High-Yield Alert: 3 Canadian Dividend Stocks to Buy Now

The interest rates are falling. The Bank of Canada has cut interest rates by 1.25 percentage points in the last four months to 3.75%. This is making interest rates on fixed deposits unattractive. If you are looking for high dividend payouts, some stocks offer a yield above 5%. While stocks are exposed to market and business risks, low-volatility stocks can give you assured payouts for 2025 and beyond.

Three high-yield dividend stocks to buy now

Canada has some of the most lucrative dividend stocks. As the burden of interest rate eases and demand recovers, companies with huge debt are getting some room to breathe. Now is the time to buy the dividend stocks and lock in higher yields.

Telus stock

Telus (TSX: T) stock is trading at a 20% discount from its average trading price of $27 as high interest rates, price competition, and regulatory uncertainty weigh on its earnings. While finance costs continue to remain high, it reported stronger third-quarter profit as restructuring helped reduce its operating expenses. Moreover, the company monetized its copper and real estate, which added to profits.

Even though revenue growth has been slow, cost-cutting measures, a slowdown in capital expenditure, and a reduction in interest rate leaves room to improve profits. This is visible from the management’s decision to increase its quarterly dividend by 3.4% to $0.4023 from $0.3891 paid in October.

This is a good time to buy the stock and access the dividend hike. With a dividend yield of 7.5%, you can earn almost double the passive income a 3.5-4% interest a Guaranteed Investment Certificate (GIC) can offer.

RioCan REIT

RioCan REIT (TSX: REI.UN) is another good dividend stock with a 5.84% dividend yield. The real estate investment trust (REIT) earns 94% of its rent from Canada’s six major markets, with a high presence in the Greater Toronto Area. A major portion of its property portfolio is retail stores that earn a higher rent than residential. None of its tenants account for more than 5% of its rental income.

The REIT’s dividend cut in 2020 gave it financial flexibility to manage debt and pay dividends when occupancy fell and reduced rental income during the pandemic lockdown. The pandemic disadvantage has turned into an advantage today as its occupancy rates have increased, and it has headroom to increase its rent amid fewer construction projects. It is paying out 61.7% of its funds from operations as dividends, which hints that the REIT can sustain its current distributions.

SmartCentres REIT

Like RioCan, SmartCentres REIT (TSX: SRU.UN) also benefitted from a recovery in the real estate market. Third-quarter earnings showed a remarkable recovery of 12.8% in cash flow from operating activities as the REIT closed the sales of some residential units. It also reported an increase in rental income and funds from operations, which reduced the distribution payout ratio to a comfortable 75.2% from 96.1% a year ago.

The improvement in the net income is likely to continue as the REIT completes the projects under development. Although the REIT’s unit price has recovered 18% since June, when rate cuts began, there is more upside to the REIT. You can invest now and lock in a 7.37% annual yield.

Building a high-yield dividend portfolio

A $5,000 investment in each of the above stocks could earn you a comprehensive dividend income of $1,023 in 2025, with a portfolio dividend yield of 6.8%. It is better than the many dividend ETFs which offer less than 5% yield.