FRU:CC - Investors: Here's How to Make $1000 Each Month in Retirement

2023-06-28 20:45:00 ET

Planning for a secure and prosperous retirement doesn’t need to be a complex task. In fact, if you stick to the right investment strategies and start your investment journey early in life, you could easily expect to live your post-retirement life with financial freedom.

In this article, I’ll highlight two of the best Canadian dividend stocks to buy now that can help you make $1,000 in monthly passive income to enhance your life after retirement.

Freehold Royalties stock

When investing in dividend stocks for retirement planning , you should ideally stick to well-established businesses with a robust business model and strong growth prospects. With that in mind, Freehold Royalties ( TSX:FRU ) could be a great Canadian dividend stock to create a steady source of monthly passive income. This Calgary-headquartered oil and gas royalty firm makes most of its revenue (nearly 63% in 2022) from its Canada, while another large portion comes from the United States market.

After rallying by 204% in the previous couple of years, FRU stock has seen a 16.3% downside correction in 2023 to currently trade at $13.28 per share with $2 billion in market cap . The recent big declines in the prices of energy products amid a gloomy global economic outlook could be the main reason for the dismal year-to-date performance. Despite these temporary challenges, Freehold’s key focus on prudently managing debt and acquiring long-life, quality assets boosts its long-term growth outlook, which should help its stock turn positive again.

At the current market price, this Canadian energy stock offers a very impressive 8.1% annualized dividend yield and distributes its dividend payouts every month.

Dream Industrial REIT stock

Besides Canadian energy stocks , you can also consider investing a portion of your retirement portfolio in some fundamentally strong REITs (real estate investment trusts). Top Canadian REITs can help you earn reliable passive income for years, as they typically distribute a large portion of their earnings among investors through dividends. Considering that, I find Dream Industrial REIT ( TSX:DIR.UN ) attractive to invest in for the long term.

This Toronto headquartered open-ended REIT has a market cap of $3.5 billion, as its stock trades at $13.40 per share with 15.7% year-to-date gains. In addition, this monthly dividend stock offers an attractive 5.2% annualized dividend yield.

In the last three years (from 2020 to 2022), Dream Industrial’s average revenue-growth rate has been 24% YoY (year over year), despite facing COVID-19-related difficulties in between. During the same period, the average YoY growth in its adjusted earnings was at 40%, reflecting strength in its business model. Moreover, Dream Industrial REIT’s reliable tenant base, consistently expanding asset base, and resilient financial position makes its stock very attractive for retirement planning.

Bottom line

If you buy 5,556 shares of Freehold Royalties and 8,572 shares of Dream Industrial REIT, you can expect to earn $1,000 in monthly passive income from their combined dividends. To buy these many shares at their respective current market prices, however, you’ll need to invest a large amount of cash (about $188,648) in these companies.

While this example should give you a fair idea of how you can earn reliable monthly passive income after retirement by investing in Canadian dividend stocks, you should always avoid pouring such a large sum of money into a couple of stocks. Instead, you must consider diversifying your retirement portfolio by including several other quality dividend stocks from different industries in it.

The post Investors: Here’s How to Make $1,000 Each Month in Retirement appeared first on The Motley Fool Canada .

The Motley Fool recommends Dream Industrial Real Estate Investment Trust and Freehold Royalties. The Motley Fool has a disclosure policy . Fool contributor Jitendra Parashar has no position in any of the stocks mentioned.

2023