Shares of telecom titan Telus (TSX:T) have been gaining some ground so far in 2026, but the dividend yield remains at a lofty 9%, making the name a compelling pick for income investors looking to start the new year with a nice yield boost. Undoubtedly, there’s more to buying a dividend stock than just the size of the yield.
With further dividend growth frozen until the company can hit some of its milestones (it’s on track), some investors might also be on pause when it comes to buying shares for their TFSA or RRSP.
Bottom-fishing for Telus won’t be easy amid increased volatility
While the 9% yield is still the star of the show, I think investors should be willing to consider the risks associated with bottom-fishing for a stock that might find itself continuing to swim against the tides in the new year.
Of course, catching a falling knife isn’t just hard to do; it can be tremendously painful, especially for new investors who aren’t willing to wait at least a few years. With Telus reportedly offering buyouts to around 700 workers, at least according to a union, it feels like the health of Telus’ massive dividend is stronger than critics would be led to believe.
In numerous pieces, I’ve touted Telus’ payout as safe, but the stock as a risky play, especially for income investors living on a fixed income. While the latest ricochet off multi-year lows is encouraging, it’s tough to tell if a revisitation to those lows will be up ahead, especially since the longer-term momentum remains quite bearish.
Either way, just because the dividend will stick around doesn’t mean Telus stock will be a winning name to stash away for the long haul, especially if new lows are on the horizon amid industry headwinds. That’s why diversifying into other dividend plays might be the way to go.
CIBC stock looks like a dividend juggernaut
So, what’s the dividend giant that might be worth preferring over the likes of Telus and its hard-hit peers? At this juncture, I’m a huge fan of the big banks for their dividends and momentum.
Indeed, why settle for just dividends when you could have a nice yield, dividend growth, and capital gains potential? Any one of the Big Six names looks like a tempting bet right here. But if I had to choose one that’s most interesting, it’d have to be CIBC (TSX:CM).
Of course, CIBC doesn’t yield more than 5% anymore (the yield sits at 3.4% today), and that’s thanks to a nearly 160% surge off its lows of fall 2023. Still, I think there’s a lot of value to be had in the name, especially as it flexes its muscles in capital markets. Combined with industry tailwinds and a good amount of expansion potential south of the border, and I’m inclined to view shares of CM as a premier dividend grower that’s worth buying on the way up.
Despite gaining more than 40% in the past year, I still view shares as quite cheap, especially relative to its Canadian banking rivals. At the time of writing, the stock goes for just 13.3 times forward price-to-earnings (P/E), which isn’t a bad deal, provided you’re comfortable with its hefty Canadian mortgage book.
Either way, CIBC has a lot going for it in 2026, and it might be a more enticing bet than Telus. Of course, there really is no substitute for Telus’s sky-high 9% yield! Either way, I’d look to buy CM and T together for a powerful one-two income punch!
