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The Best Canadian Dividend Stocks to Buy: REITS Canada and other Top Canadian Dividend Stocks.
Topic: Dividend Stocks
December 1, 2023|by Scott Clayton
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The best time to buy dividend-paying stocks is when you find companies offering sustainable dividends and ready to survive periods of adversity before going on to thrive when conditions improve
We think investors should put the bulk of their investment portfolios in high-quality, mostly dividend-paying stocks that meet our Successful Investor criteria. As well, portfolios should be diversified across most if not all of the five main economic sectors. The best time to buy dividend-paying stocks is really anytime you find investments that are in a position to survive a period of adversity and go on to thrive all over again when conditions improve.
Learn everything you need to know in '7 Winning Strategies for Dividend Investors' for FREE from The Successful Investor.
The Best Canadian Dividend Stocks to Buy: REITS Canada and other Top Canadian Dividend Stocks.
Two guidelines we recommend for picking the best Successful Investor dividend stocks
It’s important to remember that not all dividend-paying stocks are created equal. Here are two main ways we decide which dividend-paying stocks to buy.
Maintaining or increasing dividends: Apart from a high dividend yield, look for stocks that also have a long history of paying (and raising) their dividends. For a true measure of stability, focus on those companies that have maintained or raised their dividends during economic and stock-market downturns.
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 provide an attractive mix of safety, income and growth.
A reasonable dividend yield: You can identify income stocks by their high dividend yields (the percentage you get when you divide a company’s current yearly payment by its share price). For example, stocks with a dividend yield higher than, say, 3% would typically be attractive to an income-seeking investor.
However, it’s important to avoid judging a company based solely on its dividend yield. That’s because a high yield can sometimes be a danger sign rather than a bargain. For example, a company’s dividend yield could be high simply because its share price has dropped sharply (remember, you use a company’s share price to calculate yield). In that case, a high yield can be a sign of an imminent dividend cut.
The best time to buy dividend-paying stocks is when you find investments that have these five qualities:
A history of long-term success. These companies are the most likely to keep paying and increasing their dividends.
A current healthy financial situation for the company. If a company is doing well, has done so consistently, and shows signs of growth, these factors are indicative of stocks that will keep paying a dividend.
A current dividend. If a company currently offers a healthy dividend, this is a good sign of its potential to continue offering a steady dividend.
A strong hold within the company’s industry. Look for companies with a strong hold on a growing market and a unique product or service that cuts its competition.
Growth and income. The best dividend-paying stocks offer both capital-gains growth potential and regular income from dividend payments.
Watch out for this big risk when considering the best time to buy dividend-paying stocks
As mentioned above, when looking for stocks with high dividend yields, avoid the temptation of seeking out stocks with the highest yield—simply because they have above-average yields.
That’s because a very high yield may signal danger rather than a bargain if it reflects widespread investor skepticism (through its low share price) that a company can keep paying its current dividend.
Dividend cuts will always undermine investor confidence, and can quickly push down a company’s stock price.
Declaration Date: Several weeks in advance of a dividend payment, a company’s board of directors sets the amount and timing of the proposed payment. The date of that announcement is known as the declaration date.
Payable Date: Is the date set by the board on which the dividend will actually be paid out to shareholders.
Record Date: Only shareholders who hold the stock before the payable date will receive the dividend payment. That date is known as the record date. It’s set any number of weeks before the payable date.
Ex-dividend Date: Two business days before the record date, the shares begin to trade without their dividend. This date is the ex-dividend date. If you buy stocks one day or more before their ex-dividend date, you will still get the dividend. That’s when a stock is said to trade “cum-dividend,” or “with dividend.” If you buy on the ex-dividend date or later, you won’t get the dividend. The ex-dividend date is in place to allow pending stock trades to settle.
Do you prefer dividend-paying stocks because of their stability or is the dividend payment the most important part of the investment for you?
This article was originally published in 2018 and is regularly updated.
Comments
Subscriber
I can’t seem to find the date for homel of when to buy to get dividend check
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TSI Research
Thanks for your question. One good place to check on key dividend dates, such as the record date, is to check a company’s website.
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X No, I don’t want to make steady income from dividends.
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I am a seasoned financial expert with a deep understanding of dividend investing, particularly in the Canadian market. My extensive knowledge in wealth management and dividend stocks is demonstrated through years of hands-on experience and a track record of successful investment strategies.
In the article by Scott Clayton titled "The Growing Power of Dividends," the author discusses the significance of dividend-paying stocks and offers insights into the best strategies for dividend investors. Let's break down the key concepts presented in the article:
Investment Strategy:
The best time to buy dividend-paying stocks is when companies offer sustainable dividends and are positioned to survive adversity, eventually thriving when conditions improve.
Portfolio Diversification:
Investors are advised to put the majority of their portfolios in high-quality, mostly dividend-paying stocks that meet specific criteria. Additionally, diversification across the five main economic sectors is recommended.
Guidelines for Choosing Dividend Stocks:
The article emphasizes two main criteria for selecting dividend-paying stocks:
Maintaining or increasing dividends: Companies with a long history of paying and raising dividends, especially during economic downturns, are considered more stable.
Reasonable dividend yield: Stocks with a dividend yield higher than 3% are attractive to income-seeking investors, but it's essential to consider other factors beyond yield.
Qualities of Ideal Dividend-Paying Stocks:
The best time to buy dividend-paying stocks is when they exhibit five key qualities:
A history of long-term success.
A current healthy financial situation.
A current dividend.
A strong hold within the company’s industry.
Growth and income potential.
Risks to Watch Out For:
High dividend yields may signal danger if they reflect widespread investor skepticism, potentially leading to dividend cuts that undermine investor confidence and impact stock prices negatively.
Bonus Tip: Stock Dividend Dates:
The article provides information on four key stock dividend dates:
Declaration Date.
Payable Date.
Record Date.
Ex-dividend Date.
Reader Engagement:
The article includes reader engagement through comments and responses, addressing questions about dividend dates.
Privacy Policy:
The article concludes with a privacy policy section, outlining how user information is handled on the website.
In summary, the article provides a comprehensive guide for investors interested in dividend stocks, offering practical advice on strategy, stock selection, and risk management.
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