing, and the stock price is hovering around the $40 mark, which is exactly where it was about three years ago.

This means that the market isn’t willing to pay any extra for this stock than it did back then, even though earnings, cash flows, and dividends have steadily increased during that period.

Not only has the company increased its cash flow, but it has steadily increased dividends by a rate of 10% each year for this period, so investors are effectively getting a higher-quality stock at the same price. I see that as great investor math!

The post Retirees: Take Advantage of This 1 Strategy to Boost Your CPP Pension by 42% appeared first on The Motley Fool Canada.

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Enbridge is easily one of the best long-term buy-and-hold stocks globally, and the best part about this stock is, it represents high growth with high yield and a clear path to greater future cash flows.

The fact that the stock has had such a troubled 2019 is simply due to the fact that retail investors get scared easily, and all the regulatory headwinds for pipelines in the U.S. have created a costly and time-sucking problem for the company.

But the reality is that the Line 3 pipeline replacement work will get done in the next 12-18 months, and Enbridge will be able to drive a much higher cash flow than it does today.

Dividend growth showing no signs of stopping

Let’s make sure everyone understands the dividend math, because anyone who has casually glanced at Enbridge’s current dividend yield on one of the many financial websites would think that it has a 5.82% dividend yield.

I am here to tell you that the 5.82% yield is backward-looking. The reality is that the company will be raising its dividend by a full 10% for 2020.

The company has already provided guidance on this monster increase many times to investors over the last year or so. Assuming the stock price stays at the current $50 level, a 10% dividend increase would result in a 6.93% dividend yield. But how did I then get to 6.93%? Well, the math on that is fairly straightforward as well.

Enbridge has been a volatile investment for its faithful cadre of shareholders this year, going down to a low of $42 at the start of the year, and then going down to $43 again in August before creating a somewhat sustained rally over the last couple of months to end up at its current price level of $50.

In fact, I wrote about Enbridge on August 27 when the stock was trading at $43.75 and urged readers to consider buying at those absurdly low levels. Those that nibbled at it will be happy because the stock has rallied to $50, which represents a 14%% capital gain in three short months.

But despite this rally, the stock continues to be vulnerable to short-term regulatory headwinds, and I predict that the stock will flirt with the $46-$48 stock price levels at least once before the year is done and dusted.

If I split this range and assume the stock price will get to $47, our dividend yield with the embedded 10% growth in 2020 is calculated to be 6.93%.

Emerging engines of growth

This is a fantastic dividend yield for a top-quality, secure, cash flow-heavy stock, and the best part of this investment thesis is that Enbridge has several emerging engines of growth that no one seems to be paying attention to. One of those engines is Enbridge’s investments in the renewables space — especially wind energy.

Let’s get some facts straight first. The U.S. portion of Line 3’s replacement, which is the cause of so much negative press, represents only $2.9 billion of the company’s $19 billion capital-spending plan, amounting to only 15% of the company’s future growth.

No one seems to be talking about the company’s Saint Nazaire Offshore Wind Farm project in France that is due to come online in 2022. Many investors would be surprised to know that Enbridge is growing its renewables portfolio, with a specific focus on offshore wind.

Getting into the offshore wind business is a smart move, because research points to the fact that demand for fossil fuels and renewables will be neck and neck by 2040.

Furthermore, offshore wind has one of the fastest-declining costs among all the various renewables alternatives, and Enbridge has publicly stated that it expects a 15% return on its offshore wind investments.

Investor takeaway

Buying Enbridge today at $50 is great, but I think there will be an opportunity to buy shares at $46-$48 in the next few weeks. Investors who can pounce at the right time will lock in a forward-looking dividend yield of 6.93%, setting up for a richly rewarding 2020 and eventual retirement.

The post TFSA Investors: Why I Just Bought More of This 6.93%-Yielding Dividend Stock appeared first on The Motley Fool Canada.

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What I mean by that is the simple power of compounding. $500,000 earning a 10% rate of return will outgrow $1 million earning a 5% return in just 15 short years. This math is extremely powerful knowledge for people in their 30s and 40s who are saving hard for retirement but feel that it is a pipe dream.

So, the real question is this: how does one go about earning a reliable, safe 10% or greater return while ensuring that there is absolutely no capital loss.

