Pension planning can build up anxiety. You will always think: “Am I investing enough for my retirement?” To relieve this fear, you must build a portfolio that grows with inflation. The real inflation is visible in the rising prices of food, real estate and medical, which are much more than 3%.
Build a pension portfolio
Your pension portfolio needs a component that regularly pays income in every market condition, giving you certainty of the payments of utilities. This need can be met via TOP TSX dividend shares, but only trusting them is perhaps not the ideal portfolio. Also invest in growth stocks that can generate wealth to help you with costly shocks.
About dividend shares, you must continue to accumulate them over the years to build a pool of passive income that is equivalent to 30-40% of your household costs.
The TOP TSX dividend stock for pension planning
Canadian natural resources (TSX: CNQ) is a perfect stock to build passive income if your pension is removed for at least 10 years. The company has low -maintenance, high reserve oil manden fields, which gives it a lead over other oil companies in terms of profit.
How does this dividend stock manage to support dividends?
Because it is an oil and gas producer, the income is exposed to West -Texas intermediate raw price volatility. However, his dividends are not materially influenced by price fluctuations because the company absorbs the dividend amount in its break-even price of mid-40s per barrel.
Canadian natural resources even managed to pay and grow dividends when the oil prices fell for a short period in 2020 and during the 2014 oil crisis near the price of US $ 40. For this it maintains a dividend payment under 100%.
The free cash flow policy states that if the net debt is less than $ 12 billion, 100% free cash flow goes to the return of the shareholders. The efficiency includes share purchasing and dividends. If the dividend falls short in a year, this can adjust the amount assigned to purchasing.
When oil prices grow considerably, Canadian natural resources does not grow considerably, because it cannot support it when oil prices fall. Instead, it issues special dividends, buys more shares, acquires the new oil reserves to expand production and speeds up the reimbursement of the debt during the cyclical revival.
How does this dividend stock manage to maintain dividend growth
Canadian natural resources have grown its dividend in the last 25 years. The dividend growth rate delayed up to 2% during the oil crisis and rose no less than 56% in an upcycle. However, the company never reduces its dividend because oil premises have lower maintenance costs than shale gas survey.
The company increases its dividend and looks at the growth of the cash flow of production capacity and product mix, which can arrange it. In 2024, the new oil reserves that considerably increased his debt to more than $ 18 billion. It uses the money that is earned from the new reserves to reduce his debt to $ 12 billion in the next two to three years. This resulted in a delay in dividend growth of 15.5% in 2024 to 9.9% in 2025. You can also expect slow growth by one digit before 2026 until the net debt has been reduced.
How Canadian natural resources help you plan retirement
The company has grown dividends with an average annual rate of 21.8% in the past six years and 25 years. It is far above average inflation. The dividend per share of $ 0.85 in 2020 grew to $ 2.35 in 2025. If you had 1,000 shares of CNQ, $ 850 dividend in 2020 is now $ 2,350.
Imagine buying 70 shares every year for 15 years; You can collect 1,050 shares. To buy 70 shares from CNQ today, you need $ 3,108. If the company continues to grow by 10%per year, you earn an annual income of $ 9,370 in the 15th year. In addition to buying 70 shares with your income, you can also reinvest the dividend to buy more shares and increase your return. This can help you to build a significant passive income in the long term and continue to grow it even after you retire.
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