Tag Archives: NYSE:RY

How To Choose Stocks For Your Defensive Dividend Portfolio

The U.S. market has been led by the bull for pretty much 10 consecutive years. So, it’s better to take a more defensive stance to prepare for attacks from the bear. A core component of a defensive portfolio is it can utilize conservative dividend stocks as its foundation.

Here are some tips for choosing your foundation conservative dividend stocks.

Earnings or Cash Flow Stability

Healthy dividends are paid from earnings or cash flow. So, stable earnings or cash flow generation improve the dividend safety of a stock.

Typically, utilities, REITs, the big Canadian banks, the big Canadian telecoms, and energy infrastructure stocks are good places to search for businesses that generate stable earnings or cash flow.

Dividend Safety

When checking for dividend safety, the first 2 things to look at are the payout ratio and dividend track record of the company. Typically, the lower the payout ratio, the safer the dividend.

However, certain industries like REITs and utilities tend to have higher payout ratios. So, it’s best to compare a company’s payout ratio to that of its industry peers.

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This Stock Market Correction Is Triggered By These Reasons

Market corrections are scary. And who knows if this market correction will turn into a market crash with all the uncertainties in the global economies … Brexit, trade tensions, global growth slowdown, etc.

A Quick Overview on Global Economies

The European countries’ economies look like it could be falling apart with the unemployment rates in France, Italy, and Spain sitting at about 9%, 15%, and 10%, respectively.

Gross domestic product (“GDP”) is a monetary measure of the market value of all the final goods and services produced in a period of time.

Here’s a comparison of the 2017 GDP of the 3 countries:

2017 GDP of Spain, Italy, and France in a line graph

Germany and the U.K. are doing OK with recent unemployment rates of +3% and +4%.

2017 GDP of France, the U.K., and Germany in a line graph

Note that the combined 2017 GDPs of Germany, the U.K., France, Italy, and Spain was about 10.8 trillion, which was about 56% of the U.S.’s GDP. Still, if Europe’s economy falters, there’s going to be a ripple effect. Read More

Benefit from Rising Interest Rates with the Big 5 Canadian Banks

This is a guest contribution by Nick McCullum of Sure Dividend. Sure Dividend uses The 8 Rules of Dividend Investing to identify high-quality dividend stocks suitable for long-term investment.

The Big 5 Canadian banks offer great dividends and the stocks look poised for steady long-term growth if interest rates continue to go higher.

This article will discuss:

  • why we think interest rates in North America are going higher,
  • 5 actionable investment ideas that allow investors to benefit from rising interest rates, and
  • why the banks will benefit from rising interest rates

Interest Rates Are Heading Higher

In both Canada and the United States, the trend is clear: interest rates are on their way up after a prolonged period at near-zero benchmark rates.

In July, the Bank of Canada raised its benchmark interest for the first time since 2010. While the bank did not communicate any concrete plans for future rate hikes, it is likely that more are coming.

Graph of Bank of Canada Overnight Money Market Financing Rate from 1975-2017

Source: YCharts

In the United States, the trend is even more clear.

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