I am going to introduce you to one stock that meets the strict criteria I have set out. Provided an investor can leave it alone for 20 years, I will show you how this investment can lead to a comfortable retirement income.

Global real estate powerhouse

When it comes to investing in real estate, Canadians don’t have to look anywhere else other than their own backyard, because Brookfield Property Partners (TSX:BPY.UN)(NASDAQ:BPY) is simply the best real estate stock in the world and has access to top properties in the best cities in the world.

Brookfield has a clear competitive advantage in the form of its parent company, Brookfield Asset Management, which has the distinction of being one of the top two private investors in the world, alongside Blackstone Group.

Brookfield Property Partners always benefits from the rock-solid and monster balance sheet of its parent if it wants to be opportunistic amid market turbulence. Indeed, Brookfield Property Partners picks up its best assets in times when a distressed seller is cash strapped and needs to sell trophy assets to gain much-needed liquidity.

Brookfield Property Partners knows how to keep its income-oriented investors happy with an industry-leading 7% dividend yield that is set to grow by 5-8% every year for the foreseeable future.

As if all this wasn’t enough to convince you, yet another clear advantage of owning this stock is that its net asset value is around $28, while the stock is trading at $25 per share, meaning it is also a deep-value investment play.

The retirement math

I started the article by saying that stocks like this can allow an investor to retire on $500,000, so let’s prove this with some math. At a current stock price of $25, investors can buy 20,000 shares with their $500,000 nest egg.

On day one, this investment will yield $35,000 in annual dividends, which, coupled with the government’s CPP and OAS payments, equates to around $50,000 in annual income, which is enough to retire on in a number of small towns and cities across Canada.

But perhaps we want to do some traveling, and perhaps we would like to live in a city like Toronto or Montreal, which can be pricey. The easy answer is that we need to let our Brookfield Property Partners shares grow and compound over time.

Let’s assume that we invest at the age of 50 and have 15 years for the share price and the dividend to grow. I’ll assume that the dividend grows at 6.5% per year, which is smack in the middle of the company’s stated dividend-growth goal.

This means that the dividend growth in those years will lead to an annual dividend payment of $90,000. This monster dividend payment coupled with CPP and OAS should lead to a $110,000 per year income flow, which is enough to retire comfortably in virtually any city in Canada your heart desires.

Investor takeaway

Of course, I’m not suggesting that investors go out and plunk their entire nest egg in one stock. However, I am suggesting that there are many blue-chip, growth-oriented investments like Brookfield Property Partners in Canada that have a phenomenal track record at creating long-term value for investors.

What is required is a medium- to long-term time horizon and discipline to stay the course, especially in turbulent times. So, smart investors should tune out the noise and sleep easy knowing they can let high-quality stocks like Brookfield Property Partners do all the hard work to fund their retirement.

The post How to Comfortably Retire With Just $500,000 appeared first on The Motley Fool Canada.

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So, what should smart investors do when an investment opportunity of a lifetime in a pipeline stock comes along? My view is they should take full advantage and load up on the stock because the dust will settle on the pipeline debate soon enough, and the industry will thrive once again.

Inter Pipeline (TSX:IPL) is one of the best pipeline stocks that has just found itself on the wrong side of the stock trade, and the stock price has suffered terribly, going from $35 per share in its heyday in 2015 to a modest $21.91 per share at the time of writing.

The company, in very simple terms, transports, processes, and stores energy, operating out of western Canada and Europe. The company’s pipeline systems span an impressive 7,800 kilometres, and it transports an enviable 1.4 million barrels per day.

Even as the stock price has tumbled over the last few years, the funds from operations (FFO) has kept increasing from approximately $700 million in 2015 to $1,100 million in 2018. What is even more interesting and heartening as an investor is that the dividends have increased in tandem with the FFO and have gone from $1.49 per share in 2015 to $1.71 per share in 2018.

All of this points to a healthy company that is chugging along, despite headwinds in the form of investors who feel that the company’s strategy is higher risk, especially with its foray into new products with its multi-billion-dollar investment in the Heartland Petrochemical Complex.

