Category Archives: Dividend Tips

Dividend Yield Explained Simply: What’s a Good Dividend Yield?

If you’re new to dividend stock investing, you’d want to wrap your head around what a good dividend yield is. In this video, I’ll use real-world examples, including Johnson & Johnson (NYSE:JNJ), Apple (NASDAQ:AAPL), General Electric (NYSE:GE), and Simon Property Group (NYSE:SPG).

Overview

Graphic showing that dividend income can be used for vacations, retirement, and paying for bills and mortgage.

You’re probably interested in investing in dividend stocks if you’re here to learn about dividend yields and want to know what a good dividend yield is.

I’ll first explain what a dividend yield is, and what affects it. Then, I’ll follow with a super simple example as well as real-life examples, introducing some safe dividend stocks and their dividend yields.

Second, I’ll explain the difference between dividend yield and yield on cost and why they’re relevant to investors. 

Third, I’ll give examples on what makes a good dividend yield, as you may be wondering if, say, a 5% yield is better than a 2% yield. I can tell you right off that that it’s not always the case. 

Finally, I’ll recap the key takeaways at the end.

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3 Top Dividend Stocks For February 2020

Summary

  • Restaurant Brands, Nutrien, and Simon Property are undervalued.
  • They offer decent yields of about 3-6% and long-term total returns potential that’d beat the market.
  • Returns will come from dividends, growing profitability, and valuation expansion over the long run.

Are you looking for dividend stocks to generate some nice passive income and market-beating long-term returns? Let’s get some insight from Peter Lynch. 

Are you looking for dividend stocks to generate some nice passive income and market-beating long-term returns? Let’s get some insight from Peter Lynch. 

He’s the incredible mutual fund manager who returned about 29% per year for his investors between 1977 and 1990 — essentially, transforming a $10,000 investment into about $280,000 over 13 years.

Source: Author

Lynch is also the author of The New York Times bestseller, One Up on Wall Street.

One of his famous quotes is

Invest in what you know.

So, what do we know? We come into contact with many companies every day. For example, in the past week, you might have gotten a quick bite at Burger King, Tim Hortons, or Popeyes Louisiana Kitchen and notice that the quick-service restaurant was buzzing with people.

This triggers you to do more research and realize that these franchises are actually all under the same company, Restaurant Brands (TSX:QSR)(NYSE:QSR).

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Fortis (TSX:FTS) Stock: Is It a Buy?

Fortis (TSX:FTS)(NYSE:FTS) stock is as stable as stocks go. It’s perfect for conservative and risk-averse investors. Its predictable profitability has allowed it to be one of two Canadian Dividend Aristocrats with continuous dividend increases for 46 years or longer.

Dividend Safety

Fortis stock has a 10-year dividend growth rate of about 6%. The top North American utility is so confident about its growth that it already announced its intention to continue increasing its dividend at an average annual growth rate of 6% through 2024.

Its payout ratio has been at about 70%, and that’s not about to change.

Predictable Business & Profitability

Fortis has 10 utility operations diversified across Canada, the U.S., and the Caribbean. It’s a regulated utility with a focus on electricity/natural gas transmission and distribution assets and highly predictable earnings.

Thanks to management’s excellent decisions in making strategic U.S. acquisitions: Central Hudson (in 2013), UNS Energy (in 2014), and ITC Holdings (in 2016), especially when the loonie was super strong against the greenback in 2013 and 2014, Fortis has greatly diversified its operations and now earns about 65% of its earnings from the U.S.

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