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.
TECK RESOURCES LTD. $28 (Toronto symbol TECK.B; Conservative Growth Portfolio, Resources sector; Shares outstanding: 573.6 million; Market cap: $16.1 billion; Price-to sales ratio: 1.3; Dividend yield: 0.7%; TSINetwork Rating: Extra Risk; www.teck.com) is a leading producer of metallurgical coal, a key ingredient in steelmaking. It also owns… Read More
CANADIAN IMPERIAL BANK OF COMMERCE $114 (Toronto symbol CM; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 442.4 million; Market cap: $50.4 billion; Price-to-sales ratio: 3.0; Dividend yield: 4.8%; TSINetwork Rating: Above Average; www.cibc.com) has extended its exclusive alliance with Toronto’s Pearson International Airport, which handles… Read More
Rising interest rates generally reduce the appeal of income stocks, including utilities. However, recent acquisitions by these four industry leaders—and their new projects—set them up for years of higher dividends.
CANADIAN UTILITIES LTD. (Toronto symbols CU [class A non-voting] $31 and CU.X [class B voting] $31; Income Portfolio, Utilities sector;… Read More
CAE INC. $27 (Toronto symbol CAE; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 266.3 million; Market cap: $7.2 billion; Price-to-sales ratio: 2.4; Dividend yield: 1.5%; TSINetwork Rating: Average; www.cae.com) is the world’s largest maker of flight simulators for commercial airlines and military clients. It also… Read More
A Montana judge recently forced TransCanada to stop work on the controversial Keystone XL pipeline project. The court ruled the U.S. State Department failed to sufficiently consider Keystone XL’s environmental impact before approving it in September 2018.
However, that project is just one of several new… Read More
ENCANA CORP. $11.47 (Toronto symbol ECA; Shares outstanding: 963.1 million; Market cap: $10.9 billion; TSINetwork Rating: Average; Dividend yield: 0.7%; www.encana.com) fell recently after it agreed to buy Newfield Exploration Company (New York symbol NFX).
Newfield operates shale oil and natural gas wells in the Stack and Scoop… Read More
TORONTO-DOMINION BANK $73.41 (Toronto symbol TD; Shares outstanding: 1.8 billion; Market cap: $134.1 billion; TSINetwork Rating: Above Average; Dividend yield: 3.7%; www.td.com) is Canada’s second-largest bank, with total assets of $1.26 trillion.
The bank continues to invest in its digital operations—online and mobile banking.
In Canada, 81% of TD’s… Read More
INNERGEX RENEWABLE ENERGY $12.56 (Toronto symbol INE; Shares outstanding: 132.8 million; Market cap: $1.7 billion; TSINetwork Rating: Extra Risk; Dividend yield 5.4%; www.innergex.com) has completed the purcase of TransCanada Corp.’s 62% stake in five wind farms on Quebec’s Gaspe peninsula. The price was $630 million.
Innergex already owned the… Read More
PEMBINA PIPELINE $45.89 (Toronto symbol PPL; Shares outstanding: 502.4 million; Market cap: $23.1 billion; TSINetwork Rating: Average; Dividend yield: 5.0%; www.pembina.com) owns pipelines that carry almost all of B.C.’s oil and half of Alberta’s conventional oil. In addition, its network transports 30% of Western Canada’s natural gas… Read More
BCE INC. $53.59 (Toronto symbol BCE; Shares ooutstanding: 898.0 million; Market cap: $47.5 billion; TSINetwork Rating: Above Average; Dividend yield: 5.6%; www.bce.ca) stands to gain from the new trade agreement between the U.S., Mexico and Canada (called USMCA).
The new agreement overturns broadcast regulations that let Canadian cable… 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.
The Successful Investor Inc. and its affiliate Successful Investor Wealth Management (referred to hereafter as TSI Network) know that you care how information about you is used and shared, and we appreciate your trust that we will do so carefully and sensibly. This notice describes our privacy policy. By visiting websites owned by or associated with TSI Network, you are accepting the practices described in this Privacy Policy.
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What personal information do we collect?
The information we receive from customers helps us personalize and continually improve your online experience at TSI Network. TSI Network may collect personal information online for all legal purposes, which include, but are not limited to:
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Does TSI Network Use the Information It Receives?
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Changes to this Policy
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