Healthy dividend growth

As I mentioned, Inter Pipeline has never had a problem with its cash flow generation and continues to grow it, which means that it can also continue to maintain and indeed grow its dividend.

The company’s dividend strategy seems to be simple in that it grows its dividends in line with cash flows to ensure dividends are highly sustainable. FFO per share has gone from $2.19 in 2015 to $2.80 per share at the end of 2018. In line with that, the company predictably raised its dividend from $1.49 to $1.69 per share.

Actually, the only reason the company hasn’t increased its dividend more is that it has an aggressive capital-spending plan that is designed to create significant value for shareholders, and the company has held on to a good chunk of the cash flow it has generated the last couple of years to partially fund that growth.

At a current stock price of $21.91, the dividend yield is a tantalizing 7.80%, which is an extremely high yield but also extremely stable and secure.

Heartland petrochemical complex

The Heartland project is the company’s biggest and most complex undertaking to date, and while it may feel like a high-risk move to investors, it is a master stroke because the company will be able to produce polypropylene, which is a product used in the manufacture of consumer packaging, automobile parts, medical equipment, currency, and textiles.

In other words, this will diversify the company’s customer base as well as reduce its reliance on strictly conventional oil and gas energy for its cash flow. The company estimates that once this project is up and running, it will add up to $500 million in EBITDA to Inter Pipeline’s earnings every single year.

Investor takeaway

Almost 85% of the company’s earnings are stable and predictable due to the long-term nature of its contracts and 97% of the company’s earnings are linked to investment grade and very stable counterparties, further reducing the company’s risk profile.

At the time of writing, the company had a stock price of $21.91, which is very close to its five-year low. As Heartland comes into production in 2021, I strongly believe that investors will re-rate this stock much higher, because the perceived project execution risk has been mitigated.

In the meantime, investors who get into the stock now will be laughing all the way to the bank with that 7.80% yield into 2020 and beyond.

The post Buy This 1 Cheap Dividend Stock in December That Yields 7.80% appeared first on The Motley Fool Canada.

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But for the astute investors who can tune out the day-to-day headlines and noise, a lot of money is yet to be made in the stock market, especially when investors misunderstand the value of a stock.

I have three perfect examples of stocks that are misunderstood and therefore trading below their net asset values (NAV), despite being rock-solid, long-term dividend payers.

Global property king

Let’s start with a firm favourite of mine: Brookfield Property Partners (TSX:BPY.UN)(NASDAQ:BPY). I have written quite a bit about how this stock is simply the best real estate stock in the world and has access to top properties in the best cities in the world.

The best part of owning Brookfield is that its NAV is around $28, while the stock is currently changing hands at around $25 per share.

The company is also putting its money where its mouth is and repurchasing shares in the open market, because it believes that repurchasing these undervalued shares is one of the best uses of its balance sheet, and I couldn’t agree more.

Brookfield also knows how to keep its income-oriented investors happy with an industry-leading 7% dividend yield that is set to grow by at least 3-5% every year for the foreseeable future.

North American real estate focus

Now, we’ll move on to a slightly lesser-known but equally powerful name in the real estate world: Tricon Capital Group (TSX:TCN). Tricon is a fantastic real estate investor that may not have a huge yield, but it’s growing its dividend at a fast pace and because the company is not well known to most retail investors.

Tricon operates in the residential real estate segment, which is absolutely necessary, regardless of the economic climate. Tricon specializes in rental housing for the family segment, which is one of the fastest-growing segments in North America and just about the best type of business for a market downturn, because everyone needs a roof no matter what.

The company has proven that it knows how to execute its strategy with impressive growth in book value per share from a modest $3.38 per share in 2012 to a monster $10.77 per share as of October 2019. This represents a 20% annualized growth since 2012, which is truly astounding and worthy of investor attention.

Shares are currently trading at around $11, which is just a touch above book value, representing tremendous value. While the dividend yield is a modest 2.5%, the dividend growth going forward will more than make up for that.

Canadian local focus

We started this article by looking at the most global real estate play and we will end by discussing the most local of the three investments. The stock is a retail-focused REIT that has steadily been delivering double-digit returns to shareholders.

