Tag Archives: TSX:NA

3 Simple Tips to Build a Safe Dividend Income

Do you want a dividend income stream that will increase every year? Here are some simple tips to check for the dividend stocks you’re interested in. The order to check matters because if the dividend stock doesn’t pass checkpoint one, it’s out. 

Don’t slip up. You can keep your dividend income safe by following these 3 simple tips!

Does the dividend stock have a track record of dividend payments?

Notably, this checkpoint allows dividend stocks that have a track record of maintaining or increasing their dividends to pass. Though we prefer stocks to increase their dividends every year, we understand that sometimes the macro environment forces stocks to freeze their dividends. It is a great feat to even maintain dividends during stressful times. 

For example, to be prudent, the regulators forced the big Canadian banks to freeze their dividends around the time of the last financial crisis in 2009 and 2010. Once again, the regulators forced the banks to freeze their dividends. Even the best of the bunch, National Bank of Canada (TSX:NA) has maintained the same quarterly dividend for seven consecutive quarters so far, whereas prior to the pandemic, it increased dividends every two quarters. 

Again, the dividend freeze is no fault of the big banks. National Bank has maintained or increased its dividend every year since at least 2002. Now, that’s a track record!

Depending on your comfortability, you might seek dividend stocks that have maintained or increased dividends for at least five, 10, 15, or 20 years. 

If a dividend stock hasn’t made consistent dividend payments for at least five consecutive years, it’s out. The five-year test would include the stressful pandemic period that we’re experiencing, which is a decent test of resilience/defensiveness for a dividend stock.

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Did You Do Dividend Stocks Christmas Shopping?

While you’re shopping for gifts for family and friends, don’t forget to shop for quality dividend stocks that are on sale as well. These dividend stocks could be the ultimate gift for yourself, your children, and or grandchildren because the best dividend stocks paid dividends for decades and are likely to pay more dividends for decades to come!

dividend stocks Christmas shopping

Canadian Banks On Sale

Just on Monday, we saw Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) yielding 5%. This is one solid Canadian bank that has paid dividends since 1832. In fact, it has even increased dividends for 43 out of the last 45 years. (I think shareholders would forgive that it froze dividends instead of cutting them in 2009 and 2010 due to being cautious about the financial crisis.)

Even now, after Bank of Nova Scotia rebounded about 2.6% to the $57 level, it’s still a good buy for long-term investment. It yields 4.9%, and its fair value one year from now is around $73, based on its long-term historical multiple. This implies the bank’s shares are about 20% off.

Another bank that’s on sale is National Bank of Canada (TSX:NA). Similar to the Bank of Nova Scotia, National Bank of Canada pulled back to levels that yielded a high yield of 5.4%.

By Wednesday, it has rallied about 2% to $41. It still yields 5.3%, which is a good deal for the sixth largest bank of Canada. Its fair value one year from now is around $51. This implies the bank’s shares are also about 20% off. Read More