TSI’s Scott Clayton has identified seven Canadian dividend stocks offering high yields above 5%. These kinds of sustainable payouts are even more appealing following the Bank of Canada’s latest rate cut. Since the TSX Composite has declined about 6% since its January peak, the drop has increased dividend yields across the board, making it all the more essential to focus on dividend sustainability.
Our exclusive Dividend Sustainability Rating System hones in on companies with strong fundamentals, consistent cash flow, and exceptional yield potential in the Canadian market. These industry leaders are well-positioned to thrive despite economic uncertainty while maintaining reliable dividends.
Excerpt from theglobeandmail.com, March 13, 2025
What are we looking for?
Canadian dividend payers offering sustainable yields above 5 per cent – made all the more attractive given the Central Bank’s latest chop to its benchmark rate.
The screen
The TSX Composite is down roughly 6 per cent since its high in January. That drop reflects tariff-induced economic uncertainty, which has lowered the prices of even high-quality Canadian stocks. On the flip side, that slide has driven up many dividend yields above 5 per cent.
The highest yields among them are especially attractive given the Bank of Canada’s move Wednesday to shave another quarter percentage point off its benchmark rate. Lower rates generally lower the appeal of fixed-income investments while bolstering investor interest in competing dividend stocks.
Still, our analyst team at TSI Network recommends caution: A high yield often signals danger rather than a bargain if it reflects widespread investor skepticism about the company’s ability to keep paying its current dividend.
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We started this search with an extensive list of dividend-paying Canadian companies, before singling out those offering yields above 5 per cent. We then applied our TSI Dividend Sustainability Rating System to home in on the top dividend payers whose high yields are a huge plus—rather than a danger sign. Our system awards points to a stock based on key factors:
- One point for five years of continuous dividend payments – two points for more than five
- Two points if it has raised the payment in the past five years
- One point for management’s commitment to dividends
- One point for operating in non-cyclical industries
- One point for limited exposure to foreign currency rates and freedom from political interference
- Two points for a strong balance sheet, including manageable debt and adequate cash
- Two points for a long-term record of positive earnings and cash flow sufficient to cover dividend payments
- One point for an industry leader
Companies with 10 to 12 points have the most secure dividends, or the highest sustainability. Those with seven to nine points have above average sustainability; average sustainability, four to six points; and below average sustainability, one to three points.
Here are the best high-yield Canadian dividend stocks you can buy now
What we found
Our TSI Dividend Sustainability Rating System generated seven stocks:
Pipeline operators TC Energy Corp. (with a 5.1% yield) and Enbridge Inc. (6.2%), both based in Calgary, have strong cash flow and growth projects to keep dividends rising.
Power utility Canadian Utilities Ltd. (5.2%), also based in Calgary, is prospering in its markets. Bank of Nova Scotia (6.2%), headquartered in Toronto, is a Big Five stalwart.
Vancouver’s Telus Corp. (7.4%) continues to profit from selling telecom services to Canadians. Now-completed upgrades to its wireless and fibre-optic networks should further spur its gains.
Winnipeg’s IGM Financial Inc. (5.2%) is Canada’s largest independent mutual-fund provider. It also offers ETFs and wealth management services.
And finally, Toronto-based Bridgemarq Real Estate Services Inc. (10.2%) (formerly Brookfield Real Estate Services) provides services to residential real estate brokers and a network of over 21,000 Realtors. It operates in Canada under the banners of Royal LePage and Johnston & Daniel, among others.
We advise investors to do additional research on investments we identify here.
Scott Clayton, MBA, is senior analyst for TSI Network and associate editor of TSI Dividend Advisor.
