high dividend

Investors generally look to aggressive stocks for capital gains and to more conservative stocks, like utilities, for income. However, there are some aggressive stocks that pay dividends that are as high — or even higher — than more established companies. (We’ve updated our buy/sell/hold advice on a high-dividend aggressive stock in a just-published issue of Stock Pickers Digest. See below for further details.) ...

BCE is using its strong cash flow to expand and improve its wireless and high-speed Internet networks. That will fuel the company’s long-term growth. It will also let BCE keep adding services, buying back shares and paying (and possibly raising) its high dividend. BCE INC. $30.07 (Toronto symbol BCE; Shares outstanding: 765.2 million; Market cap: $23.0 billion; SI Rating: Above Average; Dividend yield: 5.8%) provides telephone and Internet services in Ontario and Quebec. It also sells wireless and satellite-TV services across Canada. In 2009, BCE’s revenue rose 0.4%, to $17.74 billion from $17.66 billion in the prior year. Earnings before one-time items rose 6.5%, to $1.9 billion from $1.8 billion in the prior year. Per-share earnings rose 11.1%, to $2.50 from $2.25, on fewer shares outstanding....

PENGROWTH ENERGY TRUST $12 (Toronto symbol PGF.UN; Aggressive Growth Portfolio, Resources sector; Units outstanding: 289.8 million; Market cap: $3.5 billion; Price-to-sales ratio: 2.4; Dividend yield: 7.0%; SI Rating: Average) has proven oil and natural-gas reserves that should last 8.3 years at current production rates. However, it hopes to expand its reserves by doing more drilling on its existing fields in western Canada. That’s a slower route to growth than buying properties from others. But it takes less capital and avoids the risk of big losses when acquired properties fail to live up to expectations. Pengrowth earned $0.32 a unit (or a total of $84.9 million) in 2009. That’s down 79.7% from $1.58 a unit (or $395.9 million) in 2008. Cash flow per share fell 42.7%, to $2.09 from $3.65. These declines mainly reflect a 26.4% drop in oil and gas prices (on a combined basis). In response, Pengrowth cut its monthly distribution by 30.0%, to $0.07 a unit from $0.10, to free up cash for more drilling. The current annual rate of $0.84 yields 7.0%....

Colabor Group, $11.55, symbol GCL on Toronto (Shares outstanding: 19.7 million; Market cap: $227.1 million), sells and distributes food and other products to customers in the retail and food-services businesses. Its clients are mainly grocery stores, convenience stores, cafeterias, restaurants and hotels. Colabor converted from an income trust to a conventional corporation last year. The company continues to report rising revenue and cash flow. That cash flow appears to be enough to let Colabor continue paying its high dividend, which now yields 13.1%. The company’s long-term debt of $122.5 million is a manageable 53.9% of its market cap. Colabor has grown quickly over the last few years, mainly by purchasing other related firms. As a result of its acquisitions, the company has goodwill and intangibles of $209.1 million, or a high 92.1% of its market cap. That raises the risk of a future writedown, but the company’s acquisitions are performing well so far....

TRILOGY ENERGY TRUST $8.32 (Toronto symbol TET.UN; SI Rating: Speculative) (403-290-2900; www.trilogyenergy.com; Units outstanding: 109.2 million; Market cap: $908.5 million; Dividend yield: 7.2%) will soon convert itself into a conventional corporation. The trust now pays a monthly distribution of $0.05 a unit. After the conversion, it plans to pay a dividend of $0.035 per month. That will give it a 5.0% yield. That’s still a high yield for a dividend-paying oil stock, but the company will have $1 billion in tax losses that it can use to delay paying taxes until 2016. That should let it maintain the high dividend. Trilogy Energy Trust is still a buy.

Canada’s telephone companies continue to face rising competition. Along with wireless and cable companies, Internet-based phone services, such as Skype, have also gained in popularity. Now, three new wireless providers (Globalive’s WIND Mobile, DAVE Wireless, and Public Mobile) are set to enter the Canadian market. This new competition will put pressure on BCE Inc. (symbol BCE on Toronto), Canada’s largest telephone service provider. In light of this and other developments surrounding this conservative investing stock, we’ve updated our buy/sell/hold advice in the latest Canadian Wealth Advisor, our newsletter for safety-conscious conservative investing....

TRILOGY ENERGY TRUST, $8.54, symbol TET.UN on Toronto, plans to convert itself into a conventional corporation by early February 2010. Trilogy owns oil and gas properties in the Kaybob and Grande Prairie areas of central Alberta. Its production is weighted roughly 80% toward natural gas and 20% to oil. The trust now pays a monthly distribution of $0.05 a unit. After the conversion, it plans to pay a dividend of $0.035 per month. That will give it a 4.9% yield, based on today’s price. That’s still a high yield for a dividend-paying oil stock, but the company will have $1 billion in tax losses that it can use to delay paying taxes until 2016. That should let it maintain the high dividend, and give it added cash flow to reinvest in exploration and development....

BCE INC. $28.54 (Toronto symbol BCE; Shares outstanding: 767.2 million; Market cap: $21.9 billion; SI Rating: Above Average; Dividend yield: 6.1%) will face pressure from three new wireless providers (Globalive’s WIND Mobile, DAVE Wireless and Public Mobile) that will probably enter the Canadian market this year. But BCE has dealt with strong competition from wireless and cable companies for years. For example, it’s using its Virgin Mobile discount cellphone service to attract younger and more budget-conscious users. The company has also upgraded its networks to handle a wider variety of cellphones, including Apple’s hugely popular iPhone smartphone....

Today’s cautious investors have developed a renewed interest in dividends and dividend yields. Dividends are more dependable than capital gains, especially in a volatile market. In fact, dividends may provide up to a third of an investor’s long-term return. Recent tax cuts also mean that you pay roughly the same tax on dividend income and capital gains. At the same time, newspapers have mostly quit publishing dividend and yield data. Much Internet dividend data is unreliable....

Investors are paying more attention to dividend yields (a company’s total annual dividends paid per share divided by the current stock price) as volatile stock markets continue to recover. Companies are responding by doing their best to maintain, or even increase, their dividend payments. That’s good news for investors, because dividends are more dependable than capital gains as a source of income. In fact, dividends typically contribute up to a third of an investor’s long-term return. Tax cuts in recent years also mean that you pay roughly the same tax on dividend income and capital gains. ...