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.
ENERFLEX LTD. $17.24 (Toronto symbol EFX; TSINetwork Rating: Extra Risk) (403-387-6377; www.enerflex.com; Shares outstanding: 88.8 million; Market cap: $1.5 billion; Dividend yield: 2.4%) rents and sells equipment and services for natural gas production. That includes refrigeration gear, power generators and processing plants.
The company’s revenue jumped 41.5% in the… Read More
SYMANTEC CORP. $21.52 (Nasdaq symbol SYMC; TSINetwork Rating: Average) (650-527-8000; www.symantec.com; Shares o/s: 638.8 million; Market cap: $13.8 billion; Dividend yield: 1.4%) is up over 22% since the start of November 2018 on better-than-expected sales and earnings in the latest quarter. The shares are also up on reports… Read More
INTACT FINANCIAL $102.45 (Toronto symbol IFC; TSINetwork Rating: Extra Risk) (416-341-1464; www.intactfc.com; Shares outstanding: 139.2 million; Market cap: $14.3 billion; Dividend yield: 2.7%) is Canada’s largest provider of property and casualty insurance. The company insures more than five million individuals and businesses. Its major brands are Intact Insurance,… Read More
ALTAGAS LTD. $16 (Toronto symbol ALA; Shares outstanding: 270.5 million; Market cap: $4.3 billion; Dividend yield: 13.9%; Takeover Target Rating: Medium; www.altagas.com) processes, transports, stores and markets natural gas for producers. The company also operates natural gas utilities; and it is a power generator, with gas-fired, coal-fired, wind,… Read More
BHP BILLITON LTD. (ADR) $47 (New York symbol BHP; Resources sector; ADRs outstanding: 1.6 billion; Market cap: $75.2 billion; Dividend yield: 5.3%; Takeover Target Rating: Medium; www.bhpbilliton.com) is a leading producer of iron ore, oil and natural gas, copper and coal.
BHP recently sold its U.S. shale assets to… Read More
HUNTSMAN CORP. $21 (New York symbol HUN; Manufacturing & Industry sector; Shares outstanding: 238.3 million; Market cap: $5.0 billion; Dividend yield: 3.1%; Takeover Target Rating: Lowest; www.huntsman.com) is a leading producer of specialty chemicals.
In August 2017, the company sold 47% of its subsidiary Venator Materials (New York symbol… Read More
CAMPING WORLD HOLDINGS INC. $17 (New York symbol CWH; Consumer sector; Shares outstanding: 87.8 million; Market cap: $1.5 billion; Dividend yield: 1.9%; Takeover Target Rating: Medium; www.campingworld.com) offers a variety of services to recreational vehicle (RV) owners through its two brands: Camping World and Good Sam.
The company operates… Read More
HILTON WORLDWIDE HOLDINGS $73 (New York symbol HLT; Consumer sector; Shares outstanding: 296.6 million; Market cap: $21.7 billion; Dividend yield: 0.8%; Takeover Target Rating: Medium; www.hiltonworldwide.com) owns, manages and franchises hotels under several brands, including Hilton, Waldorf Astoria, Doubletree and Embassy Suites by Hilton. The U.S. accounts for… Read More
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 world’s largest provider of container shipping services, accounting for about 15% of the global shipping capacity… Read More
CAMPBELL SOUP CO. $40 (New York symbol CPB; Consumer sector; Shares outstanding: 300.7 million; Market cap: $12.0 billion; Takeover Target Rating: Medium; Dividend yield: 3.5%; www.campbellsoupcompany.com) makes a variety of food products under the brands Campbell’s Soup, Pepperidge Farm, V8, Bolthouse Foods and others.
Activist investor Daniel Loeb, through… 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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