Boost Your Retirement Income With These 2 Stocks

Stocks such as Pembina Pipeline Corp (TSX:PPL)(NYSE:PBA) and Inter Pipeline Ltd (TSX:IPL) can provide safe and reliable income at very attractive yields.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A tried, tested, and true method to boost your retirement income is to adopt a dividend-growth strategy. A portfolio that is focused not only on yield but on consistent dividend growth as well will provide investors with a healthy income stream.

The best place to start your due diligence is the Canadian Dividend Aristocrat list. These are companies that have raised dividends for at least five consecutive years. As such, they have gained a reputation as dividend-growth stocks.

Next, yield can also be an important factor for investors — especially those near or at retirement. One of the best places to look for juicy yields is the oil and gas midstream industry. These aren’t energy producers but are companies that are engaged in the transportation of energy such as pipelines.

With that in mind, here are two pipelines that generate plenty of income for shareholders.

Pembina Pipeline (TSX:PPL)(NYSE:PBA)

Pembina is one of the best pipelines in the industry. It has total capacity of approximately three million barrels of oil, serving markets and basins across North America. Year to date, shareholders have enjoyed healthy returns as the company’s stock price is up 20%.

This midstream company yields 4.98% and has a seven-year dividend-growth streak. Over the past five and three years, it averaged 6.4% and 7.6% dividend growth, respectively. Investors can expect reliable dividend growth moving forward, as it has one of the best expected growth rates in the industry. Analysts expect the company to grow earnings by 10.53% on average over the next five years.

Is the dividend safe? Without question. The company has a target to keep dividends below 100% of fee-based distributed cash flow (DCF). Why fee-based DCF? Because these are more reliable and stable cash flows. In 2019, its payout ratio as a percentage of DCF is expected to be only 76%. As such, it is well positioned to pay down debt, repurchase shares, and grow its dividend.

Inter Pipeline (TSX:IPL)

Inter Pipeline has been on a tear in 2019. So far this year, the company’s stock price is up 34.29% which is a nice change of pace for the company. It had a rough 2018 and despite the run-up in share price is still trading at a 20% discount to its 52-week high.

As of writing, the company has a very attractive 8.30% yield. Although a high yield is usually a red flag, don’t expect a dividend cut any time soon. For starters, the dividend as a percentage of earnings is misleading for midstream companies. It is always best to look at dividends in relation to cash flow. In 2018, the company grew cash flow from operations by almost 12% annually and it generated $2.80 per share in 2018.

At a forward payout of only $1.71 per share, the dividend accounts for only 61% of funds from operations. Much like Pembina, the dividend is also fully underpinned by cost-of-service and fee-based cash flow. The dividend is safe, as is the company’s 10-year dividend-growth streak.

Should you invest $1,000 in Pembina Pipeline right now?

Before you buy stock in Pembina Pipeline, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Pembina Pipeline wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Mat Litalien owns shares of INTER PIPELINE LTD and PEMBINA PIPELINE CORPORATION. Pembina is a recommendation of Dividend Investor Canada.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Dividend Stocks

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

How I’d Allocate My TFSA Contribution to Canadian Value Stocks This Year

I’d split my $7,000 TFSA contribution across solid dividend-paying stocks from different sectors

Read more »

dividend growth for passive income
Dividend Stocks

Why I’d Invest in Canadian Value Stocks for Both Stability and Growth

Three Canadian value stocks are buying opportunities for investors looking for stability and growth.

Read more »

investment research
Dividend Stocks

Got $15,000? 3 Blue-Chip Stocks Every Canadian Should Consider

Here's why investing in blue-chip TSX stocks such as CNQ and CNR should derive outsized gains in 2025 and beyond.

Read more »

protect, safe, trust
Dividend Stocks

Where I’d Allocate $20,000 in 2 Safer High-Yield Dividend Stocks for Retirement Needs

Here are two safer, high-yield dividend stocks I'm looking at for my retirement needs.

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

3 Reasons I’m Considering Enbridge Stock for a $5,000 Investment This April

I'm considering Enbridge stock to provide some defensive appeal and a juicy dividend to my long-term portfolio.

Read more »

monthly desk calendar
Dividend Stocks

A 9.2% Dividend Stock Paying Cash Every Single Month

With one of the highest dividends out there, this dividend stock deserves attention in your portfolio.

Read more »

Happy golf player walks the course
Dividend Stocks

Build a Powerful Passive Income Portfolio With Just $20,000

If you are worried that the bear market could reduce your savings, these stocks can build a powerful passive income…

Read more »

Hand Protecting Senior Couple
Dividend Stocks

How I’d Use My $7,000 TFSA Contribution to Start Retirement Planning

These TSX stocks have solid fundamentals and are well-positioned to deliver significant tax-free total returns over time.

Read more »