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.
GENERAL MILLS INC. $42 (New York symbol GIS; Income-Growth Dividend Payer Portfolio, Consumer sector; Shares outstanding: 596.1 million; Market cap: $25.0 billion; Dividend yield: 4.7%; Dividend Sustainability Rating: Above Average; www.generalmills.com) is one of the world’s largest foodmakers. Its top brands include Big G (cereal), Green Giant (canned… Read More
CHOICE PROPERTIES REIT $12 (Toronto symbol CHP.UN; Cyclical-Growth Payer Portfolio; Manufacturing & Industry sector; Units o/s: 277.2 million; Market cap: $3.3 billion; Divd. yield: 6.2%; Dividend Sustainability Rating: Above Average; www.choicereit.ca) acquired Canadian REIT (old symbol REF.UN) on May 7, 2018. The merger created Canada’s biggest real estate… Read More
BED BATH & BEYOND INC. $12.43 (Nasdaq symbol BBBY; Shares outstanding: 138.1 million; Market cap: $1.7 billion; Dividend yield: 5.1%; www.bedbathandbeyond.com) sells a wide range of home furnishings and other merchandise for the home. It operates under the names Bed Bath & Beyond, Christmas Tree Shops, andThat!, Harmon, Face Values,… Read More
Emera now plans to raise its annual dividend rate between 4% and 5% each year through 2021. That’s down from its previous aim to raise the dividend 8% annually through 2020.
The company cut that growth target to conserve cash for new projects and pay down… Read More
A: In May 2018, Bank of Nova Scotia’s asset-management business, Scotia Global Asset Management, announced the launch of its Scotia Strategic ETF Portfolios.
These “smart beta” ETF portfolios include fixed-income, Canadian, U.S. and global equity funds. The four ETF portfolios are the Scotia Strategic Fixed Income… Read More
LOBLAW COMPANIES LTD., $61.00, Toronto symbol L, operates 1,082 supermarkets across Canada. It also owns the Shoppers Drug Mart chain of 1,335 drugstores.
On November 1, 2018, Loblaw transferred its stake in CHOICE PROPERTIES REIT, $12.18, Toronto symbol CHP.UN, to its parent company George Weston Ltd… Read More
LISTEN:
A.P. MOELLER-MAERSK A/S (ADRs) $6.57 (Over-the-Counter Pink Sheets symbol AMKBY; Manufacturing & Industry sector; Shares outstanding: 4.15 million; Market cap: $27.2 billion; Dividend yield: 1.8%; Takeover Target Rating: Lowest; www.maersk.com) is the… Read More
LISTEN:
Chemical giant DowDuPont continues to plan for its split into three new businesses, following last year’s big merger.
The stock has suffered in the past few months over concerns trade… Read More
NISSAN MOTOR (ADR) $17.07 (Nasdaq symbol NSANY; TSINetwork Rating: Above Average) (310-771-3111; www.nissan-global.com; ADRs o/s: 2.1 billion; Market cap: $35.6 billion; Dividend yield: 3.5%) now plans to fire its CEO Carlos Ghosn after his arrest in Japan. Nissan went to authorities with details of an internal probe prompted by… Read More
RESTAURANT BRANDS INTERNATIONAL $55.03 (New York symbol QSR; TSINetwork Rating: Average) (905-845-6511; www.rbi.com; Shares outstanding: 478.0 million; Market cap: $26.3 billion; Dividend yield: 3.3%) continues to spur sales at Tim Hortons with new initiatives. Those include remodelling its stores and launching an all-day breakfast menu. All these moves… 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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