Plaza Retail REIT (TSX:PLZ.UN) is unique in that it plays in the strip mall and specializes in owning non-trophy assets that the big payers typically don’t look at but are profitable if developed in the right way. The company takes these run-down properties and spruces them up significantly.

Once the properties are marketable, Plaza then gets higher-quality, stable tenants into long-term leases, providing greater rent but also adding more permanent value to the real estate.

Plaza pays a beautiful $0.28 annual distribution on a monthly basis, which I love, because the sooner the company pays the dividend, the sooner I can reinvest, and the sooner it all compounds.

Plaza also has a growing dividend trend, and the growth rate has clocked it at a top-quartile rate of 8% annual dividend increase for the last 16 years. The yield currently stands at an industry-leading 5.91%, which is significantly more than the REIT average in Canada.

Investor takeaway

As a smart investor, I am keeping a close eye on all three and have no problem accumulating shares at current levels to start December off on the right foot and set myself up for dependable passive income in 2020.

The post 3 Must-Have Dividend Stocks to Buy in December for Value Investors appeared first on The Motley Fool Canada.

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Now, I completely realize that to find stable, blue-chip but small-cap or mid-cap stocks is like trying to find a tiny needle in a giant haystack, but have no fear. I have a tremendous investment opportunity for you today in a REIT stock that is not super well-known today, but I guarantee it will be a core portfolio holding for many Canadians in the next few years.

Global healthcare real estate play

The stock I am so excited about is Northwest Healthcare Properties REIT (TSX:NWH.UN), a REIT that provides investors with access to a portfolio of high-quality healthcare real estate comprised of interests in a diversified portfolio of 149 income-producing properties.

The company has 10.1 million square feet of gross leasable area and $6.2 billion of high-quality assets spread out throughout major markets in Canada, Brazil, Germany, Australia, and New Zealand.

In Canada, the REIT is the largest non-government owner and manager of medical office buildings and healthcare facilities, including major concentrations in Calgary, Edmonton, Toronto, Montreal, Quebec City, and Halifax.

On the international front, Northwest partners with the region’s leading healthcare operators and has built leading management platforms globally, comprising of quality healthcare real estate assets with a significant runway for future growth.

Northwest has a market cap of $1.6 billion, which is the perfect size for investors like you and me, because this type of company flies under the radar of big institutional investors until it reaches a size of about $5 billion.

Monster 6.45% dividend yield

At its current price of $12.40, Northwest has a dividend yield of 6.45%, and the best part of all is that this distribution is paid out on a monthly basis.

My regular readers know that I am a big fan of monthly dividends, because I reinvest dividends into new shares, and monthly dividends mean that I get to reinvest every month, and the compounded growth on those reinvested dividends is that much greater over the long term.

The company just increased the dividend from $0.67 per year in 2018 to $0.80 per year in 2019, representing a monster 19% year-over-year increase.

The company has shown that it is willing to reward shareholders, as it continues to grow its financial firepower, and there is every indication that they will start considering an annual increase strategy going forward.

Tremendous financial results

Northwest has been a supremely consistent steward of shareholder money over the last few years, and the third-quarter results continued to build on that theme.

Top-line revenue increased by 4.7% to $91.1 million from $87 million in Q3 of last year, primarily driven by acquisition activities, which translated into a net income of $17.7 million, up significantly from a loss of $28.5 million in Q3 of last year.

In addition to delivering strong operating results, Northwest also advanced its strategic agenda, including integrating the $1.2 billion Healthscope hospital portfolio acquisition.

Healthscope was a transformative acquisition for the company, because it gives Northwest a firm toe-hold in Australia with a portfolio of 43 private hospitals concentrated in large metropolitan centres throughout the country.

Investor takeaway

Northwest stock is changing hands at $12.40 a share at the time of writing, which is a touch above its net asset value of $12. This means that the stock is trading cheaply, and investors haven’t recognized the significant embedded future growth yet.

While the world realizes Northwest’s value, smart investors that buy the stock today will be rewarded with a top-tier dividend yield while they wait for the share price to double, as institutional investors start getting into the stock in the next couple of years.

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It’s a catchy acronym that underlines a deep desire among many of us to have more freedom, more time to ourselves. and more room to explore our world in an unshackled sort of way.

