Transform Your Retirement With This 10.75%-Yielding Dividend Knight

Do you want income growth? How about guaranteed income through dividends as it continues to grow year after year?

Amy Legate-Wolfe

Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Before joining Motley Fool Canada, she wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote: “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published May 23, 2025 8:45 pm EDT

Retirement used to mean drawing down your savings and hoping your nest egg lasted. Today, many Canadians are turning to high-yield dividend stocks to create a steady stream of passive income that supports their lifestyle well into their golden years. One name that continues to pop up among income-seeking investors is Labrador Iron Ore Royalty (TSX:LIF). With a hefty yield, strong cash flow, and a unique business model, LIF has earned its place as a true dividend knight on the TSX today.

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About LIF

Labrador Iron Ore isn’t your typical mining company. It doesn’t operate mines or manage heavy equipment. Instead, it owns a 15.1% equity interest in the Iron Ore Company of Canada (IOC) and collects a 7% gross overriding royalty on IOC’s iron ore sales. As of writing, LIF trades around $28.70 per share and pays an annualized dividend of $3.00. That works out to a yield of 10.75%. That’s not a typo. Even better, LIF pays this dividend quarterly, offering predictable income throughout the year.

Let’s look at how the business is doing. In 2024, Labrador Iron Ore reported net income of $175 million, or $2.73 per share. That was slightly lower than the previous year due to lower iron ore prices, but not by much. Meanwhile, cash flow from operations jumped 32% to $201.9 million, or $3.15 per share. This increase was largely due to IOC distributing more dividends to its shareholders, including LIF. That’s key. Because of its royalty structure and equity stake, LIF’s revenue scales with IOC’s output and profitability, but it isn’t directly responsible for production costs.

Considerations

But like any investment, LIF is not without risk. The company’s fortunes are closely tied to the global iron ore market. When iron ore prices drop, so does LIF’s royalty revenue and share of IOC’s earnings. And that’s exactly what happened in the first quarter of 2025. LIF reported net income of $21.3 million, or $0.33 per share, down 64% from the same quarter in 2024. Lower sales volumes of concentrate and pellets, combined with reduced iron ore prices and pellet premiums, took a bite out of earnings.

Still, context matters. The company was profitable, continued to pay its dividend, and is dealing with temporary pricing pressure in a cyclical commodity market. Iron ore demand isn’t going anywhere, particularly with long-term global infrastructure investment and ongoing demand from countries like China and India. IOC’s high-quality iron ore is also in demand for greener steel production, adding another layer of long-term viability.

Bottom line

Investing in LIF isn’t about shooting the lights out with growth. It’s about owning a reliable, cash-generating asset that complements the income part of your portfolio. When paired with other blue-chip dividend payers or low-cost exchange-traded funds, it can form the backbone of a retirement strategy focused on sustainability, not speculation.

So, is LIF a stock that can transform your retirement? Absolutely. It delivers high income, leverages a unique business model, and has a history of putting shareholders first. While it’s not immune to the ups and downs of the iron ore market, its long-term outlook and income-generating ability make it a top pick for those building a better retirement with dependable Canadian dividends.