I thought it would be interesting to write an article as a Halloween special. Happy Halloween to all — no matter if you’re going around to collect candy, handing out candy, or enjoying some chocolate yourself.
A stock having one of the following traits is bad enough. Having all of them will make it the scariest stock in the world…
A poor balance sheet
If a company has tonnes of debt on its balance sheet, it could become insolvent. Avoid stocks with excessive debt. What is excessive? It’s normal for certain industries or sectors to have high debt levels. So, the best thing to do is to compare the debt levels of a company you’re interested in with those of its peers. For example, utilities and real estate investment trusts (REITs) typically have higher levels of debt.
Dividend investing can be a perfect way to earn passive income. I started this blog years ago, intending to earn passive income from dividend stocks. That’s why I chose the domain name passive-income-earner.com. However, I wasn’t investing for passive income initially.
I failed to set the criteria for passive income investing — something like the following. First, the dividend stock should provide a sufficient yield. Second, the business cannot be so volatile that there’s a chance of a dividend cut. Third, the stock should allow you to sleep well at night.
Does the dividend stock have a big enough yield?
Some dividend stocks, even though, they’re backed by quality businesses, are not good for passive income. For example, Canadian Pacific Railway (TSX:CP)(NYSE:CP) yields only 0.8%. The best five-year GIC rate is going for 2.3%. So, I would require a dividend stock with a yield of at least 3% for passive income.
Happy Thanksgiving Day, Canadians! Our American neighbours will be celebrating Thanksgiving on November 25. This is due to Thanksgiving was originally set for celebrating good harvest and since Canada is more up north, Canadian farmers would harvest sooner.
While enjoying stuffed turkeys, it’s a good time to reflect on things we’re grateful about. In terms of dividend stocks, I’m thankful to have the following holdings in my portfolio. I also want to thank you for reading this blog. :3
I used to trade in and out of stocks, looking for quick profits. More recently, I was able to refrain from selling my Fortis (TSX:FTS)(NYSE:FTS) stock even though I knew it was fully valued at the time. The thing about investing is there’s no absolute right or wrong answer. The path is only clear in hindsight.
I remember last time I traded out of Fortis stock, it did pull back. But eventually, it worked its way steadily higher. That’s the type of business it is. If you’re looking for a dividend stock that will increase its dividend year after year, Fortis is a solid pick, as a regulated utility that earns stable and predictable returns.
I’m thankful that Fortis stock remains a part of my dividend portfolio. And if it becomes cheap enough again, I’ll pick some more shares up if I have excess cash. It’s the kind of dividend stock that doesn’t require much monitoring.