Canadian retirees need a predictable, steady source of income. This makes a safer high-yield dividend stock a key component of any well-diversified portfolio. That requirement is more relevant this year as market volatility and rising costs are becoming more common.
That shift has pushed investors away from chasing growth stocks to establish and grow a reliable cash flow. That’s where the appeal of high-yield dividend stocks can help to bridge that gap. Even better when the companies paying those dividends offer a long history of paying shareholders across economic cycles.
While there’s no shortage of great options on the market that offer those safer high-yield dividends, there are two segments worthy of note. Telecoms and banking are defensive sectors that have sizable moats and growing revenue streams.
Let’s look at an example from both sectors.
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BCE: A defensive telecom built for steady income
BCE (TSX:BCE) is one of Canada’s largest telecom providers, offering essential services across subscriber-based segments such as wireless, wireline, internet, and TV.
Telecoms like BCE tend to operate like utilities because subscribers have grown reliant on the services they provide in all economic environments. In fact, the defensive appeal of those services has grown considerably in the years since the pandemic.
This makes BCE’s cash flows relatively stable, which in turn supports its long‑standing dividend program. The company has a long history of paying dividends and has maintained its reputation as a reliable income source for Canadian investors. In fact, BCE has paid its dividend without fail for well over a century.
BCE’s business model is built on that recurring subscriber revenue, which helps smooth out earnings even when the broader economy slows. Its large customer base and national infrastructure give it a strong competitive position.
The company also offers long-term growth appeal through its Ziply Fiber acquisition, which expands its U.S. footprint and accelerates its fibre growth strategy.
One risk worth noting is the high-capital costs associated with telecoms upgrading and maintaining their networks. That includes 5G expansion, which has stretched BCE in recent years. In recent years, the telecom cut its dividend, paused annual upticks and reduced staff in the face of rising costs.
Fortunately, those efforts have proved helpful. The company’s dividend is now more sustainable, and BCE currently trades up 10% year to date and offers a yield of 4.92%.
BMO: A big‑bank dividend anchor for long‑term stability
Bank of Montreal (TSX:BMO) is the oldest of Canada’s big bank stocks. BMO offers a well-diversified business model that includes personal banking, commercial lending and wealth management.
The bank has operations in Canada and in the United States. BMO’s U.S. operations stem from a series of well-executed acquisitions over the past decade. Those deals have helped elevate BMO into a position as one of the largest banks in the U.S., with a presence in 32 state markets.
While that U.S. presence offers growth potential, BMO’s Canadian presence provides a layer of defensive stability backed by a strong regulatory environment and conservative lending practices.
That also means that BMO’s dividend, which it has paid out without fail for nearly two centuries, is one of the safer high-yield dividends on the market. As of the time of writing, BMO offers a yield of 3.39%.
For retirees, BMO offers exposure to a defensive sector to offset market uncertainty. Throw in the bank’s stellar quarterly dividend, and you have one of the safest high-yield dividend options on the market.
Final thoughts
BCE and BMO offer retirees two different but complementary sources of stable income. BCE provides essential‑service stability through telecom operations, while BMO delivers long‑term dividend strength through its diversified banking model.
In my opinion, one or both stocks should be core holdings in any well-diversified portfolio.
Buy these safer high-yield dividend picks, hold them, and watch your income grow.
