How to Invest for $250 Monthly in Retirement

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Establishing a recurring income stream that can provide income monthly in retirement is one of the foremost goals of investors everywhere. And contrary to what most think, creating that income stream isn’t as hard as it seems.

Here are several ways to establish a recurring income stream of at least $250 monthly in retirement (or even more).

First, a reminder

Investors who are new to investing get discouraged when seeing things like “Start by investing $30,000 here.” Instead, investors should remember that investing for retirement isn’t a race.

In fact, starting early and investing what you can over a longer period can be even more effective thanks to the magic that is dividend reinvestments.

The other key point to remember is that no investment, even the most defensive pick, is not without some risk. That’s why it’s important to diversify your portfolio with investments from different segments of the market.

So then, what stocks should investors look to buy in order to establish an income stream that pays monthly in retirement?

This renewable stock is poised to grow

Renewable energy stocks are growing in popularity. This is partly because traditional utilities are finally transitioning to renewables (at considerable expense) to meet changing regulations.

That colossal shift puts renewable energy stocks like TransAlta Renewables (TSX:RNW) at a considerable advantage. For those that are unfamiliar with the stock, TransAlta boasts a portfolio of renewable energy assets located in the U.S., Canada, and Australia.

Those facilities include solar, wind, hydro, and natural gas. They also adhere to the same lucrative business model that traditional fossil fuel utilities follow. In other words, those facilities are bound by long-term regulated contracts that provide reliable and recurring revenue streams.

That recurring revenue stream means that TransAlta can offer a juicy monthly dividend. As of the time of writing, the yield on that dividend works out to an impressive 7.06%.

This means that a $30,000 investment will generate an income of $176 each month.

Forget about the rental property

One of the long-term strategies for establishing income monthly in retirement is owning real estate. Unfortunately, that option isn’t available to many thanks to the market volatility that gave us rising interest rates and surging downpayment requirements.

That’s where owning shares in RioCan Real Estate (TSX:REI.UN) can help establish that sought-after income paid monthly in retirement.

RioCan is one of the largest REITs in Canada. The company has a large asset portfolio that primarily comprises retail locations, but that mix is evolving. More recently, RioCan has shifted its focus to mixed-use residential properties.

Those properties, known as RioCan Living, consist of residential towers situated atop several retail floors. The buildings are in high-demand metro areas along transit corridors, which makes them appealing for several reasons.

Perhaps best of all, RioCan provides a handsome monthly distribution thanks to those properties, which currently boasts a yield of 5.41%. Given a $30,000 investment, that works out to a monthly income of $134. And keep in mind that $30,000 is considerably less than a traditional downpayment.

Prospective investors should keep in mind another advantage of investing in RioCan over a traditional rental property – lower risk. By investing in RioCan, the risk is spread across hundreds of units rather than a single location. And there’s also no need to worry about maintenance, taxes, or chasing down tenants.

Investing for monthly income in retirement

Both RioCan and TransAlta hold significant growth appeal but also offer considerable defensive appeal. And given the income they provide to prospective investors, they can together provide well over $300 every month in income.

CompanyRecent Price Number of SharesDividendTotal PayoutFrequency
TransAlta Renewables13.332,250$0.94$176.25Monthly
RioCan Real Estate20.051,496$1.08$134.64monthly

Prospective investors should also note that if they aren’t ready to draw on that income, it can be reinvested until needed. Over a longer period, this can significantly increase that income even further.

The post How to Invest for $250 Monthly in Retirement appeared first on The Motley Fool Canada.

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Fool contributor Demetris Afxentiou has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy