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.
IMPERIAL OIL LTD. $39.57 (Toronto symbol IMO; Shares outstanding: 795.8 million; Market cap: $30.4 billion; TSINetwork Rating: Average; Dividend yield: 1.9%; www.imperialoil.ca) is Canada’s third-largest publicly traded oil company, after Suncor (No. 1) and Canadian Natural Resources. U.S.-based ExxonMobil (New York symbol XOM) owns 69.6% of Imperial.
Imperial… Read More
ENERPLUS CORP. $12.89 (Toronto symbol ERF; Shares outstanding: 245.3 million; Market cap: $3.1 billion; TSINetwork Rating: Speculative; Dividend yield: 0.9%) produces oil and gas from properties in Western Canada—Alberta, Saskatchewan and B.C.—as well as North Dakota and Montana. The company also has properties in the Marcellus Shale… Read More
CHOICE PROPERTIES REIT $12.22 (Toronto symbol CHP.UN; Units outstanding: 277.2 million; Market cap: $8.3 billion; TSINetwork Rating: Extra Risk; Dividend yield: 6.1%; www.enbridge.com) acquired Canadian REIT (old symbol REF.UN), a recommendation of Canadian Wealth Advisor, on May 7, 2018.
The merger created Canada’s biggest real estate investment trust: 751 properties… Read More
H&R REIT $21.00 (Toronto symbol HR.UN; Units outstanding: 285.7 million; Market cap: $6.1 billion; TSINetwork Rating: Extra Risk; Dividend yield: 6.6%; www.hr-reit.com) should get a boost from Amazon.com’s decision to choose Long Island City as the location for one of its two new headquarters. This Amazon… Read More
Algonquin Power continues to expand through big acquisitions, which adds risk. Still, it partially offsets that with acquisitions that add immediately to its cash flow—plus, its renewable energy projects sell their power under long-term government-guaranteed contracts. The company’s international expansion also reduces its geographic risk.
ALGONQUIN POWER… Read More
Investing in the technology industry can be hugely profitable. However, companies face tough competition and the industry’s winners can quickly lose out to rivals with newer innovations. Tech stocks can also be very volatile—and negative news can throw them into steep declines. Well-diversified ETFs can… Read More
LISTEN:
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… Read More
LISTEN:
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… Read More
QUAKER CHEMICAL CORP. $206 (New York symbol KWR; Income Portfolio, Manufacturing & Industry sector; Shares o/s: 13.3 million; Market cap: $2.7 billion; Price-to-sales ratio: 3.2; Dividend yield: 0.7%; TSINetwork Rating: Average; www.quakerchem.com) started up in 1918 and currently operates 35 plants in 21 countries. Those facilities make… Read More
BRIGGS & STRATTON CORP. $16 (New York symbol BGG; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 42.3 million; Market cap: $676.8 million; Price-to-sales ratio: 0.4; Dividend yield: 3.5%; TSINetwork Rating: Above Average; www. briggsandstratton.com) makes lawn-mower engines, portable power generators, pressure washers, and snowblowers and… 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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