Are you a contrarian investor on the hunt for high-yielding returns without taking unnecessary risks with your capital? The TSX boasts plenty of dividend stocks boasting high yields. Held in a Tax-Free Savings Account (TFSA) or a Registered Retirement Savings Plan (RRSP), the right combination of stocks can provide a ton of tax-free income that can accelerate your wealth growth for years.
The market has been a roller coaster due to trade tensions and geopolitical problems causing worldwide disruptions. Despite that, the S&P/TSX Composite Index is hovering near new all-time highs. The Canadian benchmark index shows that most stocks trading on the TSX are trading at their highest levels.
Fortunately, value-seeking investors who know where to look can find gems boasting double-digit yet sustainable dividend yields. Today, I will discuss one blue-chip stock that you might want to add to your self-directed portfolio for a boost to your passive income.
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Telus
As of this writing, Telus Corp. (TSX: T) stock trades for $16.49 per share, down by a massive 28.9% from its 52-week high. At one point in 2022, it was more than double its recent share price. The last four years have seen its share prices pull back, leading to its dividend yield rising to double-digits.
Telus is one of the Big Three Canadian Telcos, operating in a largely consolidated industry with high barriers to entry. The telco sector is a capital-intensive industry, and it suffered greatly when central banks in Canada and the US decided to increase key interest rates to control inflation.
With borrowing significantly more expensive, even the most well-established businesses saw balance sheets weighed down under the pressure. The sharp increase within a short time triggered concerns that Telus stock might slash its dividends.
2024 and 2025 saw things improve as the Bank of Canada cut interest rates. However, the operational challenges posed by the earlier hikes meant that Telus stock didn’t recover quickly. During that time, Telus Digital, one of its subsidiaries, ran into revenue issues and forced the parent company to take it private.
There are other geopolitical factors that will continue to lead to volatility in the short term, but Telus is hard at work addressing the concerns.
Telus is reducing the debt it accumulated, and it sold off its wireless towers to recover its finances. The company is also planning to monetize its Telus Health division and scale back its capital program to regain more balance sheet stability.
Foolish takeaway
I feel that investors might need to remain patient for a while longer until they see any meaningful capital appreciation in Telus stock. While the stock broke its dividend-growth streak, it has not slashed or suspended its quarterly distributions. As of this writing, Telus stock trades for $16.49 per share and boasts an inflated 10.2% dividend yield that you can lock into your portfolio by investing before its share prices shoot back up.
