Thermo-optical properties of several (Tb1-xYx)2O3 ceramic samples were investigated in this Letter. The linear absorption and thermal conductivity coefficients, as well as the power dependence of thermally induced phase and polarization distortions of laser radiation, were measured. In addition, the effective thermo-optical constants Peff and Qeff were estimated. Thermo-optical properties of the studied ceramics were compared with those of the widely used terbium gallium garnet. It was shown that the material under consideration is highly promising for Faraday isolators operating at high average power laser radiation.