Dividend Yields at All-Time Highs

Market volatility is causing a sell-off in equities around the world. A combination of panic-selling from retail investors, margin calls, and forced redemptions is continuing to push stock prices lower and lower.

Pushing stock prices lower has the effect of raising the yield on their dividends, which are listed on a dollars per share basis. We're seeing the dividend yields on some large-cap dividend-paying names reach extremely attractive levels, and we're reaching out with this opportunity.

Dividend Yields

Below are the share prices and dividend yields we're seeing on some of the companies we like to include in our core holdings:

Source: Thomson ONE, March 12th

To those who follow this market closely, these numbers (an average yield of 7.1%) are pretty remarkable. Our rule of thumb is that these stocks present good value when dividend yield creeps above 4%. Now we're seeing yields that approach or exceed all-time highs, and beyond anything we have seen since the global financial crisis of 2008.

An important thing to consider is that dividend yields from Canadian companies are tax advantaged. The size of the tax advantage depends on which tax bracket the investor is in, but is significant for all Canadian tax-payers.

Two Portfolio Options

Below are two model portfolio options that we strongly recommend our clients consider:

Leveraged Portfolio: For those with access to affordable credit.

Cash Portfolio: For those with excess cash on hand and want more cash flow than traditional fixed-income investments provide.  

A note of caution: these proposed portfolios do not provide guarantees of positive performance or capital preservation. Clients considering this strategy need to maintain a long-term investment strategy and must be willing to accept above-average volatility for the near term.

For more information on this opportunity or to discuss your portfolio, reach out to us at 604.643.0101.

Disclaimer: Canaccord Genuity Corp. is a member of the Investment Industry Regulatory Organization of Canada (IIROC) and Canadian Investor Protection Fund (CIPF). The comments and opinions expressed in this commentary are solely the work of the Cash Management Group and Andrew Johns.