Retirees: 2 High-Yield Dividend Stocks for Solid TFSA Passive Income

Retirement can be difficult as your active source of income reduces. Your active income may not vanish, as you can continue working in consulting roles or take on investing as full-time work. However, what you need is passive income that can take care of your daily expenses, as other sources of income may be volatile. Investing in high-yield dividend stocks can automate your expense management. A Tax-Free Savings Account (TFSA) is a great source of tax-free passive income.

Two high-yield dividend stocks for retirees

The dividend yield is the annual dividend per share as a percentage of the share price. High-yield is often associated with high risk as the stock price falls due to short-term headwinds. However, a few dividend stocks have a strong history of paying regular dividends.

SmartCentres REIT

SmartCentres REIT (TSX:SRU.UN) is one such stock. It has a 23-year history of paying regular monthly dividends, one of the longest among the Canadian REITs. In the last 21 years, the REIT has withstood the 2008 Financial Crisis, the 2020 pandemic, and the 2022 real estate bubble. It’s not that SmartCetres was unaffected. In fact, its distribution payout ratio surpassed 95% in 2024. The reason was the falling fair market value of properties, making it difficult for SmartCentres to sell its residential properties.

However, the REIT withstood all crises and recovered its ratios. Its strength is its tenant Walmart, from which it earns 25% of rental income, and the grocery-anchored stores that keep occupancy above 90%. The REIT doesn’t increase dividends annually but has a 7.1% yield. It intensifies the area near its stores by building mixed-use properties that help it charge higher rent and secure capital gains from time to time by selling those properties.

Even renting an apartment carries the risk of non-occupancy and the tenant defaulting on rent. However, you can expect SmartCenters to give you a stable payout every month in every economic situation.  

Telus stock

Telus Corporation (TSX:T) is another stock with a 23-year history of paying dividends and growing its dividends in the last 21 years. The share price is trading near its 2013 level as high leverage on its balance sheet and strong competition keep investors bearish. However, Telus’s stable cash flows and strategy to expand in new markets on competitors’ networks will keep dividends coming. Now is a good time to lock in a 9.3% yield in your TFSA.

Telus is focused on reducing its debt, which could ease the interest expense burden and increase free cash flow. The company has integrated Telus Digital to strengthen its service offerings with artificial intelligence and Telehealth. T has paused its dividend growth and is phasing out the discounted dividend reinvestment plan to reduce leverage. However, it will continue to pay the current dividend per share of $1.64.

How much dividend income can retirees earn from the above stocks

A 7% and 9% yield are significantly better than the 3.5% interest from Guaranteed Investment Certificates. While the above dividend stocks carry equity risk, the downside risk is low as they trade at a cheap valuation.

If you buy 1,000 shares of the two stocks, you can get $3,524 in tax-free passive income in 2026 for a total investment of $44,860.

StockShare PriceDividend per ShareDividend on 1,000 sharesInvestment amountTelus$18.7$1.67$1,674$18,700SmartCentres REIT$26.16$1.85$1,850$26,160Total  $3,524$44,860

The post Retirees: 2 High-Yield Dividend Stocks for Solid TFSA Passive Income appeared first on The Motley Fool Canada.

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More reading

• Is TELUS Stock a Buy for Its 9% Dividend Yield?
• The 7.3% Dividend Stock You Can Depend On
• Top Picks: 3 Canadian Dividend Stocks for Stress-Free Passive Income
• Is Telus Stock a Buy for Its Dividend Yield?
• My Blueprint for Generating $113/Month Using a $20,000 TFSA Investment

The Motley Fool recommends SmartCentres Real Estate Investment Trust, TELUS, and Walmart. The Motley Fool has a disclosure policy. Fool contributor Puja Tayal has no position in any of the stocks mentioned.