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.
FORD MOTOR CO. $9 (New York symbol F, Cyclical-Growth Dividend Payer Portfolio, Manufacturing & Industry sector; Shares outstanding: 4.0 billion; Market cap: $36.0 billion; Dividend yield: 6.7%; Dividend Sustainability Rating: Above Average; www.ford.com) holds 14.4% of the U.S. market, which means it’s only second to General Motors (with… Read More
GREAT-WEST LIFECO INC. $28 (Toronto symbol GWO; Conservative Growth Payer Portfolio, Finance sector; shares outstanding: 988.4 million; Market cap: $27.7 billion; Dividend yield: 5.6%; Dividend Sustainability Rating: Above Average; www.greatwestlifeco.com) is Canada’s second-largest insurance company, after Manulife Financial. It also offers mutual funds and wealth management services. Power… Read More
ENBRIDGE INC. $42 (Toronto symbol ENB; Income-Growth Dividend Payer Portfolio, Utilities sector; Shares outstanding: 1.8 billion; Market cap: $75.6 billion; Dividend yield: 7.0%; Dividend Sustainability Rating: Highest; www.enbridge.com) continues to sell some of its less-important assets to help pay down the $22 billion of debt it assumed as… Read More
ALGONQUIN POWER & UTILITIES CORP. $14 (Toronto symbol AQN; High-Growth Dividend Payer Portfolio, Utilities sector; Shares outstanding: 473.9 million; Market cap: $6.6 billion; Dividend yield: 4.9%; Dividend Sustainability Rating: Above Average; www.algonquinpower.com) operates through two main businesses: The Generation Group produces and sells electricity from 35 clean energy… Read More
CAE recently raised its dividend for the eighth-straight year. While the stock yields just 1.5%, the company is in a strong position to keep raising that payment.
In fact, CAE now expects the number of active airline and business jet pilots worldwide to jump 47%, from… Read More
Many investors look at various factors in the process of understanding market risk—and this includes plenty of information you don’t need to worry about
When they first set out to formulate an investment strategy, many investors decide to focus their stock market research and understanding of… Read More
RIOCAN REAL ESTATE INVESTMENT TRUST $24.77 (Toronto symbol REI.UN; Units o/s: 306.8 million; Market cap: $7.5 billion; TSINetwork Rating: Average; Dividend yield: 5.8%; www.riocan.com) is preparing to lease the units of its first rental development, eCentral, in midtown Toronto before the end of this year. Those 466… Read More
ALLIED PROPERTIES REAL ESTATE INVESTMENT TRUST $45.03 (Toronto symbol AP.UN; Units outstanding: 103.9 million; Market cap: $4.7 billion; TSINetwork Rating: Extra Risk; Dividend yield: 3.5%; www.alliedreit.com) owns 147 office buildings, mainly in major Canadian cities. Most of those are classified as Class I buildings (19th- and early-20th-century… Read More
POWER CORP. $26.00 (Toronto symbol POW; Shares outstanding: 414.4 million; Market cap: $12.4 billion; TSINetwork Rating: Above Average; Dividend yield: 5.9%; www.powercorporation.com) is a holding company with a diversified list of businesses. It holds its financial assets through its 65.6%-owned Power Financial.
Power Financial’s assets include a.. Read More
LOBLAW COMPANIES $62.07 (Toronto symbol L; Shares outstanding: 375.3 million; Market cap: $23.0 billion; TSINetwork Rating: Above Average; Dividend yield: 1.7%; www.loblaw.ca) operates 1,082 supermarkets and 1,335 Shoppers Drug Mart pharmacies across Canada.
On November 1, 2018, Loblaw transferred its stake in Choice Properties REIT (see page 90)… 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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