Yellow Pages (TSE:Y): Is the High Yield a Sustainable Dividend Play or a Risky Trap?

Investors seeking income often gravitate toward high-yield stocks, but few present as stark a dichotomy as Yellow Pages Limited (TSE:Y). With a trailing twelve-month dividend yield of 8.75% according to PortfoliosLab and a payout ratio exceeding 100% as reported by PortfoliosLab, the company's financials paint a picture of both opportunity and peril. This analysis evaluates whether Yellow Pages' dividend sustainability and long-term shareholder returns justify the risk, or if its high yield signals a precarious financial position.

Earnings Trends: A Declining Foundation

Yellow Pages' third-quarter 2025 results underscore persistent challenges. Total revenue fell 8.1% year-over-year to C$48.3 million, driven by a 6.2% decline in digital media revenue (C$40.0 million) and a sharper 16.3% drop in print revenue (C$8.3 million) as reported by Yahoo Finance. External factors, such as Canada Post labor disruptions, further deferred approximately C$0.5 million in print revenue as reported by Yahoo Finance. Adjusted EBITDA margin contraction-from 23.8% in Q3 2024 to 20.6% in Q3 2025 as reported by Yahoo Finance-highlights weakening profitability.

Full-year 2025 net income of C$22 million as reported by Yahoo Finance, while positive, masks the structural decline in core business segments. Digital and print, once pillars of the company's revenue, face mounting headwinds from shifting consumer behavior and competitive pressures. For a business reliant on recurring revenue streams, such trends raise concerns about long-term earnings resilience.

Payout Ratio: A Double-Edged Sword

The company's 102.46% payout ratio as reported by PortfoliosLab for 2025 is a critical red flag. Paying out more in dividends than it earns suggests reliance on cash reserves or debt to fund distributions. While Yellow Pages maintains a quarterly dividend of C$0.25 per share as reported by StockInvest, this consistency may mask fragility. A payout ratio above 100% increases the risk of a dividend cut, particularly if earnings continue to contract.

Data from PortfoliosLab reveals that the stock's high yield-8.75% as reported by PortfoliosLab-is among the highest in its sector, but such generosity comes at a cost. Sustaining dividends at this level requires either a reversal of earnings trends or external financing, neither of which appears imminent given the company's declining revenue streams as reported by Yahoo Finance.

Total Shareholder Returns: Mixed Signals

Yellow Pages' total shareholder returns (TSR) for 2024–2025 reflect a tug-of-war between dividend payouts and stock price performance. As of December 12, 2025, the stock closed at C$11.43, up 0.351% from the previous day as reported by StockInvest, but its 52-week range (C$9.86–C$12.19) as reported by Yahoo Finance indicates volatility. The 8.7% TSR as reported by SimplyWall for 2025 is modest, driven largely by its 8.75% dividend yield as reported by PortfoliosLab, but capital appreciation has been lackluster.

This dynamic creates a paradox: while the dividend appears attractive, the stock's price action suggests underlying uncertainty. For buy-and-hold investors, the combination of declining earnings and stagnant share price raises questions about whether the company can generate meaningful long-term value.

Risk vs. Reward: A Calculated Assessment

Yellow Pages' high yield is tempting, but its financial metrics suggest a precarious balance sheet. A cash balance of C$59 million as reported by Yahoo Finance as of October 2025 provides some cushion, but with declining revenues and a payout ratio exceeding 100%, this reserve may not last. A dividend cut-common in such scenarios-would likely trigger a sharp sell-off, eroding investor confidence.

Conversely, the company's consistent dividend history as reported by StockInvest and relatively strong TSR as reported by SimplyWall hint at operational discipline. If Yellow Pages can stabilize its digital and print segments or pivot to higher-growth areas, it may yet sustain its payouts. However, given current trends, this outcome appears speculative.

Conclusion: A High-Yield Trap?

Yellow Pages presents a classic high-yield dilemma. Its 8.75% dividend yield as reported by PortfoliosLab is among the most attractive in the market, but the company's declining earnings, margin compression, and unsustainable payout ratio as reported by PortfoliosLab signal significant risk. For conservative investors, the stock's volatility and structural challenges make it a poor buy-and-hold candidate. For those willing to accept elevated risk, it could offer short-term income-but at the potential cost of long-term capital preservation.

In the absence of a clear turnaround strategy or revenue growth catalysts, Yellow Pages' high yield appears more like a trap than a sustainable opportunity.