Should You Buy the Three Highest Paying Dividend Stocks in Canada?

A random screen ranking Canadian dividend stock yields in descending order might point to some of the highest-paying tickers with yields approaching 14%. Such payouts indicate that within just seven years, the companies would have effectively returned their capital to investors through dividends. But given that equity claims are perpetual, and so are dividends, double-digit dividend yields make little sense to the companies that pay them.

Given the choice, such companies would be better off borrowing from the bond markets rather than issuing expensive shares. So once you see a double-digit dividend yield on a stock, that yield should indicate significant risk to your capital. Such high-yield payouts are usually unsustainable. There is no free lunch here.

That said, a deeper dig into some of the highest-paying TSX dividend stocks could reveal a few tickers worth a second look. The three highest paying dividend stocks on my radar today include TELUS (TSX:T) shares with a 9% payout, Allied Properties Real Estate Investment Trust (TSX:AP.UN) with massive distribution revenue, and Parex Resources (TSX:PXT), an energy stock that pays an 8.3% dividend yield. This is why passive income investors may want to check them out now.

TELUS

The telecom sector giant is a household name for millions of Canadians. Telus has long been considered the foundation of domestic portfolios due to its essential services and strong market position. However, the stock has suffered recently, pushing the dividend yield towards an all-time high 9%.

The selling point for TELUS stock is its cash flow resilience. Even in a recession, Canadians are likely to pay their internet and phone bills above all else. Telus also continues to expand its fiber network and 5G capabilities, keeping it competitive with competitors and others Rogers And B.C.

However, the risk to the dividend is real. The company’s payout ratio has often exceeded free cash flow in recent quarters due to heavy capital spending. Management recently reduced capital expenditures and believes the dividend free cash flow payout is within the target range of 60% to 75%. If TELUS’s dividend yield stays this high for too long, management may be tempted to prune it toward industry averages.

Investors looking for high-yield Canadian dividend stocks to buy now can still consider TELUS stock, for its combination of high earnings and defensive stability, provided management can steer the ship back to free cash flow growth in 2026.

Parex Resources

Parex Resources differentiates itself with a unique offering of high-yield dividend stocks on the TSX. Unlike many Canadian peers who sell their oil at a discount through tariff-ridden U.S. trade routes, Parex produces oil in Colombia and sells its crude at prices tied to a superior Brent Crude index. This price advantage usually results in stronger margins.

Currently, the dividend yield of Parex Resources shares is a tempting 8.3%. The payout ratio seems sustainable for now, especially since the company has very little leverage. The impeccable balance sheet is management’s main defense against volatility.

However, income investors should keep a close eye on oil prices. Although Parex’s production yields better prices, lower global oil prices could cripple the 2026 capital budget if market trends are much lower. If that happens, the high-yield dividend could take a big hit.

Allied Properties REIT

On November 17, Allied Properties Real Estate Investment Trust announced a monthly distribution of $0.15 per unit through December 2025. The office real estate investment trust (REIT) has maintained its monthly payouts through 2025, but its annualized return has increased to an incredible 13.9%.

The REIT is struggling with lower occupancy rates. The 84% occupancy rate in September 2025 was well below management’s year-end goals of 90%, as leasing efforts were delayed as tenants were too slow to commit.

That said, the REIT nearly paid off its floating rate debt in the third quarter and maintains a low leverage ratio of 45%. However, management guides for adjusted funds from operations (AFFO) per unit will shrink 10% YoY through 2025. This significantly jeopardizes distribution at a time when the trust is divesting its non-core assets. The REIT’s most recent AFFO payout ratio of 106.4% is extremely unsustainable.

Looking ahead, Allied Properties has announced a significant long-term lease for one of its major properties, reducing the property’s vacancy rate to 10%. Perhaps 2026 will bring better fortunes for investors buying shares at a current 66% discount to their recent net asset value (NAV) of $38.05.