Retirees: Looking to top up your CPP? Here’s how to add $ 500 of non-taxable monthly income

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Canada Pension Plan payments are not very useful during your retirement years. If you’re retired and looking for ways to increase your monthly income, investing in dividend-paying stocks can be a great way to do it. Some income-generating stocks pay dividends on a monthly basis and can help you live a little easier. Rather than burning your savings, you can use it to invest in a dividend-paying stock. Not only will you earn a recurring dividend, but if your investment grows in value, you may even make a profit if you decide to sell it. This is potentially a much better option than snacking on your nest egg.

A REIT with optimal performance

A great option for investors looking for dividend income is to invest in real estate investment trusts (REITs). Many are struggling this year because of the markets and concerns about rent collection. But one of the biggest and most stable REITs you can invest in is RioCan Real Estate Investment Trust (TSX: REI.UN).

Some of the major Canadian retailers are tenants of RioCan, including big names like Bed bath and beyond, Best buy, Canadian tire, Costco, and many more. They are among the most stable retail tenants that a REIT could have. While there is always a risk, especially when operations could be closed due to COVID-19, RioCan has been shown to be stable so far. On July 29, the company released its second quarter results for the period ending June 30, and was able to collect 86.8% of its quarterly rent for the period, which included deferrals and financings it s expect to receive from the government.

The second quarter was a difficult time for RioCan and for the economy as a whole, as many businesses were closed during this time, and the REIT’s ability to still produce decent numbers is testament to the strength of its business. As bad as it was from a quarter, RioCan’s funds from operations (FFO) per unit were still positive at $ 0.35, down from $ 0.48 in the same period a year. latest. The quarters ahead should be better, especially with businesses restarting and the economy slowly recovering from what was a terrible quarter.

Investing in RioCan today is a calculated risk, but it is a risk that can be very profitable. The company’s shares have fallen more than 40% this year, and that’s why its return is astronomical, paying investors around 9.6% a year. To earn $ 500 in monthly income, you must invest $ 62,500. Theoretically, it would be possible to do this inside a Tax-Free Savings Account (TFSA), where the cumulative limit today is $ 69,500 if you have never invested there and if you have been eligible for the account each year. And that would make the dividend income you earn tax-free.

Many other options to choose from

RioCan is a great option, but it’s not the only one either. You can diversify and invest in other stocks to reduce your overall risk. RioCan is just one example of dividend-paying stocks that you could use for the purpose of generating monthly income. Ultimately, you’ll need to determine how much risk you’re comfortable with, as you might prefer a REIT with less retail exposure than RioCan, or invest in multiple stocks to make sure all of your eggs are not all in the same basket. .

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Silly contributor David Jagielski has no position in any of the stocks mentioned. The Motley Fool recommends Costco Wholesale.

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