This 6% dividend giant could be the perfect retirement partner

Are you aiming for a perfect retirement, where your energy and grocery bill is taken care of without worries? You have no debts and multiple sources of income. You will be given an advisory role, work part-time or on an as-needed basis for some extra income for recreation. For this dream pension, you must invest in shares twenty years in advance.

The role of dividend investing in retirement planning

Speaking of multiple sources of income, you can build dividend pools for each expense for a few years and then let your money work for you through the power of compounding. Consider building an investment pool of $50,000 for utility bills, and another $50,000 for groceries and transportation.

This 6% dividend giant could be your retirement partner

In Canada you have a number of good pension partners that offer a dividend yield of 6%. Among them is CT REIT (TSX:CRT.UN), a REIT that grows its distribution annually, offers a dividend reinvestment plan (DRIP) and has lower debt on its balance sheet. More than 95% of the debt consists of unsecured bonds, which are renewed annually. There is no construction loan and mortgages make up a very small part.

Furthermore, CT REIT’s operating costs are lower as it does not spend much on marketing and brokerage commissions to fill occupancy. With his parent Canadian band Because it covers 92.2% of the total gross leasable area and contributes to 90.9% of the annualized minimum rent, it is reasonable to assume that the retailer’s financial strength is better reflected in its REIT activities.

CRT.UN increases dividends by 3% annually in July. However, it slowed that growth to 2.5% this year as the parent company invested in the True North program to boost sales. Same store intensification and development projects have also been slow compared to 2024.

The 6% return on CT REIT can rise to 7.4% in 10 years and as high as 17.5% in 20 years.

How CT REIT Can Give You Passive Income After You Retire

Let’s consider a scenario where you invest $12,000 in 2026 and $6,000 per year for the next nine years. Your total investment in CT REIT alone is $66,000. Invest now in a DRIP (dividend reinvestment plan) from 2026.

For calculation purposes, we have assumed that CT REIT’s average unit price remains $16.5 for the first ten years and $18 for the next ten years, with dividends. to grow at a compound annual growth rate (CAGR) of 2%. An investment of $12,000 would purchase 727 units at an average share price of $16.50. However, if you invest a lump sum today, you can buy 753 units for $15.92.

The 727 units can earn you $689 in annual dividend income. Add another $6,000 in investments from your pocket, and you continue to accumulate income-producing units. The first decade of accumulation could accelerate the wheel of compounding. Then you can simply let the investment of €66,000 work for you via DRIP. The $4,858 dividend earned in the first ten years could more than double to $11,534 without a single dollar of investment from your pocket.