High-yield dividend stocks can be an attractive source of passive income, making them appealing to retirees seeking steady cash flow. However, investors should remember that no dividend stock is completely safe, and chasing the highest yields can sometimes do more harm than good.
Dividend payments are never guaranteed. In many cases, an unusually high yield may signal underlying business challenges, deteriorating fundamentals, or an unsustainable payout that could eventually be cut.
Instead of focusing solely on yield, retirees should prioritize companies with strong fundamentals, reliable cash flow generation, healthy balance sheets, and sustainable payout ratios. These businesses are better equipped to withstand economic uncertainty while continuing to reward retirees with dependable income.
Within this context, here are two high-yield dividend stocks that are relatively safer picks for Canadian retirees.
Source: Getty Images
High-yield dividend stock #1: SmartCentres REIT
SmartCentres REIT (TSX: SRU.UN) is a relatively safer option for retirees seeking high-yield dividend stocks. The real estate investment trust distributes $0.15 per unit monthly, yielding approximately 6.3%. Moreover, it has a long history of steady payouts. Its high yield and durable dividend payments make it an attractive stock to generate reliable passive income.
SmartCentres owns a high-quality real estate portfolio that continues to produce solid net operating income (NOI), supporting its payouts. Notably, a significant portion of its diversified retail and mixed-use properties is concentrated in prime retail locations, which help the company maintain strong occupancy levels and secure higher rental rates.
The REIT’s high-quality tenant base further stabilizes its business and drives rent collection. Strong leasing demand, high renewal rates, and consistent rent collection provide a stable stream of cash flow, helping SmartCentres weather economic uncertainty while continuing to reward unitholders.
SmartCentres reported an occupancy rate of 97.6% at the end of the first quarter, reflecting sustained demand for its properties. Same-property NOI increased by 3.4% during the quarter, driven primarily by leasing and renewal activity in retail assets. Notably, 80% of 2026 lease maturities were already renewed at higher rental rates in the quarter. Excluding anchor tenants, renewal rents increased by 11.5%, reflecting the strong pricing power of its retail portfolio. Rent collection also exceeded 99%, which shows the reliability of its tenant base and the resilience of its income stream.
Looking ahead, SmartCentres is likely to generate steady growth led by strength in its retail properties. Beyond traditional retail, it is expanding its mixed-use development pipeline to diversify its revenue streams. Its substantial land holdings and solid balance sheet will further support its growth and help drive its payouts.
High-yield dividend stock #2: Gibson Energy
Gibson Energy (TSX: GEI) is a compelling high-yield dividend stock to generate steady income. With a dividend yield of over 6.3%, a history of consistent dividend increases, and stable cash flows backed by long-term contracts, Gibson is a relatively safer pick for retirees.
Gibson Energy operates one of North America’s leading liquids infrastructure networks, with assets that include storage terminals, processing facilities, gathering systems, and marine loading infrastructure. These energy assets generate predictable revenue and provide the financial stability to cover the payouts.
Gibson’s commitment to returning capital to investors is evident in its latest dividend increase. Gibson recently raised its quarterly dividend by 5%, marking its seventh consecutive year of dividend growth.
Supporting its payouts is the stability of its Infrastructure segment, which contributes the majority of the company’s revenue and earnings. Importantly, much of the revenue generated by this business comes from long-term, take-or-pay agreements with investment-grade customers. These contracts provide strong visibility into future cash flows while reducing exposure to fluctuations in commodity prices.
Gibson recently strengthened its Canadian crude oil infrastructure network by acquiring Teine Energy’s Chauvin Infrastructure Assets. In addition, the previously announced Wink-to-Gateway Integration project is expected to enhance connectivity across its network, improve operating efficiencies, and create additional growth opportunities.
With its combination of a high dividend yield, steady cash flow, long-term contractual revenue, and visible growth opportunities, Gibson Energy appears well-positioned to reward retirees with steady payouts.
