What are we looking for?
Canadian companies that generate strong free cash flow and actively return it to shareholders through dividends and share buybacks.
The screen
Global equity markets have become increasingly volatile in 2026, as the continuing conflict in Iran has driven oil prices higher and disrupted shipping routes.
In this environment, investors have increasingly sought companies that can generate reliable cash flows and that return capital to shareholders regardless of broader market conditions. Free cash flow is a particularly strong signal of financial health, as it reflects what a company actually produces after maintaining and investing in its business. Dividends offer stability, while buybacks provide a share price floor, offering a unique combination to prudent investors.
Using FactSet’s screening tool, I identified Canadian companies with the combination of cash generation and capital return by applying the following criteria:
- Included in the S&P/TSX Composite Index
- Market capitalization greater than $1-billion
- Free cash flow yield greater than 8 per cent
- Buyback yield greater than 3 per cent
- Dividend yield greater than 2 per cent
- Dividend payout ratio less than 75 per cent
The 10 remaining companies were ranked by total shareholder yield, defined as the combined dividend yield and buyback yield.
What we found
Toronto-Dominion Bank TD-T, Canada’s second-largest bank by assets, ranked first with a total shareholder yield of 13.6 per cent, well above the group average of 9.4 per cent, comprising a 3.3-per-cent dividend and 10.3-per-cent buyback yield.
The buyback programs are funded in part by proceeds from TD’s 2025 sale of its US$15.4-billion stake in Charles Schwab Corp., which the bank committed to returning directly to shareholders. The bank completed its C$8-billion share repurchase program in January, buying back approximately 76.6 million shares, and it immediately launched a new C$7-billion buyback program. By the end of TD’s first quarter on Jan. 31, it had repurchased approximately 84 million shares across both programs.
Open Text Corp. OTEX-T, a Waterloo, Ont.-based information management company, ranked second with a total shareholder yield of 13.2 per cent, including 4.4-per-cent dividend and 8.8-per-cent buyback yield. The company has recorded 20 consecutive quarters of organic cloud revenue growth powered by its strategy to acquire and integrate software providers into its portfolio.
Moreover, management at Open Text recently increased its share repurchase program to US$500-million, citing confidence in its ability to continue to generate strong cash flow. The stock has declined 30.9 per cent year to date, which could present management with an opportunity to acquire shares at compelling prices.
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.