Old Age Security (OAS) is a great benefit for Canadians, offering a steady stream of income during retirement. It’s designed to provide financial support once you’ve reached a certain age, with the maximum benefit depending on how long you’ve lived in Canada.
However, even if you qualify for the full amount, OAS is not likely to cover all your expenses in retirement. The maximum monthly payout for 2024 is $800.44 as of writing, which comes to about $9,605 annually. That’s probably not enough to sustain a comfortable lifestyle, especially when you factor in rising living costs. That’s why it’s important to explore other sources of income.
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Buy dividend stocks
Investing in dividend stocks is one of the best ways to supplement your OAS payments and increase your financial security in retirement. Dividend stocks provide regular payments, just like OAS. But unlike OAS, your potential earnings are uncapped. The more you invest and reinvest dividends, the more income you can generate over time. This is especially beneficial if you start investing earlier in life and allow compounding to work its magic. Plus, dividend-paying stocks can appreciate in value, offering both income and growth potential.
Consider BCE stock
One great dividend stock to consider is BCE (TSX:BCE) on the TSX. BCE is a telecommunications giant in Canada, with a long history of delivering stable and growing dividends to its shareholders. With a current dividend yield of 8.7% at writing, BCE provides a much higher return than most savings accounts or government bonds. This yield is based on its current share price of $46.26, making it an attractive option for those looking to boost their passive income. For retirees, BCE’s reliable dividend stream can be a valuable addition to OAS payments.
BCE’s recent earnings show that the company continues to perform well despite concerns about increased competition and regulatory challenges. In its most recent quarter ended June 30, 2024, BCE posted operating revenue of $6 billion. Although that figure was down 1% year over year, quarterly net earnings jumped a significant 52%.
BCE’s dividend
One of the best aspects of BCE stock is its dividend history. BCE has a track record of not only paying regular dividends but also increasing them over time. Over the past five years, the dividend stock has averaged a dividend yield of around 6.19%. Yet this has grown to nearly 9% in recent months. This makes it an ideal stock for income-focused investors.
Bottom line
While OAS is a valuable benefit for Canadians, its limitations mean it may not be enough on its own for a comfortable retirement. That’s why investing in dividend stocks, like BCE, is a smart strategy to supplement your OAS income. With its strong dividend yield and history of returning value to shareholders, BCE is an excellent option.
