The Canada Pension Plan (CPP) and Old Age Security (OAS) are the foundation and backbone of Canada’s retirement income system. Both pensions are for life, although they may not be sufficient for a comfortable retirement. The gap between the combined pensions and the actual costs of living continues to widen.
To address longevity risk and reduce financial anxiety, many seniors invest in stocks to supplement their CPP and OAS benefits, aiming to fill the income gap. The federal government encourages Canadians to save and invest for retirement by offering the Registered Retirement Savings Plan (RRSP) and Tax-Free Savings Account (TFSA).
However, protecting a retirement portfolio is paramount given that financial security is at stake. Losing money is not an option for those in the golden years. Stock selection is key if capital preservation and long-term income stability are the priorities. Some stocks are enticing options but are speculative bets and dividend traps. Wary investors must avoid them as much as possible.
Speculative investment
Bitfarms (TSX:BITF) has rewarded investors with a substantial 52% return in 2025 and has surged +117.24 in the last six months. As of January 23, 2026, the share price is only $3.78. BITF is classified as a financial services stock, but is still considered a highly speculative investment due to its exposure to Bitcoin mining.
The $2.3 billion vertically integrated Bitcoin mining company operates data centres in Canada and the United States. It also operated in South America but sold its Paso Pe site in Paraguay in early January 2026. Bitfarms is rebalancing its energy asset portfolio to 100% North American, with a heavy concentration in America.
Today, Bitfarms markets itself as an energy and compute infrastructure company. It also believes that the infrastructure is not a bubble but a bottleneck. Bitfarms has the largest portfolio of power infrastructure assets in North America, where demand for High-Performance Computing with Artificial Intelligence (HPC/AI) is high. The assets in the energy portfolio can convert to HPC/AI.
The exit from Latin American Mining to North America HPC/AI infrastructure projects indicates a refocusing of the business. While the strategic pivot to the U.S. and multi-year energy development pipeline ensures revenue growth, expect Bitfarms to continue reporting losses due to this massive business transformation.
Dividend trap
Allied Properties (TSX:AP.UN) in the real estate sector attracts dividend chasers and income-seekers. The $1.98 billion real estate investment trust (REIT) owns and operates urban workspace in Canada’s major cities. At $14.15 per share, the dividend yield is a mouth-watering 11.45%.
However, seniors and prospective retirees beware. The payout ratio is nearly 399%, and in a retirement context, it is a dividend trap. In the first nine months of 2025, net loss rose 272% year over year to $315.8 million. Moreover, the occupancy rate of 84% is below the 90% target, which the REIT missed in 2024 and 2025.
On December 1, 2025, Allied Properties announced a 60% reduction in monthly distributions for the month and throughout 2026 as it works to reduce indebtedness.
Unacceptable options
Bitfarms and Allied Properties offer outsized capital gains and generous dividend income, respectively. However, for a retirement-focused investor, a speculative growth and income instability are unacceptable investment options.
