Passive income can complement your primary earnings, accelerate wealth creation, and help you achieve your long-term financial goals. It also provides an additional financial cushion against rising living expenses. Moreover, reinvesting passive income can help investors harness the power of compounding to build wealth over time.
Among the various income-generating options, investing in quality dividend stocks is a convenient, cost-effective way to build a steady income stream. However, since dividend payments are not guaranteed, investors should prioritize companies with well-established businesses, healthy cash flows, sustainable payout ratios, and solid growth prospects.
Against this backdrop, let’s explore two quality Canadian dividend stocks that could help investors generate reliable passive income over the long term.
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SmartCentres Real Estate Investment Trust
SmartCentres Real Estate Investment Trust (TSX: SRU.UN) is a fully integrated REIT that owns and operates 201 strategically located properties spanning 35.4 million square feet of gross leasable area. It leases its properties to well-established tenants under long-term agreements, with approximately 95% having a national or regional presence and 85% offering essential services. This resilient tenant base supports healthy occupancy and rent collection rates across different economic environments. Backed by its stable business model, SmartCentres has paid distributions since 2003 and currently offers an attractive forward yield of 6.7%.
The REIT reported healthy third-quarter operating results earlier this month, leasing 104,000 square feet of vacant space and renewing leases covering another 57,000 square feet with 11.8% rental growth. Amid these renewals, it has already renewed 89% of leases maturing this year. Consequently, occupancy improved by 10 basis points to 98.2%, while same-property net operating income (NOI) increased 2.5%.
Financially, NOI grew 0.4% to $141.8 million, while funds from operations (FFO) per unit declined to $0.54 from $0.59, primarily due to higher interest expenses and lower fair value adjustments. Adjusted FFO per unit, excluding one-time items, edged down to $0.55 from $0.56. Meanwhile, net income and comprehensive income increased by $98.4 million to $179.5 million, largely reflecting fair value gains on financial instruments.
Looking ahead, SmartCentres has approximately 0.6 million square feet under construction and another 87.3 million square feet in various stages of development. These projects offer significant opportunities to expand its asset base and support long-term growth. Given its high occupancy, resilient tenant base, attractive yield, and development pipeline, SmartCentres could be a compelling option for income-seeking investors.
TC Energy
Another Canadian stock worth considering for income-seeking investors is TC Energy (TSX: TRP). The diversified energy company operates an extensive natural gas pipeline network across North America, transporting gas under long-term take-or-pay contracts. It also owns seven power-generating facilities with a combined capacity of 4.3 gigawatts, selling the electricity generated through long-term power purchase agreements (PPAs). This contract-based business model generates stable and predictable cash flows, allowing TC Energy to increase its dividend for 26 consecutive years. Its current quarterly payout of $0.88 per share translates into a forward yield of 3.8%.
Meanwhile, TC Energy continues to grow its asset base to capitalize on growing demand for its infrastructure amid rising natural gas production in North America. The company has already placed $2.5 billion of projects into service and expects to bring another $0.9 billion into service this year. Further, it has approximately $30 billion in sanctioned and pending-approval capital investments, alongside more than $40 billion in early-stage development opportunities, providing a solid pipeline for future growth.
Supported by these expansion opportunities, management expects adjusted EBITDA to grow at an annualized rate of 5–7% between 2026 and 2031. It also anticipates dividend growth of 3–5% annually in the near term. Given its stable, contracted cash flows, established dividend track record, and visible growth opportunities, TC Energy appears well positioned to sustain dividend growth, making it an attractive option for long-term, income-seeking investors.
