3 High-Yield Dividend Stocks to Build a 2nd Pension With

Canadians have ways to create a second pension apart from the CPP/OAS retirement package. Invest in the Keyera stock, Alaris Equity Partners stock, and True North Commercial stock. All three pay high dividends.

| More on:

Every Canadian envisions a stress-free retirement. However, the sunset years won’t be enjoyable if you don’t cover the blind spots. The primary lookout is cash flow. Pensions like the Canada Pension Plan (CPP) and Old Age Security (OAS) will be there when you retire, although they aren’t the total package.

Building a second pension will help you conquer the financial hurdles in retirement. Start today and do it yourself. If you have seed capital, consider dividend investing. Choose from among high-yield dividend stocks like Keyera (TSX:KEY), Alaris Equity Partners (TSX:AD), and True North Commercial (TSX:TNT.UN).

Rock-solid dividends

Keyera is a solid choice because the energy stock is a dividend aristocrat. Besides the lucrative 5.94% dividend, the payout of this $7.39 billion energy infrastructure company is monthly, not regular quarterly. You can incorporate the investment income into your monthly budget.

Dividend growth has been steady since Keyera went public in 2003. Because 70% of its cash flows come from fee-for-service contracts with investment-grade customers, commodity price fluctuations won’t interrupt dividend payments. The total return in the last 18 years is 967.77% (13.92% CAGR).

Keyera’s year-to-date gain of 53.82% makes it one of TSX’s top performers. Management has allocated up to $450 million in growth capital for the full year of 2021. It also hopes to realize between $45 million and $65 million in cost savings this year.

Unique funding structure

Alaris Equity Partners is ideal if your preference is the private capital market. The $758.51 million income trust specializes in helping private businesses (no startups) achieve their full potentials.

The stock isn’t doing bad either, as evidenced by the 15.95% year-to-date gain. At $16.87 per share, you can partake of Alaris’ generous 7.32% dividend. Given the high yield, any investment amount will double in less than ten years (9.83 years).

Alaris’ investment or structure is unique. The company provides equity or growth capital to lower middle-market companies in North America. Apart from a proven management team, a funding candidate must be generating an annual free cash flow of $3 million or more. More importantly, the company has a low risk of obsolescence.

Stability in the pandemic

True North Commercial isn’t the largest real estate investment trust (REIT) in Canada, but it possesses the best tenant profile among all REITs. Also, at only $7.62 per share, this $665.22 million REIT pays an attractive 7.92% dividend. Like Keyera and Alaris, True North outperforms in 2021 (+26%).

How can you go wrong when the federal government of Canada is the lead lessee in 12 of the 47 income-producing properties? Government tenants compose35% of the high-quality renters, while 40% are credit-rated companies. The top three contributors to gross revenue are the federal government of Canada (14.4%), the province of Alberta (9.8%), and the province of Ontario (60%).

True North’s weighted average term on lease renewals and replacements is 7.4 years. For new lease deals, it’s 4.3 years. The occupancy rate is a high 97%. Because of the fully occupied portfolio of predominantly government and credit-rated tenants, expect the REIT to maintain stability in the pandemic environment.

Prepare for the unemployment years

A second pension will help future retirees prepare for and get through the unemployment years. Retirement life should be a ball with recurring income streams from high yield dividend stocks.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends Alaris Equity Partners Income Trust and KEYERA CORP.

More on Dividend Stocks

ways to boost income
Dividend Stocks

1 Excellent TSX Dividend Stock, Down 25%, to Buy and Hold for the Long Term

Down 25% from all-time highs, Tourmaline Oil is a TSX dividend stock that offers you a tasty yield of 5%…

Read more »

Start line on the highway
Dividend Stocks

1 Incredibly Cheap Canadian Dividend-Growth Stock to Buy Now and Hold for Decades

CN Rail (TSX:CNR) stock is incredibly cheap, but should investors join insiders by buying the dip?

Read more »

bulb idea thinking
Dividend Stocks

Down 13%, This Magnificent Dividend Stock Is a Screaming Buy

Sometimes, a moderately discounted, safe dividend stock is better than heavily discounted stock, offering an unsustainably high yield.

Read more »

Canadian Dollars bills
Dividend Stocks

Invest $15,000 in This Dividend Stock, Create $5,710.08 in Passive Income

This dividend stock is the perfect option if you're an investor looking for growth, as well as passive income through…

Read more »

A Canada Pension Plan Statement of Contributions with a 100 dollar banknote and dollar coins.
Dividend Stocks

3 Compelling Reasons to Delay Taking CPP Benefits Until Age 70

You don't need to take CPP early if you are receiving large dividend payments from Fortis Inc (TSX:FTS) stock.

Read more »

A worker overlooks an oil refinery plant.
Dividend Stocks

Better Dividend Stock: TC Energy vs. Enbridge

TC Energy and Enbridge have enjoyed big rallies in 2024. Is one stock still cheap?

Read more »

Concept of multiple streams of income
Dividend Stocks

Got $10,000? Buy This Dividend Stock for $4,992.40 in Total Passive Income

Want almost $5,000 in annual passive income? Then you need a company bound for even more growth, with a dividend…

Read more »

Investor reading the newspaper
Dividend Stocks

Emerging Investment Trends to Watch for in 2025

Canadians must watch out for and be guided by emerging investment trends to ensure financial success in 2025.

Read more »