The dividend yield is one of the important ratios to calculate for dividend stocks. It is calculated as the total annual dividends paid per share, divided by the current stock price. Movements in the stock price will change the dividend yield. When you’re looking for income-producing stocks, dividend yield is typically your most important consideration. The best companies to invest in for a high dividend yield have strong positions in healthy industries. They also incorporate strong management that makes the right moves to remain competitive in changing marketplaces.
Dividend yields are a sign of investment quality. Some good companies reinvest profit to spur growth instead of paying dividends. But fraudulent and failing companies are hardly ever dividend-paying stocks. So if you only buy stocks that pay dividends, you’ll automatically stay out of almost all the market’s worst stocks.
For a true measure of stability, focus on those companies that have maintained or raised their dividend yields during a recession or stock-market downturn. That’s because these firms leave themselves enough room to handle periods of earnings volatility. By continually rewarding investors, and retaining enough cash to finance their businesses, they also provide an attractive mix of safety, income and growth-and are a big part of a successful long term investment strategy
High dividend yields can be a warning sign, however
When looking for high dividend stocks, you should avoid the temptation of “reaching for yield.” That is, choosing investments purely because they offer a high current yield. That’s because a high yield may signal danger rather than a bargain, if it reflects widespread investor skepticism that a company can keep paying its current dividend. Dividend cuts always undermine investor confidence, and can quickly push down a company’s stock price.
While a high-and safe-yield dividend is generally favourable, be aware that it is only one of many indicators that we look for in a good stock. You need to look at the big picture, so you get a realistic view of a company’s long-term prospects. As well, at TSI Network, we recommend our three-part Successful Investor strategy:
Discover how to put an extra strength in your portfolio with our specific advice on how to identify high-quality dividend stocks. It’s all in our newly updated report. Dividend Paying Stocks: How High Dividend Stocks Can Supercharge Your Income Investing.
APPLE INC. $181 (Nasdaq symbol AAPL; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 5.1 billion; Market cap: $923.1 billion; Price-to-sales ratio: 3.2; Dividend yield: 1.5%; TSINetwork Rating: Average; www.apple.com) has dropped 22% from its recent peak of $233 in October 2018.
Many companies that make parts… Read More
The falling Japanese yen is good news for these four Japan-based companies. That’s because a lower yen makes their products more attractive in markets outside of Japan. We continue to hold a high opinion of these four, and see two as buys for right now.
TOYOTA… Read More
UNITED TECHNOLOGIES CORP. $123 (New York symbol UTX; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 801.0 million; Market cap: $98.5 billion; Price-to-sales ratio: 1.5; Dividend yield: 2.3%; TSINetwork Rating: Above Average; www.utc.com) has completed its acquisition of Rockwell Collins Inc. (New York symbol COL) now… Read More
One key to our success is that we look for stocks with hidden or under- appreciated assets. In Mondelez’s case, it recently turned its minority stake in a European coffee maker into a significant holding in Keurig Dr Pepper. It’s the seventh-largest food and beverage… Read More
J.P. MORGAN CHASE & CO. $111 (New York symbol JPM; Conservative-Growth Payer Portfolio, Finance sector; Shares outstanding: 3.4 billion; Market cap: $377.4 billion; Dividend yield: 2.9%; Dividend Sustainability Rating: Above Average; www.jpmorganchase.com) is the largest banking firm in the U.S., with total assets of $2.6 trillion as of… Read More
CISCO SYSTEMS INC. $47 (Nasdaq symbol CSCO; High-Growth Dividend Payer Portfolio, Manufacturing sector; Shares outstanding: 4.5 billion; Market cap: $211.5 billion; Dividend yield: 2.8%; Dividend Sustainability Rating: Above Average; www.cisco.com) makes hardware and software that links and manages computer networks.
The company paid its first quarterly dividend of $0.06… Read More
TELUS CORP. $47 (Toronto symbol T; Income-Growth Dividend Payer Portfolio, Utilities sector; Shares outstanding: 599.0 million; Market cap: $28.2 billion; Dividend yield: 4.6%; Dividend Sustainability Rating: Highest; www.telus.com) is Canada’s third-largest wireless carrier, after Rogers Communications (No. 1) and Bell Mobility (No. 2), with 9.15 million subscribers. It… Read More
SYMANTEC CORP. $23 (Nasdaq symbol SYMC; High Growth Dividend Payer Portfolio, Manufacturing sector; Shares outstanding: 638.9 million; Market cap: $14.7 billion; Dividend yield: 1.3%; Dividend Sustainability Rating: Average; www.symantec.com) sells computer-security technology, including antivirus and email-filtering software, to both businesses and consumers.
The company pays a quarterly dividend of… Read More
SUNCOR ENERGY INC. $43 (Toronto symbol SU; Cyclical-Growth Payer Portfolio, Resources sector; Shares outstanding: 1.6 billion; Market cap: $68.8 billion; Dividend yield: 3.3%; Dividend Sustainability Rating: Above Average; www.suncor.com) is Canada’s largest integrated oil company, with major projects in the Alberta oil sands. It also owns four refineries… Read More
MANULIFE FINANCIAL CORP. $22 (Toronto symbol MFC; Conservative-Growth Payer Portfolio; Finance sector; Shares o/s: 2.0 billion; Market cap: $44.0 billion; Dividend yield: 4.5%; Dividend Sustainability Rating: Above Average; www.manulife.ca) is Canada’s largest life insurance provider. It also sells other forms of insurance, including health, dental and travel plans… Read More
Learn everything you need to know in 'The Canadian Guide on How to Invest in Stocks Successfully' FREE Special Report from The Successful Investor.
How to Invest In Stocks Guide: Find 10 factors that make your investments safer and stronger.
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