For the most part, it is an unattainable dream for most of us that are usually living paycheque to paycheque and drowning in mortgages and other debt. However, there is one easy way to make your F.I.R.E dreams come true, which is to invest early on in fantastic growth stocks and ride that momentum into the golden sunset, quite literally.

Canada doesn’t seem to be blessed with too many of these ultra-high-growth stocks unless you are willing to take on excessive amounts of risk. However, there are a few that have stood the test of time and proven to be long-term ultra-growth stocks.

I have previously written about one of those stocks, Alimentation Couche-Tard, which I admire a lot for its consistency and fearless global growth strategy. But believe it or not, I have an even more compelling growth story to talk about today.

Software is the future

The growth story I am talking is Constellation Software Inc (TSX:CSU), a leading provider of software and services to public and private sector markets. The company specializes in acquiring and building industry-specific software businesses that provide specialized, mission-critical software solutions that address particular customer needs.

With over 125,000 customers in more than 100 countries and a proven track record of growth, the company has established a superb portfolio of software businesses to provide its customers and shareholders with exceptional returns.

Yes, exceptional returns are exactly what has been delivered to shareholders who were smart enough to get into the stock in January 2015, when the stock was not as well known as it is now. In those days, the stock price was around $340 per share and since then it has skyrocketed to around $1,440. This mind-blowing stock price growth translates to an annual stock price growth rate of 33%.

I realize that the company is now at a $31 billion market capitalization, which means the days of 33% growth are likely behind it. However, its ambition burns as bright as ever and its strategy of continuous growth by acquisition should deliver annual returns around the 20% range for the foreseeable future.

So, let’s do some simple math to see if getting into the stock at these lofty stock price levels would be smart or not. For this exercise, we will take an amount of $26,100, which a lot of folks I know have in their TFSA account as their balance.

We will now invest this amount in Constellation stock at today’s stock price and fully expect the stock price to grow at an annual growth rate of 20%, compounded for a period of 20 years.

It is no surprise that this high-growth compounded over the long term translates that modest $26,100 investment into a monster million-dollar TFSA retirement nest egg.

Investor takeaway

The latest Q3 2019 results show that the company continues to grow and churn cash flow, which I love.  Cash flow from operations was $163 million, an increase of 14% compared to $143 million for Q3 2018 and free cash flow was $134 million compared to $112 million for Q3 2018, representing an increase of 20%.

The company is a high-growth free cash flow machine, which means it has the ability to become a high dividend payer in a few years. Just add that to the high double-digit stock price growth and smart investors have a stellar opportunity to get that million-dollar TFSA nest egg with a very modest investment right now.

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This is because if I play my cards right, I can usually make a 10% annual return while the company is on the smaller side but once analysts start covering it, I find that there is a “pop” of 20-30% in the stock price.

This pop creates a step jump for the stock, and it rarely goes back down to previous levels, because there is a new normal and new demand to buy the stock from retail and institutional investors alike.

Finding rock-solid companies under $1 billion in market cap is really hard, but there are a few out there for savvy investors to dive into. One of those investments is, without a doubt, Plaza Retail REIT (TSX:PLZ.UN).

Plaza is a developer, owner, and manager of retail real estate primarily in Ontario, Quebec, and Atlantic Canada. Plaza offers a unique business strategy that differs from many of its peers in the real estate industry. Plaza has a competitive advantage in Atlantic Canada and Quebec, while many other REITs focus on Ontario.

Plaza aims to deliver growth in net asset value (NAV) and cash flow per unit from a diversified portfolio of retail properties, designed to deliver a minimum cash yield equal to 100 basis points above the mortgage constant for a 10-year mortgage at prevailing rates and assuming a 25-year amortization period.

Said another way, investors in Plaza can count on a stock that acts like a fixed-income product but with a yield that is at least a full 1% higher than a 10-year mortgage rate. Plaza is a perfect stock for an investor who wants to dip their toes into the stock market without too much risk.

Winds of change in retail

Let’s get a preconceived notion out of the way that sometimes clouds investor judgment about retail. A lot of investors feel that retail is dead. According to Plaza’s CEO, brick-and-mortar retail is not dying; it is just changing. He is absolutely right, and Plaza knows how to capitalize on that shift.

