3 dividend stocks that yield at least 5% for virtually free monthly income

A 5% dividend yield on a tax-free savings account (TFSA) may be the closest you can get to “set it and forget it” passive income in Canada. The money ends up without the tax burden that would normally eat away at dividends in a non-registered account. A return that looks decent on paper can look a lot better if you stop sharing with the CRA every year. The key is to treat the proceeds as a bonus, and not as the entire thesis. You still want a company that can protect its dividend during a recession and grow its cash flow over time, turning that income into even more cash flow.

PPL

Pembina Pipeline (TSX:PPL) has looked like a classic first-dividend cash flow name for years, with the current yield still at around 5.6%. Today’s dividend stock can actually create a near-free income angle, because a stable dividend can do a lot of the heavy lifting when price momentum seems muted.

On the recent earnings front, Pembina reported third-quarter 2025 results. This included earnings of $286 million and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $1 billion. In addition, adjusted cash flow from operating activities was $648 million.

Pembina also updated its adjusted 2025 EBITDA guidance, indicating management continues to feel comfortable with its year-end outlook. The most important risks remain known. Energy volumes can decline in a slowdown, major projects can face cost or timing surprises, and sentiment can quickly change as investors become nervous about interest rates.

SRU

SmartCentres REIT (TSX:SRU.UN), interest rates have risen to currently around 7%. That higher return can seem tempting with a TFSA, especially since it pays out monthly, scratching that paycheck investing itch. But can the revenue support future payments?

On recent earnings, SmartCentres released third-quarter 2025 results and reported financial resources from operations (FFO) with unit adjustments of $0.56 for the quarter, compared to $0.53 a year earlier. This points to more stable underlying cash generation.

That supports the income thesis, but the risk part needs fairness: a higher yield can indicate greater sensitivity to interest rates, refinancing terms and tenant issues. Payouts from real estate investment trusts (REITs) can seem long if costs rise faster than rental growth. The virtually free portion will only survive if operations remain stable and debt remains manageable in the coming years.

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Alaris Equity Partners Income Trust (TSX:AD.UN) has a dividend yield of 6.6% at the time of writing. It’s also delivered a solid-looking 7% return over the past year, meaning investors haven’t been relying solely on distributions lately. The story here feels different than a pipeline or a REIT. Alaris functions more as an alternative financing platform that aggregates cash flows from a portfolio of private company investments, which could make distribution feel attractive if it remains stable.

For recent earnings, Alaris announced Q3 2025 results, highlighting net distributable cash flow of $37.4 million and a payout ratio of 41.4%. That payout ratio of just 38% is the kind of detail that helps too, as it suggests the distribution has room rather than running on fumes.

The biggest risk is that this is not an ordinary thing. It depends on how the partner companies perform, how well Alaris manages capital deployment and how credit conditions develop. If the economy tightens sharply, the market may become more cautious about anything that smells like private credit, even if cash flow looks good.

In short

If you want to turn a 5% yield in a TFSA into something that actually feels passive, the trick is to choose dividends paid from real cash flow, not hope, and then let time do the boring work. PPL currently meets the target of around 5%, while SRU.UN and AD.UN are significantly above 5%. In fact, this is what can fetch $7,000 each.

The sweet spot is not the highest yield. It’s the kind of yield you can sustain through a tough year without losing sleep, while the TFSA quietly blends in the background. And all three offer the spades.