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.
HERTZ GLOBAL HOLDINGS INC. $15 (New York symbol HTZ; Consumer sector; Shares outstanding: 84.1 million; Market cap: $1.3 billion; No dividends paid; Takeover Target Rating: Medium; www.hertz.com) rents cars and trucks under the Hertz, Dollar and Thrifty banners at 10,200 locations in over 150 countries. Through its Donlen… Read More
ARCONIC INC. $18 (New York symbol ARNC; Manufacturing & Industry sector; Shares outstanding: 483.2 million; Market cap: $8.7 billion; Dividend yield: 1.3%; Takeover Target Rating: Medium; www.arconic.com) is a leading maker of engineered-aluminum products for cars and jet engines.
On November 1, 2016, Arconic spun off Alcoa Corp. (New… Read More
VF CORP. $72 (New York symbol VF; Consumer sector; Shares outstanding: 396.8 million; Market cap: $28.6 billion; Dividend yield: 2.7%; Takeover Target Rating: Medium; www.vfc.com) is one of the world’s largest apparel suppliers.
The company will spin off its Lee and Wrangler jeans business in the first half of… Read More
United Technologies recently completed its acquisition of Rockwell Collins—a rival maker of aircraft parts. Like most big acquisitions, this one adds risk, but it also comes with several long-term benefits. Those include giving United Technologies more clout when negotiating new deals with big aircraft makers… Read More
Studies show that both a spinoff and its parent company perform better than comparable firms for several years following their split. That’s especially so with industry leaders like these two.
WYNDHAM DESTINATIONS $37.47 (New York symbol WYND; TSI Rating: Extra Risk) (973-753-6000; www.wyndhamdestinations.com; Shares outstanding: 97.5 million; Market… Read More
SYMANTEC CORP. $20.72 (Nasdaq symbol SYMC; TSINetwork Rating: Average) (650-527-8000; www.symantec.com; Shares outstanding: 638.9 million; Market cap: $13.2 billion; Dividend yield: 1.5%) sells computer-security technology, including antivirus and email-filtering software, to businesses and consumers.
The company has now formed a partnership with Fortinet, symbol FTNT on Nasdaq. Both companies… Read More
BMTC GROUP $13.82 (Toronto symbol GBT; TSINetwork Rating: Extra Risk) (514-648-5757; No website; Shares outstanding: 34.7 million; Market cap: $477.9 million; Dividend yield: 2.0%) has 36 outlets and is one of Quebec’s biggest retailers of furniture, electronics and appliances. The company mainly sells these items through two chains:… Read More
CALIAN GROUP $27.28 (Toronto symbol CGY; TSINetwork Rating: Speculative) (613-599-8600; www.calian.com; Shares outstanding: 7.8 million; Market capitalization: $218.2 million; Dividend yield: 4.1%) continues to build its backlog of health services contracts by signing additional agreements with its existing clients.
This latest Canada Border Services Agency (CBSA) contract is for a.. Read More
FIRSTSERVICE CORP. $92.24 (Toronto symbol FSV; TSINetwork Rating: Extra Risk) (416-960-9500; www.firstservice.com; Shares outstanding: 34.6 million; Market cap: $3.2 billion; Dividend yield: 0.8%) set up its commercial real estate business, Colliers International Group, as a separate company on June 1, 2015. It then handed out shares to its… Read More
YAMANA GOLD $3.19 (Toronto symbol YRI; TSINetwork Rating: Speculative) (416-815-0220; www. yamana.com; Shares outstanding: 948.9 million; Market cap: $2.9 billion; Dividend yield: 0.8%) owns and operates seven gold mines, in Canada, Brazil, Chile and Argentina.This includes the Cerro Moro gold/silver mine in Argentina. It started up in mid-2018.
Yamana… 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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