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Retirees: 2 Unloved High-Yield Income Stocks for Your TFSA

Canadian pensioners are searching for reliable REITs and dividend stocks to help boost their retirement income.

Let’s take a look at RioCan Real Estate Investment Trust (TSX:REI.UN) and Inter Pipeline Ltd. (TSX:IPL) to see why they might be interesting picks today.


RioCan’s unit price is at a new 12-month low, as investors shed the Canadian mall owner amid fears of a wave of bankruptcies in the retail sector.

High-profile failures in the U.S. department store space have been in the news on a regular basis, and it appears the contagion is moving north of the border.

Sears Canada Inc. (TSX:SCC) just filed for creditor protection, as it plans to undergo a major overhaul. The company is closing 59 stores across the country and cutting 2,900 jobs.

Sears is a RioCan tenant, but it’s not among the top 10 sources of the REIT’s revenue.

RioCan’s properties remain in high demand, as the company has demonstrated in the wake of Target Canada’s abrupt exit in 2015. The mall operator has commitments to replace most of the space vacated by Target at total rent payments that exceed Target’s previous levels.

Upheaval will continue in the retail sector, and while it is sad to see some legacy names disappear, new tenants are eager to grab prime anchor spots located in RioCan’s top urban locations.

RioCan continues to grow with 2.8 million square feet of new retail development projects in the works. The company has also launched a plan to build up to 10,000 residential units at properties located in its core markets.

Investors might not see a distribution increase in the near term, but the current payout should be safe. At the moment, investors can pick up a yield of 5.75%.


IPL owns natural gas liquids (NGL) extraction facilities, conventional oil pipelines, oil sands pipelines, and a liquids storage business in Europe.

Management has taken advantage of the oil rout to add strategic assets a attractive prices, including the $1.35 billion purchase of two NGL extraction facilities from The Williams Companies.

These assets, combined with $3 billion in development projects, should provide ample cash flow growth to support ongoing dividend hikes.

IPL has raised its payout every year through the oil downturn, and the Q1 2017 payout ratio was 61%, so there is room for the distributions to grow.

IPL’s stock price is also down to a 12-month low, as investors bail out of the broader energy market on weakening oil prices.

Income seekers who buy today can pick up a 6.6% yield.

Is one more attractive?

Both stocks should be able to maintain their distributions, despite the challenges in their respective sectors.

That said, IPL is probably the better choice today. The pipeline operator provides a higher yield and likely offers stronger dividend growth over the medium term.

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Fool contributor Andrew Walker has no position in any stocks mentioned.

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