Looking for a 5.4% Average Yield? These 3 TSX Stocks Are Worth a Look

South Bow (TSX:SOBO) and 2 other TSX dividend stocks deliver a sustainable 5.4% average yield with strong long-term fundamentals for reliable passive income.

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Key Points
  • Crombie REIT (TSX:CRR.UN) offers a 5.2% yield with 97.6% occupancy, 8-year weighted lease terms, and a safe 77.6% AFFO payout ratio. Monthly distributions have already risen twice since early 2025.
  • South Bow (TSX:SOBO) stock provides a 5.1% dividend yield backed by 90% long-term contracts (7-year average term) and paid out just 65% of free cash flow, with new growth projects on the pipeline.
  • Parex Resources (TSX:PXT) stock's dividend yields 5.8%. Following a $500M acquisition; cash flow growth is imminent. The payout historically used about 60% of free cash flow, offering Canadian investors higher income from discounted Colombian oil barrels.

Chasing exceptionally high investment yields can lead one into potential dividend yield traps. But a sustainable average yield of 5.4% could be a sweet spot for passive-income seekers. Here are three TSX dividend stocks that combine attractive payouts with solid business fundamentals to consider for your dividend portfolio right now.

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Crombie REIT’s 5.2% distribution yield could rise higher

Crombie Real Estate Investment Trust (TSX: CRR.UN) is a silent income-generating workhorse. This Canadian REIT owns 310 commercial properties across Canada – mostly retail, mixed-use, and some office space. With 19.4 million square feet of gross leasable area (GLA) and a strong 97.6% committed occupancy rate going into the second quarter of 2026, the diversified real estate portfolio is humming.

But here’s what I love about Crombie REIT: the weighted-average lease term on its rental portfolio is a long eight years. That means nearly a decade of visible cash flow. The trust reported a double-digit re-leasing spread of 12% for the first quarter of 2026. Tenants are paying a premium to stay, and distributable cash flow grew 7.4% annually last quarter.

Crombie has paid monthly distributions for 20 years straight. And after holding steady for a while, it started raising its payouts in August 2025 – then again in May 2026.

The current monthly distribution yields 5.2%. With an adjusted funds from operations (AFFO) payout ratio of just 77.6% (down from 82.6% last year), Crombie REIT’s monthly distribution looks plenty safe. You can sleep well on this one, and distributions may grow through 2030.

Should you buy South Bow stock for a 5.1% dividend yield?

South Bow (TSX: SOBO) stock is the new kid on the block. It spun out of TC Energy in October 2024, but it’s already acting like a dividend veteran. The Keystone Pipeline system is its crown jewel, and 90% of revenue comes from long-term contracts with investment-grade clients. A weighted-average remaining contract term of seven years as of December 2025 gives SOBO cash flows long-term visibility.

South Bow pays a quarterly dividend of US$0.50 per share, which works out to a 5.1% annual yield today. Yes, the historical earnings payout rate is high (98.6%), but that’s misleading. The company pays out less than 70% of its free cash flow. During the first quarter, it generated US$159 million in funds flow and paid just US$104 million in dividends – a very sustainable 65% cash flow payout.

Management expects US$655 million in distributable cash flow for 2026, easily covering the ~US$416 million dividend bill. Plus, the company just wrapped up an open season for the Prairie Connector Pipeline, securing 20-year customer commitments. A final investment decision is targeted for mid-2027. That project will expand South Bow’s asset base and boost long-term free cash flow.

SOBO stock has delivered 43.3% total returns year-to-date. Not too shabby for a pipeline stock in my view.

Parex Resources stock’s investable 5.8% yield

Parex Resources (TSX: PXT) is Colombia’s largest oil and gas producer after its strategic US$500 million acquisition of Frontera Petroleum assets (closed June 1, 2026). That deal added low-decline oil reserves, improves capital efficiency, and – crucially – should be accretive to free cash flow.

The stock’s quarterly dividend yields 5.8%, and the payout is well covered. Over the past 12 months, Parex Resources stock paid out about 60% of its free cash flow as dividends. Management has raised the quarterly dividend from $0.13 per share in 2021 to $0.39 today.

Yes, Parex trades at a discount to Canadian peers because of Colombia country risk. But cash flow is cash flow. And that discount means you’re getting a higher yield for the same barrel. If oil prices cooperate, PXT stock could become a bona fide dividend-growth story this decade.

Foolish bottom line

Crombie REIT, Parex Resources and South Bow are three TSX dividend stocks, from three different economic sectors – real estate, pipelines, and energy – that could do well in a passive income-generating portfolio. They offer yields between 5.1% and 5.8% (average 5.4%), and all have the coverage and contract visibility to keep paying. The trio appears worth a closer look for long-term-oriented investors today.

Fool contributor Brian Paradza has no position in any of the stocks mentioned. The Motley Fool recommends Parex Resources. The Motley Fool has a disclosure policy.

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