The Canada Pension Plan Investment Board’s (CPPIB) task is to grow the Canada Pension Plan (CPP) and create retirement security for future retirees. However, the pension fund manager reminds everyone that the CPP is a foundation for retirement, not a retirement plan. Moreover, not everyone qualifies to receive the maximum benefit.
Only those who contributed for at least 39 years between 18 and 65 can expect to receive $1,364.60 monthly when they retire and start payments at 65. Otherwise, most users will make do with an average of $815 (July 2024 for new beneficiaries).
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Give your retirement income a boost
Fortunately, Canadians have ways to boost retirement income. The Old Age Security (OAS) kicks in at age 65 but even with an additional $713.34 monthly, there’s still an income gap to fill. To receive more or an amount near the CPP maximum benefit, generate investment income.
Consider holding dividend stocks in retirement accounts like the Tax-Free Savings Account (TFSA) and Registered Retirement Savings Plan (RRSP). Gibson Energy (TSX:GEI) and Atrium Mortgage Investment Corp. (TSX:AI) are eligible investments in either investment account.
Besides the high dividend offers, both are steady performers in 2024. Given the average yield of 7.4%, a $25,000 investment in each will generate $3,695 in passive yearly income. The $50,000 capital transforms into an additional $307.92 monthly for your CPP and OAS benefits.
Highly contracted infrastructure business
Gibson Energy operates in the Oil & Gas Midstream industry. The $3.9 billion liquids infrastructure company boasts a storage capacity of 25.2 million barrels and has over 500 kilometres of crude pipelines across North America, not to mention high-quality terminal assets.
The competitive advantage is the stable, highly contracted infrastructure business. According to management, Gibson’s existing projects assure infrastructure growth. In Q2 2024, revenue and net income increased 23.7% and 17.9% to $3.2 billion and $63.3 million compared to Q2 2023.
Notably, in the three months ending June 30, 2024, distributable cash flow rose 23% year-over-year to $101.5 million. As of this writing, GEI trades at $23.99 per share (+25.8% year-to-date) and pays a hefty 6.8% dividend (quarterly payout). The uninterrupted quarterly payouts since 2014 lend confidence to invest in the mid-cap stock.
Defensive lending
Atrium, a $527.7 million mortgage investment corporation (MIC), extends financing or lends to commercial real estate and development communities in Ontario and major urban centres in Ontario and Western Canada. Around 96.8% of the total portfolio are first mortgages and 89.5% have a loan-to-value of less than 75%.
Suppose you invest today at $11.30 per share (+14.1% year-to-date). You can partake in the over-the-top 8% dividend. AI’s dividend track record dates back to 2013. Furthermore, it has paid special dividends every year on top of the regular monthly dividends.
According to management, the focus remains on navigating challenging real estate market conditions. Atrium’s mortgage portfolio at the end of Q2 2024 rose to a record $908 million despite slower market activity. Its CEO, Rob Goodall, said the MIC will continue to lend defensively in preferred sectors.
Comfortable retirement
Canadians can live comfortably in retirement by utilizing retirement accounts like the TFSA and RRSP. Passive income from both can augment the CPP and OAS benefits.
