Retirees often rely heavily on passive income to cover their everyday expenses, as they no longer receive a regular paycheque after leaving the workforce. Therefore, they focus on protecting their capital while steady passive income covers their expenses. Moreover, retirees usually have a shorter investment horizon, giving them less time to recover from market downturns or prolonged economic uncertainty. As a result, they typically adopt a more conservative and risk-averse investment strategy.
Therefore, retirees should focus on investing in resilient business models, reliable cash flows, and a strong history of dividend payments, which tend to be particularly attractive during retirement. With this in mind, let’s examine two high-yield Canadian dividend stocks that could help retirees protect their capital while enhancing their passive income potential.
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Enbridge
Enbridge (TSX:ENB) is an attractive stock for retirees due to its highly stable and contracted business model. Approximately 98% of the company’s earnings are generated from long-term contracts and regulated assets, which significantly reduces its exposure to commodity price swings and broader economic volatility. Additionally, nearly 80% of its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) is indexed to inflation, providing an added layer of earnings stability during periods of rising prices.
Backed by this resilient business model, Enbridge has delivered an average annual total shareholder return of 13.2% over the past 20 years. The company has also maintained an impressive dividend track record, having paid dividends for 70 consecutive years while increasing its payout annually for the last 31 years. Currently, the stock offers an attractive forward dividend yield of 5.1%, making it a compelling option for income-focused retirees.
Meanwhile, rising oil and natural gas production and consumption across North America continue to create long-term growth opportunities for the company. Enbridge has identified roughly $50 billion in growth opportunities and plans to invest between $10 billion and $11 billion annually to advance these projects. Supported by these expansion initiatives, management expects adjusted earnings per share (EPS) and distributable cash flow per share to grow at an annualized rate of around 5% through the rest of this decade.
The company’s financial position also remains solid, with approximately $12.7 billion in available liquidity. In addition, management expects to return $40 billion to $45 billion to shareholders over the next five years, reinforcing the sustainability and attractiveness of its future dividend payouts.
SmartCentres Real Estate Investment Trust
Another high-yield dividend stock that appears well-suited for retirees is SmartCentres Real Estate Investment Trust (TSX:SRU.UN). The REIT owns and operates 200 strategically located properties across Canada, with approximately 90% of Canadians living within 10 kilometres of one of its properties. Its tenant base is also highly resilient, with around 95% of tenants having a regional or national presence and nearly 60% providing essential services. This strong tenant profile helps the REIT maintain healthy occupancy levels regardless of broader economic conditions.
Supported by stable occupancy, ongoing lease-up activity, and rising rental rates, SmartCentres has continued to strengthen its financial performance while delivering attractive income to unitholders. The REIT currently pays a monthly distribution of $0.15417 per unit, which translates into an appealing forward yield of 6.6%.
Meanwhile, SmartCentres continues to expand and diversify its asset portfolio. The REIT currently has approximately 0.8 million square feet of projects under construction across retail, residential, self-storage, office, and industrial segments. In addition, it possesses a substantial development pipeline totalling 87 million square feet at various stages of planning and development, providing strong long-term growth visibility.
Given its resilient tenant base, stable cash flows, attractive yield, and significant development pipeline, SmartCentres appears well-positioned to continue rewarding unitholders with dependable monthly distributions, making it an appealing option for retirees seeking reliable passive income.