Plaza thrives on challenges like redeveloping an old and underperforming enclosed mall into a vibrant community strip centre that had a 63% occupancy rate. Plaza’s focus on redevelopment resulted in attracting national tenants on long-term leases that replaced local month-to-month leases.

In addition, outdoor tenants experienced significantly higher sales and customer traffic due to an improved shopping experience and easy street access with a monster 96.1% occupancy rate.

Focus on dividends

Let’s get to the juicy stuff right off the bat. Plaza pays a beautiful $0.28 annual distribution on a monthly basis. Yes, I said monthly. I absolutely love it when companies pay on a monthly basis, because I tend to make sure I reinvest those dividends. The sooner the company pays the dividend, the sooner I can reinvest, and the sooner it all compounds.

Monthly payments are beautiful for long-term compounding, and Plaza knows how to please shareholders on this front. Plaza also has a growing dividend trend. In fact, Plaza has grown its dividend every single year since 2003. The dividend growth has amounted to an 8% annual dividend increase for the last 16 years.

The company’s dividend track record is stellar, and there is every indication that the growth trend will continue to be positive, steady, and stable.

Investor takeaway

Plaza started the year at a low stock price of $4 but steadily zoomed up to $4.75 as of the time of writing, which is a solid 18% capital return. The stock has also returned 6% to investors in monthly dividend yield, which takes the total shareholder return to a market-beating 24%.

What’s even better than its stellar performance in 2019 is the fact that the stock has serious momentum on its side, and institutional investors are starting to take notice, as it inches its way to $500 million in market cap.

I anticipate that the stock price will continue its momentum in 2020, and smart investors who are fortunate to pick up shares in the $4.50-$4.75 range will be thrilled in a few months.

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I have an investment strategy that is called the “cherry on the top” way of investing and I use it to handily beat the standard market dividend rate. This means that I fill the base of my “cake” with the highest quality, large-cap, global and diversified blue-chip stocks I can find, like Enbridge, which has a 6% yield.

Next, I might put some slightly medium risk, medium reward “icing” by tacking on companies like Alaris Royalty, which has a 7.5% yield.

Finally, I put a “cherry on the top” in the form of a higher risk, higher reward stock like Chemtrade Logistics Income Fund (TSX:CHE.UN), with its monster 11% dividend yield to round out my selections and make sure that I can get to an 8% dividend yield on a weighted average basis.

In order for this strategy to work successfully, my “cherry on the top” stock doesn’t have to provide me with a ton of capital gain, but it does need to sustain its high yield through good times and bad. So, sit back and relax while I tell you why I believe Chemtrade’s monster 11% dividend yield is secure.

North American leader

Chemtrade is one of North America’s largest suppliers of industrial chemicals and services to customers in North America and around the world.

Chemtrade operates a diversified business providing much-needed products like sulfuric acid, acid processing services, water treatment chemicals, sodium, and phosphorous based industrial products.

Now if you were thinking that the company is in a boring business, you would be absolutely right. This stock may not send your heart fluttering, but neither will it give you any panic attacks, as there’s a constant need for these types of industrial products and the demand continues to be extremely stable.

Operating excellence

The company had a turbulent 2018, which is partially the reason why the dividend yield has ballooned from a more mainstream 6% to an eye-popping 11%.

However, Chemtrade has addressed many operational issues in 2019, including fixing supply chain issues, especially with the rail carriers that the company relies upon to get its products to market in a timely fashion.

The company has also addressed its human capital issues like employee retention, which were causing a lot of management headaches because recruiting new people is costly and there is also an implicit cost as working knowledge of the company keeps walking out the door and new folks have to be trained constantly.

This type of revolving-door situation doesn’t lead to an employee base that are experts at their craft and operating at their best.

Finally, the company felt that its growth and increased complexity make it challenging for shareholders to understand the key drivers of the business, as well as the risks and rewards. To combat that, the company has started issuing guidance on key drivers of business results to create greater transparency for investors.

2019 financial results

Chemtrade reported third quarter adjusted EBITDA of $90 million, above street consensus of $86 million. Management also reiterated its 2019 adjusted EBITDA guidance of $335 million to $375 million and continues to expect results to come in at the lower end of this range.

