Excessive-yield dividend shares get a nasty rap, and actually? A few of them deserve it.
In case you’re an revenue investor who has been burned by a yield that seemed nice till it didn’t, you already know the drill: The quantity on the display is barely pretty much as good because the money circulate behind it.
A sky-high yield can sign bother, particularly if the corporate pays greater than it earns or retains borrowing simply to mail out cheques. However a excessive yield may present up for an easier motive: the market feels nervous, the inventory worth falls, and the dividend appears to be like greater on paper although the underlying money circulate nonetheless holds up. The candy spot sits within the center, the place you get a pleasant yield and a enterprise mannequin that may really help it.
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TF
Timbercreek Monetary (TSX:TF) will not be a conventional working firm. It’s a mortgage funding company that lends to Canadian industrial actual property debtors, usually within the bridge-financing lane. During the last yr, the backdrop has shifted from “charges preserve biting” to “charges lastly easing,” and administration has framed decrease floating charges as a tailwind for its typical lending technique whereas transaction exercise improves.
Within the fourth quarter of 2025, it reported web funding revenue of $25.7 million and distributable revenue of $15 million, or $0.18 per share. It declared $0.17 per share in dividends within the quarter, which put the distributable revenue payout ratio at 95.3%. It additionally ended the quarter with web mortgage investments of $1.239 billion and a weighted common rate of interest of 8.1% for the quarter. The headline web end result seemed ugly because it booked a web lack of $1.1 million, however that was pushed by legacy asset resolutions, not a collapse within the core curiosity engine.
If it retains resolving legacy positions and redeploys into higher-quality new loans, the earnings capability can enhance whereas the month-to-month dividend stays intact. The market is already paying shut consideration to protection, so that you need to watch distributable revenue, not simply accounting earnings. On valuation, the inventory at the moment trades round 16.7 occasions trailing earnings, but additionally comes with actual property credit score danger you can not ignore.
T
TELUS (TSX:T) is the extra acquainted type of dividend inventory. It runs Canada’s third nationwide wi-fi provider, a big fibre community enterprise, and a rising digital well being platform, with TELUS Digital now handled as a part of the broader portfolio after its privatization. During the last yr, TELUS has leaned closely right into a easy promise: preserve including prospects, preserve increasing margins, and preserve deleveraging. It has additionally been extra cautious on capital allocation, together with retaining the dividend at its present degree.
Within the fourth quarter of 2025, TELUS reported consolidated working revenues and different revenue of $5.3 billion. Internet revenue for the quarter was $290 million and primary earnings per share (EPS) was $0.19, whereas adjusted web revenue was $311 million and adjusted primary EPS was $0.20. Adjusted earnings earlier than curiosity, taxes, depreciation and amortization (EBITDA) sat round $1.8 billion and was primarily flat yr over yr. For the complete yr, it reported consolidated money from operations of $4.9 billion and report free money circulate of $2.2 billion, up 11%.
TELUS additionally gave buyers a clearer map for 2026. It targets 2026 consolidated service income development of two% to 4%, adjusted EBITDA development of two% to 4%, capital expenditures of about $2.3 billion, and free money circulate of roughly $2.45 billion, or about 10% development. It additionally declared a quarterly dividend of $0.4184 per share and pointed to a long-term payout ratio guideline tied to free money circulate, even because it prioritizes deleveraging.
Backside line
These two shares present why “excessive yield” doesn’t robotically imply “dangerous guess,” however provided that you deal with what the yield is constructed on, not simply the quantity itself.
Right here’s what each might usher in from $7,000 in every.
| COMPANY | RECENT PRICE | NUMBER OF SHARES YOU COULD BUY WITH $7,000 | ANNUAL DIVIDEND | TOTAL ANNUAL PAYOUT ON A $7,000 INVESTMENT | FREQUENCY OF PAYOUT |
|---|---|---|---|---|---|
| TF | $6.65 | 1,052 | $0.69 | $725.88 | Quarterly |
| T | $18.67 | 374 | $1.67 | $624.58 | Quarterly |
That final level — that you need to deal with money circulate protection over yield chasing — is one thing they arrive again to always in Inventory Advisor Canada. In case you’re constructing a passive revenue portfolio, it’s value a glance.