3 Dividend Stocks Yielding at Least 5% for Practically Free Monthly Income

A 5% dividend yield inside a Tax-Free Savings Account (TFSA) can feel like the closest thing to “set it and forget it” passive income in Canada. The cash lands without the tax drag that usually eats away at dividends in a non-registered account. A yield that looks decent on paper can look much better when you stop sharing it with the CRA every year. The key is to treat the yield like a bonus, not the whole thesis. You still want a business that can protect the dividend through a downturn and grow cash flow over time, and turn that income into even more cash flow.

PPL

Pembina Pipeline (TSX:PPL) has looked like a classic cash flow first dividend name for years, with the current yield still at about 5.6%. The dividend stock today can actually set up the practically free income angle, because a stable dividend can do a lot of the heavy lifting when price momentum feels muted.

On recent earnings, Pembina reported third-quarter 2025 results. This included earnings of $286 million and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $1 billion. Furthermore, adjusted cash flow from operating activities was $648 million.

Pembina also updated its 2025 adjusted EBITDA guidance range, which signals management still feels comfortable with its outlook into year-end. The main risks remain familiar. Energy volumes can soften in a slowdown, big projects can run into cost or timing surprises, and sentiment can swing fast when investors get nervous about rates.

SRU

SmartCentres REIT (TSX:SRU.UN) has jumped in yield to currently around 7%. That higher yield can look tempting in a TFSA, especially because it pays monthly, which scratches that paycheque investing itch. But can earnings support future payments?

On recent earnings, SmartCentres released third-quarter 2025 results and reported funds from operations (FFO) with adjustments per unit of $0.56 for the quarter, up from $0.53 a year earlier. This points to steadier underlying cash generation.

That supports the income thesis, but the risk section needs honesty: a higher yield can signal higher sensitivity to interest rates, refinancing terms, and tenant issues. Real estate investment trust (REIT) payouts can look stretched if costs rise faster than rent growth. The practically free part only holds if operations stay steady and debt stays manageable through the next few years.

AD

Alaris Equity Partners Income Trust (TSX:AD.UN) sits at a dividend yield of 6.6% at writing. It has also delivered a solid-looking return of 7% in the last year, which means investors have not relied only on distributions lately. The story here feels different from a pipeline or a REIT. Alaris functions more like an alternative financing platform that collects cash flows from a portfolio of private-company investments, which can make the distribution feel appealing when it stays stable.

For recent earnings, Alaris released its third-quarter 2025 results, highlighting net distributable cash flow of $37.4 million and a payout ratio of 41.4%. That payout ratio of just 38% is the kind of detail that helps as well, as it suggests the distribution has room rather than running on fumes.

The main risk is that this is not a plain-vanilla business. It depends on how its partner companies perform, how well Alaris manages capital deployment, and how credit conditions evolve. If the economy tightens sharply, the market can get more cautious about anything that smells like private credit, even when the cash flow looks fine.

Bottom line

If you want to turn a 5% yield in a TFSA into something that actually feels passive, the trick is picking dividends that get paid from real cash flow, not hope, and then letting time do the boring work. PPL fits the around 5% brief right now, while SRU.UN and AD.UN sit meaningfully higher than 5%. In fact, here’s what $7,000 in each can bring in.

COMPANYRECENT PRICENUMBER OF SHARESDIVIDENDTOTAL ANNUAL PAYOUTFREQUENCYTOTAL INVESTMENTPPL$50.76137$2.84$389.08Quarterly$6,954.12SRU.UN$25.59273$1.85$504.05Monthly$6,986.07AD.UN$20.49341$1.36$463.76Monthly$6,987.09

The sweet spot is not the highest yield. It’s the yield you can hold through a rough year without losing sleep, while the TFSA quietly compounds in the background. And all three offer it up in spades.

The post 3 Dividend Stocks Yielding at Least 5% for Practically Free Monthly Income appeared first on The Motley Fool Canada.

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More reading

• 3 Unbelievable Buying Opportunities Investors Should Jump On Right Now
• Got $5,000 to Invest? Put it to Work in 3 TFSA-Worthy Blue Chips (and Then Do Nothing for Decades)
• Find Your Balance: 3 TSX Stocks for Income, Growth, and Value
• Betting on a Holiday Retail Revival? 3 Stocks That Could Benefit
• 2 Top TSX Stocks for Reliable Monthly Income

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Alaris Equity Partners Income Trust, Pembina Pipeline, and SmartCentres Real Estate Investment Trust. The Motley Fool has a disclosure policy.