high dividend

Investors are paying more attention to dividends as volatile stock markets continue to recover. That’s 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. To help you quickly identify and evaluate dividend-paying stocks, we’re now including the dividend yield (annual dividend rate divided by the current share price) in the basic information we present for each company we analyze....

Three new wireless providers (Globalive, DAVE Wireless and Public Mobile) will probably enter the Canadian market next year. This will undoubtedly put pressure on Canada’s three existing wireless carriers, including Telus. However, Telus has dealt with strong competition from wireless and cable companies for years. For example, last year it launched Koodo, a new discount cellphone service, to attract younger users. The company has also upgraded its networks to handle a wider variety of cellphones, including Apple’s hugely popular iPhone. New TV services should also help Telus hang on to many of its traditional phone and wireless customers. Moreover, Telus’s high dividend yield should attract more investors as income trusts convert to corporations, or cut their distributions once Ottawa starts taxing them in 2011....

The Webb Enhanced Income Fund is a mutual fund whose portfolio mainly consists of large-capitalization stocks. It also holds some income trusts and bonds. Resource shares make up the largest component of its stock holdings, at 41%. The fund lost 26.5% in the year ended June 30, 2009, compared to a loss of 29.6% for the S&P/TSX Index. The fund pays a $0.05 monthly distribution, which gives it an 8.2% yield based on the current unit price. The Webb Enhanced Income Fund aims to increase its returns by writing call options. Call-option holders have the option to buy the underlying shares from the fund at a specified price. The fund earns a premium on the call option, whether or not it’s exercised. The problem with covered-call writing is that you have to hold the stocks on which you’ve sold calls, even when prices drop; if you sell those stocks, your calls are no longer “covered”, and you expose yourself to far more risk. But when the market rises, call holders exercise their calls and you have to sell your stocks at a fixed price. In other words, if it goes down, you have to hang on; if it goes up, you have to sell. In addition, regardless of market trends, you pay a heavy toll in brokerage commissions. These eat away at your capital....

One of the most concrete things about an investment is its dividend yield — the percentage you get when you divide its current yearly dividend payment by its price. It’s an indicator we pay especially close attention to when we select stocks to recommend in our Canadian Wealth Advisor newsletter. But yield, high yield especially, can give you a false sense of security. Investors in high dividend stocks have a natural tendency to think that all investment income is nearly as safe and predictable as bank interest. In fact, investment income can dry up in a heartbeat. Companies are sometimes unable to honour their commitments, and they sometimes spring the bad news on you with no warning. Rather than a sign of a bargain, high yield may be a danger sign. It may mean insiders are selling and pushing the price down. A falling price makes yield go up (because you use the latest dividend to calculate yield). When an investment does cut or halt its dividend, its yield collapses....

Although stock markets have rebounded lately, they remain sharply lower than their 2008 highs. Likewise, the economy has shown some signs of life, but it remains in recession. In these times of market turbulence, it’s easy for investors to panic and make mistakes. Here are three common ones: ...

Here are four classic, profit-killing errors that all investors make from time to time. All can seriously hinder your stock market returns. 1. “Averaging down” without reconsidering whether you should have bought in the first place. Many investors have made lots of money by “averaging in” to the stock of a well-established, well-managed company — that is, buying more as funds became available over a period of years....

Canada’s telephone companies face growing competition from cable companies and Internet-based phone services. New entrants in the wireless industry will also push the established wireless companies to cut their rates. We feel these four telecom companies will continue to dominate their markets. Steady cash flow from their traditional phone businesses will help them invest in new growth areas, like wireless, and maintain their high dividend yields. BCE INC. $24 (Toronto symbol BCE; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 803.1 million; Market cap: $19.3 billion; Price-to-sales ratio: 1.1; SI Rating: Above Average) has over 7.5 million telephone and Internet customers in Ontario and Quebec. It also has 6.5 million wireless subscribers across Canada....

At times like this, when deciding what to do with your portfolio, you should resist the urge to dump high-quality investments just because you think they may get dragged down by a further decline in the market. After all, when things look bleakest (as they do today), the market often turns around and begins rising. That’s especially true of high-quality stocks that offer lots of hidden value and high yields. Keep this in mind when contemplating the unsettling outlook for Canadian bank stocks. The banks are a mainstay of the Canadian economy. Their slide since mid-2007 provides a powerful buying opportunity. But fed-up investors may wind up dumping these stocks just when prices and risk are near a low....

One of the best ways to find bargain stocks is to look for undervalued stocks that have “hidden assets”. These are assets that attract far less investor interest that they deserve. That gives the buyers of these undervalued stocks a bargain. It may also attract takeover bids. If these hidden assets were sold, spun off, or utilized more efficiently, they could greatly increase the value of the undervalued stocks that hold them. One great example of such undervalued stocks is Torstar Corp. TORSTAR CORP. $11 (Toronto symbol TS.B; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 78.9 million; Market cap: $867.9 million; SI Rating: Above average) publishes The Toronto Star, Canada’s largest daily newspaper. It also publishes other dailies and community newspapers in Southern Ontario. Newspapers account for 70% of Torstar’s total revenue. The remaining 30% comes from wholly owned subsidiary Harlequin Enterprises Ltd., the world’s largest publisher of romance novels (putting Torstar Corp. in the category of undervalued stocks)....

3M COMPANY $69 (New York symbol MMM; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 669.0 million; Market cap: $46.2 billion; WSSF Rating: Above average) is one of the world’s largest industrial companies and is an example of the kind of blue chip stocks that can pay off for investors. It makes over 50,000 products in six main areas: Industrial and Transportation (30% of revenue); Health Care (16%); Display and Graphics (16%); Consumer and Office (14%); Safety, Security and Protection (13%); and Electro and Communications (11%). Major brands include Post-it notes, Scotch tape, Scotchguard protection and Thinsulate insulation. Like many of our favourite blue chip stocks, the company’s broad product base cuts its reliance on a single industry or customer. It also sells its products in over 60 countries, which limits its exposure to a single geographic area. Overseas sales now account for about two-thirds of 3M’s sales. ...