Income-seeking investors in Canada can consider gaining exposure to high-dividend stocks now and starting a low-cost passive income stream in 2026. One such TSX dividend stock is Timbercreek Financial (TSX:TF), which offers you a forward yield of 10% today.
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Is this TSX dividend stock a good buy right now?
Valued at a market cap of $563 million, Timbercreek Financial operates in the Canadian commercial real estate lending segment. It provides shorter-duration structured mortgages to sophisticated property investors who need speed and flexibility over the lowest possible rates.
Timbercreek is a Toronto-based mortgage investment corporation that focuses exclusively on loans secured by stabilized, income-producing properties, including multi-residential buildings, retail centres, and office space in urban markets across Canada.
The company underwrites deals in which consistent rental income from tenants provides cash flow to service debt, reducing default risk compared to development or speculative projects.
Timbercreek fills gaps left by major Canadian financial institutions that cannot justify dedicating resources to smaller mortgage investments, typically ranging from one to five years in duration.
The typical Timbercreek borrower is an experienced real estate investor seeking bridge financing for property acquisitions, capital improvements, or repositioning strategies ahead of permanent refinancing.
These clients accept higher interest rates and origination fees in exchange for rapid execution on time-sensitive opportunities, early repayment options without penalties, and the ability to cross-collateralize multiple properties within a single loan structure.
Timbercreek Financial maintains a diversified portfolio of structured mortgage loans through rigorous underwriting standards, active asset management, and disciplined governance.
Is the TSX stock undervalued?
Timbercreek Financial posted mixed third-quarter results as transaction delays and an unexpected large repayment offset improving market fundamentals that should drive sustained activity ahead, CEO Blair Tamblyn said.
The mortgage investment corporation advanced $131 million in new loans during the quarter, all targeting low loan-to-value multifamily assets. Those originations were wiped out by $191 million in repayments, including an $83 million payoff in September that management had not anticipated. The portfolio ended the quarter at $1.05 billion, down $60 million from the prior period despite roughly $50 million in year-to-date growth.
While net investment income held steady at $25.4 million, its distributable income per share declined to $0.17 from $0.18 last year. The payout ratio was above its target range as constrained investment activity limited earnings.
Management expects full-year results to fall within targeted parameters, with more substantial fourth-quarter volumes, and more than $200 million already funded or committed so far this quarter.
Timbercreek reported $5.9 million in expected credit losses driven by revaluations of two troubled loans. Chief Investment Officer Scott Rowland said the company resolved nearly $19 million in stage-two loans since the last earnings call and expects further progress in returning this portion of the portfolio to historical norms.
Redeploying capital from non-performing assets into new loans that generate returns of around 11% should provide significant tailwinds for revenue growth.
The weighted average loan-to-value ratio ticked up to 67.9% as Timbercreek leans into reset commercial real estate valuations with lower interest rates, creating favourable conditions for a new cycle.
The portfolio’s weighted average interest rate fell to 8.3% from 9.3% a year earlier, closer to the long-term average of roughly 8%. Rate floors on more than 85% of floating-rate loans provide downside protection, with 93% of floored loans currently at their minimums.
Timbercreek upsized its credit facility to $600 million from previous levels, improving economics with spreads coming in 25 basis points while adding two new banks to the syndicate. Management believes existing debt capacity supports portfolio growth to $1.2 billion or $1.3 billion before requiring additional equity raises.
The Foolish takeaway
Timbercreek is a TSX-listed stock that pays an annual dividend of $0.69 per share, yielding over 10%. Analysts tracking the dividend stock forecast earnings to grow from $0.56 per share in 2024 to $0.70 per share in 2027.
Moreover, its distributable cash income should improve from $0.73 per share in 2025 to $0.76 per share. With an improving payout ratio and a tasty dividend yield, Timbercreek is positioned to deliver inflation-beating returns in 2026.
