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.
3M COMPANY $185 (New York symbol MMM; Income Growth Dividend Payer Portfolio, Manufacturing & Industry sector; Shares outstanding: 582.3 million; Market cap: $107.7 billion; Dividend yield: 2.9%; Dividend Sustainability Rating: Above Average; www.3m.com) started up in 1902 as the Minnesota Mining & Manufacturing Company.
While it started off making… Read More
POWER CORP. $27 (Toronto symbol POW; Conservative-Growth Dividend Payer Portfolio, Finance sector; Shares outstanding: 417.0 million; Market cap: $11.3 billion; Dividend yield: 5.7%; Dividend Sustainability Rating: Above Average; www.powercorporation.com) is a holding company with a diversified list of businesses. Those include 65.6%-owned Power Financial, which in turn holds… Read More
ARCHER DANIELS MIDLAND CO. $48 (New York symbol ADM; High-Growth Payer Portfolio, Manufacturing & Industry sector; Shares outstanding: 559.7 million; Market cap: $26.9 billion; Dividend yield: 2.8%; Dividend Sustainability Rating: Above Average; www.adm.com) processes corn, wheat, soybeans, canola, and other crops to make a variety of food ingredients… Read More
BCE INC. $53 (Toronto symbol BCE; Income-Growth Portfolio, Utilities sector; Shares outstanding: 898.0 million; Market cap: $47.6 billion; Dividend yield: 5.7%; Dividend Sustainability Rating: Highest; www.bce.ca) is Canada’s largest traditional telephone service provider: it has 3.1 million residential customers in Ontario, Quebec, Manitoba and the Atlantic provinces. It… Read More
CHEVRON CORP. $110 (New York symbol CVX; Cyclical Growth Dividend Payer Portfolio, Resources sector; Shares outstanding: 1.9 billion; Market cap: $209.0 billion; Dividend yield: 4.1%; Dividend Sustainability Rating: Above Average; www.chevron.com) expects its average production will rise between 4% and 7% from 2018 to 2020. That’s mainly due… Read More
PROCTER & GAMBLE CO. $89 (New York symbol PG; Income-Growth Portfolio, Consumer sector; Shares outstanding: 2.6 billion; Market cap: $231.4 billion; Dividend yield: 3.2%; Dividend Sustainability Rating: Highest; www.pg.com) is one of the world’s largest makers of household and personal-care goods.
Starting with the May 2018 payment, Procter raised… Read More
BANK OF NOVA SCOTIA $69 (Toronto symbol BNS; Income-Growth Portfolio, Finance sector; Shares outstanding: 1.2 billion; Market cap: $82.8 billion; Dividend yield: 4.9%; Dividend Sustainability Rating: Above Average; www.scotiabank.com) is the third-largest of Canada’s five big banks with assets of $946.7 billion.
Bank of Nova Scotia last raised its… Read More
ALLIED PROPERTIES REAL ESTATE INVESTMENT TRUST $42 (Toronto symbol AP.UN; Cyclical-Growth Payer Portfolio, Manufacturing & Industry sector; Units o/s: 103.8 million; Market cap: $4.4 billion; Dividend yield: 3.7%; Divd. Sustainability Rating: Above Average; www.alliedreit.com) owns 147 office buildings, mainly in major Canadian cities.
With the January 2018 payment,… Read More
BROOKFIELD RENEWABLE PARTNERS L.P. $38 (Toronto symbol BEP.UN; High-Growth Dividend Payer Portfolio, Utilities sector; Units outstanding: 309.9 million; Market cap: $11.8 billion; Dividend yield: 6.6%; Dividend Sustainability Rating: Above Average; www.bep.brookfield.com) has interests in 218 hydroelectric generating stations, 544 solar facilities, 104 wind farms, four biomass facilities and… Read More
HIGH LINER FOODS INC. $8.42 (Toronto symbol HLF; Shares outstanding: 33.4 million; Market cap: $281.2 million; Dividend yield: 6.9%; www.highlinerfoods.com) processes and markets frozen seafood throughout the U.S., Canada and Mexico.
The company sells its products in grocery stores under the High Liner and Fisher Boy brands, among others… 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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