The 11% Yielding Dividend Stock Set to Soar in 2026

When investors seeking a dividend stock to buy find one that offers a yield in the double digits, the first reaction is typically alarm. That’s because an extremely high yield is usually an indicator of an unsustainable business. It could also mean that the market has priced in extreme risk.

But that’s not always the case. Sometimes, the market can become too focused on what went wrong and ignore what could begin to go right.

That’s the case with Telus (TSX:T). The telecom giant has struggled in recent years as higher interest rates and elevated debt levels weighed heavily on the stock. And while that sent the stock lower, it propelled the yield into double-digit territory.

It even raised questions about whether the quarterly dividend was still sustainable.

But here’s the thing. Telus continues to generate billions in cash flow. The company’s outlook for the rest of 2026 suggests that its financial performance is moving in the right direction, too.

This means that investors seeking to offset risk could benefit greatly from this rare mix of massive income potential now and significant recovery potential in the future.

An 11% yield hiding in plain sight

Telus is one of Canada’s big telecom stocks. The company provides wireless, wireline, internet, television, and other communications services to millions of customers across Canada. Those services are subscription-based, generating a recurring revenue stream.

In recent years, the wireless and internet segments have become more of a necessity for subscribers, giving Telus additional defensive appeal.

Apart from its core subscription-based offerings, Telus has expanded into offering other digital services through its Telus Health and Telus Digital businesses.

Yet despite that broad offering of growing necessities, investors have largely focused on the telecom’s balance sheet and the amount of cash required to fund that dividend.

Those concerns contributed to the decline in the stock price, pushing the dividend yield well into double-digit territory. As of the time of writing, Telus offers a dividend of $0.41 per share, which works out to a yield of 11.3%.

This means that investors who deposit $5,000 into the stock will generate over $550 in annual passive income. To put it another way, that’s over 35 new shares generated and ready to compound for each year of waiting.

That being said, while Telus works on improving its financial house, the company has paused its dividend growth. This means that prospective investors shouldn’t expect any dividend growth anytime in the foreseeable future.

Instead, those investors can expect to collect an unusually high level of income while waiting for Telus’ financial position and market sentiment to improve.

Why Telus could soar in 2026

One of the main reasons investors should be positive about Telus’s ability to improve its position can be traced back to cash flow. The company is targeting $2.45 billion in free cash flow for 2026.  Telus is also targeting service revenue and adjusted EBITDA growth to come in at 2% to 4%.

So far, the results are encouraging. During the first quarter, Telus generated $583 million in free cash flow. That’s a 19% improvement over the same period last year.

Telus Health is also seeing promising growth, and more importantly, the segment allows Telus to diversify outside its core telecom market. In the first quarter of 2026, Telus reported that service revenue and adjusted EBITDA from the segment both increased by 11%.

Is this high-yield dividend stock worth buying?

No stock is without risk, and that’s evident in reviewing Telus. The company isn’t a low-risk option today. The ultra-high yield offered reflects that risk.

That being said, the risk-reward is becoming interesting.

Investors buying Telus today are getting an 11.3% yield while management works toward higher free cash flow and lower leverage. Meanwhile, Telus Health provides a growth platform that could become more important and contribute more towards earnings over time.

That makes Telus a unique type of dividend stock opportunity. For investors, the high-yield dividend is paid generously to investors waiting for that turnaround to come to fruition.

For income investors who can tolerate the added risk, Telus could be one of the most interesting Canadian dividend stocks to watch in 2026. If free cash flow continues rising and debt levels improve, Telus could have room to recover as part of a larger, well-diversified portfolio.

The post The 11% Yielding Dividend Stock Set to Soar in 2026 appeared first on The Motley Fool Canada.

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More reading

• The Sneaky Stocks to Profit From Meta’s $13 Billion Data Centre in Alberta
• Forget Telus: A Cheaper Dividend Stock With More Growth Potential
• A Value Stock With a Dividend Yield Over 11% to Buy Near 52-Week Lows
• BCE vs. Telus: Which Telecom Belongs in Your TFSA?
• 1 Canadian Dividend Stock Down 24% to Buy and Hold Forever

Fool contributor Demetris Afxentiou has no position in any of the stocks mentioned. The Motley Fool recommends TELUS. The Motley Fool has a disclosure policy.