The distributable cash per unit for the year is estimated to be around the $1.30 to $1.40 range, according to some Bay Street estimates’ the current annual dividend is $1.20.

This means that the dividend is covered by the cash coming into the company, which is why I believe that the dividend yield is extremely safe and dependable.

Investor takeaway

While Chemtrade may not be increasing its dividend payments anytime soon, I’m confident that the current 11% yield is completely sustainable and smart investors would do well to keep a close eye on this stock and lock in this juicy yield heading into December for a secure passive income stream for 2020 and beyond.

The post Buy This High-Yield Dividend Stock in December for Its 11% Income Stream appeared first on The Motley Fool Canada.

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A lot of investors find comfort in the fact that while they may not be earning a lot of interest in return for holding their scratch in these checking accounts, they also aren’t losing their shirts based on the vagaries of the U.S.-China trade deal or the latest tweet from an influential global political figure.

In my opinion, a very low-risk, high-reward way to invest if you are worried about losing your capital is by buying high-quality, blue-chip real estate stocks that are backed by the underlying “real asset,” the buildings and the land, especially if they happen to be located in global hot spots like Toronto, New York, and London.

With that in mind, I strongly recommend that smart investors take a hard look at these two rock-solid, long-term buys that pay steady and growing dividends.

U.S. “sunbelt” real estate growth

H&R Real Estate Investment Trust (TSX:HR.UN) is the best way to play the significant growth in the “sunbelt” of the U.S. from Florida to Texas and in between. H&R is the only large-cap Canadian REIT that has a strong and growing U.S. rental real estate business, especially since RioCan REIT high-tailed out of there a few years ago.

H&R is focused on new developments as well as acquiring existing buildings in Texas, Florida, and California — all areas with excellent long-term rental fundamentals, underpinned by good and predictable weather, which tends to attract people from the U.S. but also Canada and Europe.

A perfect example of that strategy is its development project, River Landing: an urban in-fill mixed-use development site in Miami, FL, which represents its largest development project currently.

River Landing has 1,000 feet of waterfront on the Miami River, two miles from downtown Miami with about 346,000 square feet of retail space, 136,000 square feet of office space and 528 residential rental units. Construction is currently underway with occupancy scheduled to commence in the second quarter of 2020.

H&R has had a rough few weeks, going from a stock price of $22.5 to the near 52-week-low levels of $21, which has pushed up the dividend yield to slightly above 6.5%. At this price and dividend level, the REIT is a rock-solid, long-term play.

Global top-quality real estate

My regular readers know that I am a massive fan of Brookfield Property Partners (TSX:BPY.UN)(NASDAQ:BPY). In my humble opinion, this stock is simply the best way on earth to profit from global real estate. Brookfield investors can count on the company to buy and sell only “Class A” buildings in top-rated locations around the world.

The company’s investment objective is to generate attractive long-term returns on equity of 12-15% based on stable cash flows, asset appreciation, and annual distribution growth of 5-8%.

The company has been a long-term serial grower of dividends, and its share units are currently trading at a discount to its net asset value, which makes it a deep-value, high-dividend play.

Brookfield had an annual dividend of US$1 in 2014, which has grown to a monster US$1.33 in 2019 in the span of five short years and now represents a 6.89% yield in Canadian dollar terms on a share price of $25.5.

The company’s 33% growth in dividends from 2014 to 2019 is repeatable and reliable for the next several decades. What is more impressive is that this dividend growth equates to a 5.9% annual increase, which is within the company’s desired 5-8% range.

This shows that the company has a good long-term line of sight to its earnings and cash flow growth and can actually be trusted to keep its word to shareholders.

Brookfield also continues to be shareholder friendly in other ways by returning capital to shareholders through repurchasing and canceling its own shares on the open market. This results in greater earnings per share and cash flow per share, all else being equal.

Key investor takeaway

While it can be stomach-churning to see stock price volatility, I urge long-term investors to tune out the day-to-day movements and focus on these two high-quality stocks for the long term to benefit from a phenomenal 2020 passive-income stream.

The post TFSA Investors: 2 Top TSX Stocks to Buy for 2020 That Yield up to 6.89% appeared first on The Motley Fool Canada.

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