Retirees: 2 Amazing High-Yield Stocks for Passive Income

These two top dividend stocks deserve to be on your income radar. Here’s why.

| More on:

Canadian pensioners are searching for reliable dividend stocks that can generate steady passive income in their TFSA portfolios. The market has enjoyed a huge rally after the 2020 crash, but some top Canadian dividend stocks with high yields still look cheap.

Pembina Pipeline

Pembina Pipeline (TSX:PPL)(NYSE:PBA) provides midstream services to oil and gas producers primarily located in Canada. The company has grown steadily over the past 65 years, adding assets through strategic acquisitions and internal development projects.

Pembina Pipeline reported solid Q2 2021 results with adjusted EBITDA roughly in line with the same period last year. The company increased the bottom end of its adjusted EBITDA guidance for 2021, so things are going well for the second half of the year.

Pembina Pipeline’s management team has been busy in 2021 getting the business positioned for future growth. The company terminated a takeover agreement for Inter Pipeline after a bidding battle for the competitor. Pembina Pipeline received a $350 million termination fee as a result of IPL deciding to accept an offer from a subsidiary of Brookfield Asset Management.

The second quarter of the year produced three new partnerships. Pembina Pipeline is teaming up with First Nations to develop a potential LNG facility in British Columbia. Another partnership will evaluate the possible purchase of the Trans Mountain Pipeline currently owned by the Canadian government.

In addition, Pembina Pipeline is working with TC Energy on an ESG project to build a carbon-sequestration facility that will help energy producers meet their net-zero emittance goals in the coming years.

The dividend should be safe and currently offers a yield of 6.5%. Pembina Pipeline pays the dividend monthly, which is attractive for retirees who want regular income to complement their CPP, OAS, and company pensions. The stock trades near $39 at the time of writing. That’s below the $53 it fetched before the pandemic, so there is decent upside potential as the energy sector recovers.

Enbridge

Enbridge (TSX:ENB)(NYSE:ENB) is a giant in the North American energy infrastructure industry with a market capitalization of $100 billion and assets that are essential to the smooth operation of the Canadian and U.S. economies. The businesses moves 25% of the oil produced in the U.S. and Canada and transports 20% of the natural gas used in the United States.

Enbridge completed a major turnaround effort before the pandemic, monetizing nearly $8 billion in non-core assets and bringing four subsidiaries into the parent company. These moves shored up the balance sheet and streamlined the business structure, helping Enbridge get through the past 18 months in decent shape.

Oil throughput is rebounding on the oil pipelines as fuel demand recovers. Enbridge’s natural gas and renewable energy assets held up well last year, helping offset the downturn on the oil pipeline business and enabling the board to raise the dividend for 2021.

Enbridge trades near $50 per share compared to $56 before the crash. Investors who buy the stock now can pick up a 6.7% dividend yield.

The bottom line

Pembina Pipeline and Enbridge look attractive right now for retirees seeking high-yield dividend income. The payouts should drift higher in the next few years, and the share prices appear reasonable today in an otherwise expensive market.

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.

The Motley Fool owns shares of and recommends Brookfield Asset Management and Enbridge. The Motley Fool recommends Brookfield Asset Management Inc. CL.A LV and PEMBINA PIPELINE CORPORATION. Fool contributor Andrew Walker owns shares of Enbridge, TC Energy,  and Pembina Pipeline.

More on Investing

ETF chart stocks
Investing

Here Are My 2 Favourite ETFs for 2025

These are the ETFs I'll be eyeballing in the New Year.

Read more »

money goes up and down in balance
Dividend Stocks

This 6% Dividend Stock Is My Top Pick for Immediate Income

This Canadian stock has resilient business model, solid dividend payment and growth history, and a well-protected yield of over 6%.

Read more »

Canadian energy stocks are rising with oil prices
Energy Stocks

Outlook for Cenovus Energy Stock in 2025

A large-cap energy stock and TSX30 winner is a screaming buy for its bright business outlook and visible growth potential.

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Stock Market

CRA: Here’s the TFSA Contribution Limit for 2025

The TFSA is a tax-sheltered account that allows you to hold diversified asset classes at a low cost.

Read more »

Hourglass and stock price chart
Tech Stocks

1 Canadian Stock Ready to Surge Into 2025

There is a lot of uncertainty about the market in general as we move closer to the following year, but…

Read more »

think thought consider
Stock Market

Billionaires Are Selling Apple Stock and Picking up This TSX Stock Instead

Billionaires like Warren Buffett continue to trim stakes in Apple stock, with others picking up this long-term stock instead.

Read more »

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 »

canadian energy oil
Energy Stocks

Is Baytex Energy Stock a Good Buy?

Baytex just hit a 12-month low. Is the stock now oversold?

Read more »