For income investors in Canada, high-yield dividend stocks can be a great way to generate consistent passive income. Over the past year, the TSX Composite Index has surged more than 20%, lifting many dividend-paying stocks higher. However, not all dividend stocks have followed suit, as some with strong long-term fundamentals have experienced value erosion due to short-term challenges, making their dividend yields more attractive than ever.
In this article, I’ll highlight two of the highest-yielding stocks on the TSX right now and discuss whether they are worth considering for a long-term income portfolio.
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BCE stock
With an 11.9% annualized yield, the Canadian telecommunication giant BCE (TSX:BCE) is currently the highest-yielding dividend stock on the TSX Composite. The company mainly focuses on providing everything from wireless and internet services to television and media content. Right now, the stock is trading at $33.41 per share, giving it a market cap of $30.5 billion.
The company has faced some challenges lately due to macroeconomic concerns, which have driven BCE stock down over 34% in the last year. Despite this, the company continues to generate steady revenue. In the fourth quarter of 2024, it posted $6.42 billion in operating revenue, slightly down from the previous year. However, BCE still managed to grow adjusted quarterly EBITDA (earnings before interest, taxes, depreciation, and amortization) by 1.5% YoY (year over year) to $2.6 billion, its highest fourth-quarter margin in over 30 years.
Besides this strength, BCE is also focusing on expanding its fibre and 5G networks, strengthening its enterprise technology services, and increasing its digital media presence. Its strong cash flow helps support its dividend, and despite some near-term pressure, it remains a top pick for income investors looking to earn passive income from dividends.
Parex Resources stock
Parex Resources (TSX:PXT) is another high-yield stock that income investors might want to keep an eye on in early 2025. Unlike BCE, which dominates telecom, Parex operates in the oil and gas sector, focusing on exploration and production in Colombia.
PXT stock is currently trading at $15.52 per share, with a market cap of $1.5 billion. What really makes it stand out to dividend investors is its 9.9% annualized yield, one of the highest on the TSX right now. Over the last year, the stock has gone down by 27%. However, in just the last 100 sessions, it has rebounded by over 32%, showing some strong momentum.
Despite macroeconomic challenges, Parex is still generating solid cash flow with the help of steady production. In the fourth quarter, Parex posted an average production of 45,297 barrels of oil equivalent per day (boe/d), keeping pace with its full-year target. For 2025, it aims to produce 43,000 to 47,000 boe/d, while planning up to 30 new wells.
A big focus for Parex right now is long-term stability. It has $300 million in planned capital expenditures, but after covering those, the company still expects $145 million in free cash flow, which could support both share repurchases and dividends.
With strategic partnerships like its expanded deal with Ecopetrol and a push into high-potential regions, the company could see sustainable growth in the long run. For income investors, this mix of a nearly 10% yield, strong cash flow, and a clear long-term vision makes Parex a compelling stock to consider.
