As 2025 ushers in significant changes to the Canada Pension Plan (CPP) and Old Age Security (OAS), retirees might find themselves pondering the stability of their golden years. While government benefits are undergoing shifts, there’s a silver lining. Investing in robust mid-cap stocks can offer a cushion against potential financial hiccups. Two Canadian companies, GFL Environmental (TSX:GFL) and WSP Global (TSX:WSP), stand out as promising candidates to bolster your retirement portfolio.
GFL
GFL, a Vaughan, Ontario-based company, has been making waves in the waste management sector. Recently, GFL announced plans to sell its environmental services division to Apollo Global Management and BC Partners in a deal valued at approximately $8 billion. This strategic move is expected to generate cash proceeds of about $6.2 billion, which the company intends to use to repay debt and repurchase shares, thereby strengthening its financial position. A deal of this magnitude not only streamlines the company’s focus but also provides a strong foundation for future growth.
In the third quarter of 2024, GFL reported an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin of 31.1%, marking the highest in the company’s history and reflecting a 300 basis point increase over the prior year. This impressive performance underscores GFL’s commitment to operational efficiency and profitability. With the waste management industry remaining an essential service, GFL’s stability makes it an attractive investment for retirees seeking passive income. A strong dividend history and a disciplined approach to capital allocation add to its appeal as a long-term holding.
WSP
Montreal-based WSP Global is a leading engineering and professional services firm with a global footprint. In 2023, WSP reported revenues of $14.44 billion, up from $11.93 billion in 2022, indicating significant growth. The company’s adjusted EBITDA also saw an increase, reaching $1.92 billion in 2023 compared to $1.53 billion in the previous year. This kind of revenue expansion reflects a strong demand for WSP’s engineering expertise in infrastructure, environmental solutions, and urban development, positioning the company for continued success.
WSP’s diversified services and international presence ensure that it is well-positioned for future growth. As more governments and corporations invest in sustainability and large-scale infrastructure projects, WSP is likely to benefit from long-term contracts and stable revenue streams. The company has been expanding its reach through acquisitions, further solidifying its place in the market. This level of growth, combined with a track record of consistent earnings, makes WSP an attractive choice for investors looking for both stability and capital appreciation.
A winning combination
Investing in companies like GFL and WSP offers exposure to industries that are crucial regardless of economic conditions. Waste management is a necessity, ensuring that GFL will continue to have a stable stream of revenue. Meanwhile, infrastructure and engineering projects are long-term investments that keep WSP well insulated from market volatility.
Both GFL and WSP have demonstrated resilience and strong financial performance, making them appealing options for those looking to supplement retirement income. While government benefits such as CPP and OAS will continue to provide a foundation, relying solely on them may not be enough in an inflationary environment. Owning dividend-paying and growth-oriented stocks can help ensure a more comfortable and financially secure retirement.
Mid-cap stocks like GFL and WSP provide a balance between the stability of large-cap stocks and the high growth potential of smaller companies. While these may not have the same level of mainstream attention as some of the largest Canadian blue-chip stocks, each offers a compelling combination of reliable earnings and expansion opportunities.
Bottom line
As CPP and OAS evolve, retirees need to think beyond government benefits and take control of their financial future. Investing in high-quality companies with strong fundamentals is one of the best ways to ensure financial stability. The landscape of retirement income is changing, but that doesn’t mean retirees have to worry about their financial security. By staying informed and proactive, they can navigate these shifts with confidence and create a well-rounded investment strategy that supports them for years to come.