Someone asked me how you can find high paying dividend stocks. This post is a guide to looking into Canadian dividend stocks with a yield of 8% or higher and seeing if any of them are potential good investments. First off a good starting point is the TSX stock screener that let’s you find stocks that match certain criteria. I searched all Canadian stocks that have dividend yields between 5% and 50%. Then I sorted the list by dividend yield and wrote down each stock with a yield of 8% or more. Here is the result:
MCM.A, MCS, CBL, TZS, WED, DGS, CJR.B, MKZ.UN, FTN, LCS, FFN, BSO.UN, HFC.PR.A, MMP.UN, LND, ELC, LBS, DC.PR.B, F.UN, DFN, CCI.UN, PDV, INC.UN, DS, DC.PR.D, BK, GXO, EIT.UN, KWH.UN, BGI.UN, HOT.UN, PRM, CCZ.PR.A, SOT.UN, PEGI, TMC, XTD, AD, ERE.UN, FGX, PRV.UN, CJ, BTB.UN, TNT.UN, MTG, SKG.UN, AFCC, DE, ALA, EFN.PR.E, SRT.UN, JE, FAP, CWX, SBC, EFN.PR.A, SIN.UN, PAR.UN, BIR.PR.A, IVQ.U, TXT.UN, EFN.PR.C, MKP, EFN.PR.G, AZP.PR.A, BNE, DR, MR.UN, ESI, HGI.UN, EFN.PR.I, ENF, SAT, NXR.UN, BBD.PR.D, RNW, SNI.PR.A, INO.UN, BBD.PR.C, PTG.
It’s a long list of 80 stocks. I quickly went through them and removed all of then that were either funds, split share corporations, in the process of winding up or no longer existing. This resulted in:
MCM.A, MCS, CBL, WED, CJR.B, HFC.PR.A, LND, ELC, DC.PR.B, DC.PR.D, GXO, KWH.UN, HOT.UN, CCZ.PR.A, SOT.UN, PEGI, AD, ERE.UN, PRV.UN, CJ, BTB.UN, TNT.UN, AFCC, DE, ALA, EFN.PR.E, SRT.UN, JE, CWX, EFN.PR.A, PAR.UN, BIR.PR.A, IVQ.U, EFN.PR.C, MKP, EFN.PR.G, AZP.PR.A, BNE, DR, MR.UN, ESI, EFN.PR.I, ENF, SAT, NXR.UN, BBD.PR.D, RNW, SNI.PR.A, INO.UN, BBD.PR.C, PTG
This is a slightly less long list of 51 stocks. I am further going to remove MCM.A, MCS, ELC, GXO, CJ and BNE as they are in mining and oil which though they may be a good investments are not stable enough to be dependable dividend payers. I will remove CBL as it may be going private. I will further remove HFC.PR.A, CCZ.PR.A and ERE.UN as they are either too new, small or risky. I will also remove PRV.UN as seems to pay out more than it earns. This gives 40 stocks to choose from:
WED, CJR.B, LND, DC.PR.B, DC.PR.D, KWH.UN, HOT.UN, SOT.UN, PEGI, AD,BTB.UN, TNT.UN, AFCC, DE, ALA, EFN.PR.E, SRT.UN, JE, CWX, EFN.PR.A, PAR.UN, BIR.PR.A, IVQ.U, EFN.PR.C, MKP, EFN.PR.G, AZP.PR.A, DR, MR.UN, ESI, EFN.PR.I, ENF, SAT, NXR.UN, BBD.PR.D, RNW, SNI.PR.A, INO.UN, BBD.PR.C, PTG
If you wish you can then further investigate these to determine if any look promising. I will just highlight a few I find interesting. Firstly I currently own DC.PR.B and TNT.UN. I think these are good choices that can afford their high yields. I also like Alaris Royalty (TSE:AD) as a potential investment. It’s a business royalty company that gives money to medium sized private companies in exchange for a sales royalty. I remember this used to be a darling company that every fund manager used to talk about. Looking at the stock chart we can see it used to trade above $36 at one point when everyone was talking about it, but now it trades for around $16.50. Looking at the yearly results from 2017 it seems to earn more in cash flow than it pays in dividends so the yield should be sustainable. I have found one possible reason for the current dip in the share price. SCITI trust (TSE:SIN.UN) is closing down and Alaris happens to be it’s largest holding. The closing of the trust will cause it to sell all of it’s shares which will cause a temporary headwind for the stock but then it should recover after it’s complete. In my opinion this makes Alaris a good buy on both a short term and long term basis.
Disclosure: I own DC.PR.B and TNT.UN and may purchase AD in the near future