If you’re a passive-income investor seeking a sustainable yield booster, there are a lot of options to pick from on the TSX Index these days. Undoubtedly, higher yields tend to accompany a higher magnitude of risk (dividend reduction risk as well as capital downside), so be sure to pay extra careful attention to the state of the balance sheet. Of course, also keep tabs on cash flows and the headwinds that could stand in between investors and further dividend growth.
In this piece, we’ll check in on a trio of yield-boosting investments that I think hit a fine middle ground between the size of the yield and the security of the payout. Their dividend payouts, though on the swollen side, do not appear to be at an elevated risk of an imminent cut. Still, such supercharged dividend payouts probably aren’t going to be growing by considerable amounts anytime soon, either. In any case, let’s look at some Canadian high-yielders that might be worth watching for the new year.
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Telus
The 9.62% dividend yield of Telus (TSX: T) stock has to be a main attraction for prospective buyers of the dip. While I’ve noted that the payout looks safe over the near to medium term, I’ve also remarked on the risk as shares struggled to hold on to any gains. Though 2026 might be the year the yield breaches the 10% mark, investors should focus more of their attention on the business itself and how management plans to trim debt to improve the balance sheet and, with that, the dividend’s health.
While there might be extremely deep value to be had at these multi-year lows, I’d much rather be a buyer on the way up than the way down, even if it means snagging a modest deal rather than an absolute steal of a bargain. I think the company is more of a show-me story going into the new year.
As the company de-levers and hits its free cash flow milestones, I’d be much more comfortable building a more sizeable position. If management can hit such financial targets, its dividend is probably going nowhere. Personally, I’d give the odds to Telus and its managers, as they’ve cut costs and are doing everything in their power to improve the balance sheet and the cash flow situation.
For now, Telus is more of a watch than a buy unless, of course, you’re willing to embrace extreme volatility for a shot at a near-10% yield, which is nearly unheard of for a blue-chip Telus’s calibre.
In 2026, it’s more of the same headwinds for the telecoms: pricing competition, consumer challenges (holding off on device upgrades), and the rise of a disruptor in Freedom Mobile, which, believe it or not, still has room to expand its footprint.
BMO Canadian High Dividend Covered Call ETF
For Canadians content with a lower payout, BMO Canadian High Dividend Covered Call ETF (TSX: ZWC) might be a better bet right here. The ETF, which invests in a slew of higher-yielding Canadian dividend stocks to go with a “covered call” strategy (using options, it trades off upside for premium income that boosts the ZWC’s yield by a bit), is a great option for cautious or nervous investors who want less volatility and a generous yield, and who are willing to forego further gains should the TSX Index continue its epic run.
In the past year, shares gained around 15%, which is still impressive, though miles below the TSX Index, which is shy of gaining 30% for 2025.
