COVID-19 has changed, if not completely changed, the retirement expectations of Canadians. If not, then why did the household savings rate increase during the pandemic? BMO The economy estimates the surplus savings to be around $ 150 billion. Instead of spending their pandemic money, people are storing it and saving for the future.
Future retirees know that the Canada Pension Plan (CPP) and Old Age Security (OAS) only partially replace average pre-retirement income. They have to figure out how to increase pensions, generate more income and not outlive their savings.
Dividend investing is the way to achieve such a goal. If you were to stick with investing in single stocks, the logical choice is none other than BCE (TSX: BCE) (NYSE: BCE). With its 5.86% dividend yield, you can gradually build stocks over time and earn $ 15,000 a year in retirement income.
BCE is TSX’s premier telecommunications stock. The telecommunications sector is stable, as is the rail industry. This $ 54 billion company, with Telus and Rogers Communications, forms the oligopoly. New entrants must have enormous financial resources to build and match the infrastructure of the Big Three, especially BCE.
I affectionately describe BCE as the Coca Cola of the telecommunications industry because it dominates the market as the king of soft drinks. BCE has the largest network of data centers and retail outlets in Canada. Bell LTE is also the country’s national network.
BCE’s three lines of business (Bell Wireless, Bell Wireline and Bell Media) virtually meet the communication needs of all Canadians. The core businesses have combined to generate an average of nearly $ 24 billion in revenue over the past three years. During the same period, the average net income was $ 2.9 billion.
Canada’s Big Five Banks are the preferred dividend-paying stocks, as each has paid dividends for over 100 years. Equally impressive is BCE’s dividend streak. The company started operations in 1880 and profit sharing began a year later. BCE has not failed to pay dividends for – 140 years and more.
The total return for leading telecommunications stocks over the past 45 years is 66,212.96% (15.38% CAGR). BCE is an ideal holding company for current and future retirees. If you were to invest today, the stock price would be $ 59.71. As mentioned earlier, you can start small and build stocks if finances allow. You can also continue to reinvest quarterly dividends.
Power of composition
You should own at least $ 256,000 of BCE shares at the current dividend rate to generate annual income of $ 15,000. To illustrate the power of compounding, an investment of $ 50,000 today would be worth $ 156,173.60 over 20 years. You must understand that building wealth or retirement funds is a long-standing activity.
Get in the habit of setting aside a set amount each month for investment purposes. A mature but constantly growing business that provides essential communications products and services will not disappoint. Dividend payouts are regular and you won’t worry much about market fluctuations. BCE, the number one telecommunications company, can provide you with the income you badly need in retirement to supplement your CPP and OAS pensions.
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This article represents the opinion of the author, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We are Motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer, so we’re posting sometimes articles that may not conform to recommendations, rankings or other content. .
Silly contributor Christophe Liew has no position in any of the stocks mentioned. The Motley Fool recommends ROGERS COMMUNICATIONS INC. CL B NV and TELUS CORPORATION.