The TSX Composite Index corrected on Trump tariffs. This dip has inflated the yields of some dividend stocks past 10%. The dividend yield is the percentage of annual dividend per share to the stock price. If you pay $10 a piece to get $1 in annual dividend per share, you have a 10% dividend yield.

The problem with the highest-yielding stocks is their stock price has fallen significantly because of some real concerns. With high yield comes high risk, and it may not always be the stock to hold forever. But it is also true that diamonds are found in coal mines. Sometimes, a few companies sustain the headwinds and thrive in a recovering economy.

Two highest-yielding stocks on the TSX right now

Let's look at some of the highest-yielding stocks on the TSX right now and analyze how you can make the most of their yield.

Parex Resources

Parex Resources (TSX:PXT) is in the business of oil and gas exploration and production in Colombia. It produces oil in Colombia and sells it to international markets at London's Brent Crude Index prices. This helps it avoid Trump tariffs. The company started giving dividends in 2021 and has grown them annually. It has also reduced its share count through consistent share buybacks which helps it reduce the total amount spent on dividend payments while growing its dividend per share.

As an oil producer, Parex earnings and free cash flow depend on the Brent crude price realized. In its 2025 guidance, the company expects to realize a price of US$70/barrel and earn US$26-$28/barrel in operating funds flow after deducting royalty, production, and transportation costs.

A higher oil price could convert into higher funds flow, giving Parex more room to grow dividends. If the oil price falls, Parex can reduce its capital spending and oil production to reduce its expenses.

Parex Resources's stock price has dipped 38% since June 2024 and is trading near its pandemic low of $13.46. Now is a good time to buy the stock, as the dip has inflated its dividend yield to 11.45%. The company could continue paying $1.54 in annual dividends for 2025 and the following years.

However, you might want to evaluate the investment two or three years later. Remember, the stock is a good investment as long as Brent crude oil price is above US$65 per barrel. If the oil price falls below that price, it is time to sell Parex shares.

BCE stock

BCE (TSX:BCE) has become the most talked about stock on the TSX because of its company-wide restructuring which significantly reduced its net profit. The telecom giant known for its 5% annual dividend growth rate has finally put a pause on its dividend growth. However, the TSX penalized the stock as it fell 25% since November 2024. The stock is trading at its 14-year low, which has inflated its dividend yield to 12%.

The dividend growth pause is a good sign, but the stock price decline comes because investors fear a dividend cut given that the company has been paying dividends from its loans. BCE's dividend payout ratio has been above 100% since 2021, which is unsustainable. In 2025, the company looks to normalize this payout ratio. For this, it has retained the dividend per share at $3.99, is selling non-core assets, and is reducing debt to improve free cash flow (FCF).

BCE expects to earn $3.45 billion FCF in 2025. Assuming the dividend payment remains at the 2024 level of $3.6 billion, the company could reduce the payout ratio to 105%. I would not rule out the possibility of BCE considering a dividend cut to improve the payout ratio to the target range of 65-75% of FCF.

Despite these headwinds, BCE is a stock to buy and hold for the long term, as it monetizes the 5G opportunities of artificial intelligence at the edge.