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.
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
ALLIANT ENERGY CORP. $45 (New York symbol LNT; Income Portfolio, Utilities sector; Shares o/s: 231.5 million; Market cap: $10.4 billion; Price-to-sales ratio: 3.0; Dividend yield: 3.0%; TSINetwork Rating: Average; www.alliantenergy.com) sells power and natural gas to 1.4 million clients in Wisconsin, Iowa and Minnesota.
Alliant earned $199.9 million… Read More
TENNANT CO. $61 (New York symbol TNC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 18.1 million; Market cap: $1.1 billion; Price-to-sales ratio: 1.0; Dividend yield: 1.5%; TSINetwork Rating: Average; www.tennantco.com) makes industrial floor and street-cleaning equipment, including scrubbers, sweepers and polishers.
Tennant recently agreed to buy… Read More
To cut their reliance on phone services, these U.S. telecom giants continue to expand with new businesses. Those moves should also continue to spur their dividend growth.
AT&T INC. $31 (New York symbol T; Income Portfolio, Utilities sector; Shares o/s: 7.3 billion; Market cap: $226.3 billion; Price-to-sales… Read More
Yum Brands set up its Chinese operations (Yum China) as a separate company on November 1, 2016. At the same time, it handed its investors one share in the new firm for each Yum Brands share they held.
Stock in both the spinoff and its former… Read More
BUCKEYE PARTNERS L.P. $31 (New York symbol BPL; Income Portfolio, Utilities sector; Units outstanding: 147.0 million; Market cap: $4.6 billion; Price-to-sales ratio: 1.1; Dividend yield: 9.7%; TSINetwork Rating: Average; www.buckeye.com) operates 9,700 kilometres of pipelines in the U.S. Northeast and Midwest. Its network pumps gasoline, jet fuel… Read More
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
Learn everything you need to know in '7 Winning Strategies for Dividend Investors' FREE Special Report from The Successful Investor.
The Best Canadian Dividend Stocks to Buy: REITS Canada and other Top Canadian Dividend Stocks.
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