One Impressive Dividend Stock Yielding 6% That Deserves a Closer Look

A 6% yield in the current environment is difficult to find. When it comes to telecom stocks, Telus and BCE always steal the show. The fears of dividend cuts, high leverage, and the after-effects of the regulation change have affected their profit margins and dividend-paying capacity. But the other side of the regulatory change no one is talking about. Cogeco Communications (TSX:CCA) is a beneficiary of the rule change, and its 6% dividend yield deserves a closer look.

Why this dividend stock deserves a closer look

The rule change allowed Mobile Virtual Network Operators like Cogeco, which do not own fibre infrastructure, to lease network access from Mobile Network Operators like BCE and Telus. In August 2025, Cogeco launched its Canadian wireless service, Cogeco Mobile, across 12 markets in Ontario and Quebec.

Cogeco Mobile requires no commitments from customers. Moreover, it does not charge activation fees or surprise overage. It is bundling wireless service with its existing Cogeco residential internet subscriptions for package discounts.

Since it has an asset-light model, the debt burden is relatively less. Its net debt is 3.2 times its Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA), closer to Telus’s 3.5 times. However, Cogeco’s high ratio is because of a 5.3% decline in Adjusted EBITDA due to an accounting treatment.

Cogeco recognized $1.8 million and $3.5 million of technology licensing costs for its wireless operations as operating expenses during the three- and six-month periods ended February 28, 2026, respectively. Earlier, when Cogeco was setting up the wireless business, it reported this expense under ‘Acquisition, integration, restructuring, and other costs’, which did not affect its EBITDA. The accounting treatment has changed the leverage ratio, but debt is at manageable levels.

One impressive dividend stock yielding 6%

Cogeco is an attractive dividend stock. It has been growing dividends at an average annual rate of 10% for the last 11 years. In 2026, it grew its dividend by 7% to $3.95 per share. This dividend makes up for 30% of its free cash flow per share. That is a safe ratio, giving Cogeco ample space to grow its dividends even when revenue falls.

Unlike BCE and Telus, Cogeco doesn’t offer a dividend reinvestment plan. However, its high dividend yield and growth rate make it worth considering in your passive income portfolio.

How to invest in Cogeco

Cogeco stock fell 20% on March 26, triggered by news that institutional shareholder CDPQ is rebalancing its equity stake. This dip has created a buying opportunity for dividend seekers to lock in a 6% yield. Consider investing a lump sum amount in the stock before it recovers.

A little over $6,000 investment today can buy you 91 shares of Cogeco, which can earn $359 in annual dividends. You can use these dividends to buy other growth stocks and grow your portfolio.

YearCogeco dividend per shareNumber of shares purchased from $6,000Cogeco Share PriceDiviend Amount2026$3.9591$66.08$359.272027$4.1891$380.822028$4.4491$403.672029$4.7091$427.892030$4.9891$453.57

Assuming Cogeco grows its dividend by 6% annually, these 91 shares can give you $453 in annual dividends by 2030. Consider investing through a Tax-Free Savings Account to avoid dividend tax.

The post One Impressive Dividend Stock Yielding 6% That Deserves a Closer Look appeared first on The Motley Fool Canada.

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More reading

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• 3 Canadian Stocks with Over 6% Yield That Haven’t Given Up on Growth

Fool contributor Puja Tayal has no position in any of the stocks mentioned. The Motley Fool recommends Cogeco Communications and TELUS. The Motley Fool has a disclosure policy.