What are we looking for?
Canadian companies offering high, sustainable dividend yields with lower price volatility as geopolitical uncertainty persists.
The screen
Global equity markets have rebounded sharply in recent weeks on hopes of a ceasefire in the Iran conflict, but the rally masks continued uncertainty. Oil prices remain elevated above US$90 per barrel, shipping routes through the Strait of Hormuz are contested and the S&P/TSX Composite has experienced sharp intraday swings throughout 2026.
In this environment, investors seeking income may look for safer equity exposure through high-dividend-yield stocks, but this only works if the payout is sustainable. Companies with strong free cash flow, conservative payout ratios and lower price sensitivity to market swings offer a more stable source of income.
Using FactSet’s screening tool, I identified Canadian companies combining yield, sustainability and stability by applying the following criteria:
- included in the S&P/TSX Composite
- market capitalization greater than $1-billion
- dividend yield greater than 3 per cent
- dividend payout ratio less than 75 per cent
- free cash flow yield greater than 5 per cent
- five-year beta, a measure of market volatility, less than 1
- five consecutive years of dividend increases, with a forecast 2026 increase based on FactSet consensus estimates
The eight remaining companies were ranked by dividend yield.
What we found
CT Real Estate Investment Trust, a Canadian real estate investment trust with a portfolio of over 375 properties totalling 31.7 million square feet, ranked first with a dividend yield of 5.4 per cent and a five-year beta of 0.83. (A beta over 1 indicates a higher volatility than the overall market, while a beta lower than 1 is lower.) The company reported fourth-quarter growth in adjusted funds from operations per unit, a commonly used measure of recurring cash flow in real estate, of 2.9 per cent, after acquiring an additional 400,000 square feet of retail space. Retailer Canadian Tire Corp. is CT REIT’s majority unitholder, and accounts for approximately 91 per cent of the trust’s rental revenue under long-term net leases with built-in annual rent escalators, providing a high degree of cash flow predictability. Portfolio occupancy stood at 99.5 per cent as of year-end, reinforcing the company’s appeal as a defensive income holding. CT REIT has increased its distribution every year since its 2013 initial public offering, a streak of 12 consecutive annual increases. The trust is scheduled to report first-quarter 2026 results on May 11.
Canadian Natural Resources Ltd., an oil and gas production company, ranked third with a dividend yield of 4.2 per cent and a free cash flow yield of 6.8 per cent. The company generated $7.4-billion in adjusted earnings in 2025 and returned approximately $9-billion to shareholders through a combination of dividends, share repurchases and net debt reduction. In March, the board approved an approximately 6.4-per-cent increase to the quarterly dividend, extending the company’s streak to 26 consecutive years of dividend increases. Management has provided guidance of approximately 4-per-cent production growth in 2026, and with crude trading well above the company’s budgeted assumptions, Canadian Natural stands to generate substantially more free cash flow at current prices. The company is scheduled to report first-quarter 2026 results on May 7.
The information in this article is not investment advice. The author assumes no liability for any consequence relating directly or indirectly to any action or inaction taken based on the information contained above.
Arjun Deiva, CFA, is an MBA candidate at the University of California, Berkeley, Haas School of Business.