A dividend is a distribution of a part of a company’s profits to a certain class of dividend-paying shares. A dividend-paying share is a stock that pays a certain amount of money to every shareholder for each share they hold. A dividend is usually a small fraction of the share price, which means that the amount of dividend paid off can be written as a fraction of the share price. A shareholder is entitled to receive a dividend on a stock they hold if they don’t sell it before the dividend payout date. Some online trading platforms offer dividend reinvestment plans (DRIP) which automatically reinvests dividend into more shares.
The board of directors of a company decides what shares are dividend-paying before the shares are issued. Once the shares are issued, investors can buy those shares to receive a dividend. Depending on the type of share, the shareholder may have a right to vote at the shareholders' meeting or they may not have the right to do so. Before the dividend is paid out to the shareholders, the dividend must be approved by the board of directors. Once the board of directors votes for issuing a dividend, the dividend will be paid out to each share. A stock with a track record of consistently increasing its dividend also has had a track record of positively affecting the net worth of its holders.
It is important to note that a dividend-paying stock has two ways of providing income to the shareholder. First, it pays a dividend that may be consistent or growing over time. In addition to that, a dividend-paying stock changes in price depending on the news and market sentiment, which means that the shareholder may also realize capital gains or capital losses depending on the price of the share at the time of sale. The price of a dividend-paying stock may change, which means that the total return on a dividend-paying stock will not only be affected by the dividend yield but also by the price growth of a share. For example, if a stock paid $10 in dividends and increased in value by $5, then the shareholder made $15 while holding the stock. On the other hand, if a stock paid $10 in dividends but decreased in value by $15, then the shareholder lost $5 even though they received dividend payments. This means that not every stock with a high dividend yield is a good pick because the value of the share may decrease more than the dividends yield.
Many shares do not have a fixed dividend. Usually, the dividend is calculated and voted on by the shareholders, which means that if there is not enough money earned, there may be a dividend cut later on. A dividend cut may lead to a lower price of a share. Because of the lower price, the dividend yield may look high temporarily, but it will decrease once the dividend cut is announced. Any investment comes with a certain risk, and dividend-paying stocks are no different. It is important to make sure that your investments are in line with your risk tolerance and investment goals. Risk can be divided into general market and specific (issuer) risks. General market risk is not avoidable if you are invested in the market. But specific risks can be reduced by diversification. Self diversification can be very costly but using an instrument like one of the best Canadian ETFs or one of the best Canadian mutual funds enables cost-effective diversification. If you are specifically interested in dividend investing, you can see a list of Canadian ETFs with the highest dividend yield.
The information about the stocks has last been updated on June 18th, 2022.
A high-dividend stock does not mean that it is a good investment. It is important to be aware of the business activities and risks involved in investing in that type of business before buying their stock. The following list provides 20 stocks and ETFs with some of the highest dividend yields currently available.
This split share fund focuses on investing in large-cap Canadian equities with strong underlying business fundamentals. This fund is operated by Brompton Funds which was founded in the year 2000. Currently, they look after multiple ETFs, split share funds, and other products traded on Toronto Stock Exchange (TSX).
Dividend Growth Split Corp. is a diversified fund that has one of the highest dividend yields available on TSX. It is a well-diversified fund with the top 5 sectors it is invested in are: Financials (23.8%), Energy including Canadian oil stocks (18%), Industrials (10.6%), Communication Services (9.7%), and Utilities (8.2%). The diversification of the fund makes it relatively safe compared to single stocks, but the high dividend yield may be of concern for some investors.
Financial 15 Split Corp. is a fund that consists of 15 high-quality financial companies that are located in Canada and the US. It has demonstrated an above-average long-term performance as well as dividend yield growth. The shares of the companies held by this fund include the Canadian Imperial Bank of Commerce (CIBC), Royal Bank of Canada (RBC), Bank of America, JP Morgan Chase & Co., and others.
This fund is operated by Quadravest Capital Management Inc. which was founded in 1997. This firm is an investment management firm that creates and manages enhanced yield products. They have 13 funds that focus on a variety of markets in isolation as well as diversify among different sectors.
Canadian Banc Corp. is another fund that is managed by Quadravest Capital Management Inc. This fund consists of 6 large Canadian bank stocks: Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, National Bank of Canada, Royal Bank of Canada, and Toronto-Dominion Bank. The holdings of the fund offer long-term capital appreciation and an attractive dividend yield. It is not as diversified as the previous funds discussed, but it is still diversified better than a single stock. It represents the banking sector in Canada as a whole, which means that it is likely to grow as the banking sector in Canada grows and shrinks when the banking sector in Canada shrinks.
This fund is composed of 15 companies that pay a monthly dividend. It is designed to provide a steady dividend income using high-quality investments. Similar to the previous two investments, this fund is managed by Quadravest Capital Management Inc. Dividend 15 Split Corp. includes different sectors, but it is mainly composed of financial, utility, and telecommunication companies. Some of the companies held in the fund include Bank of Montreal, Bank of Nova Scotia, Enbridge Inc., Manulife Financial, and TELUS Corporation. The original objectives of this fund are to provide a target of 8% in yearly dividend yield and terminate the fund and distribute the proceeds to the shareholders on December 1, 2024.
Life & Banc Split Corp. is another fund that is managed by Brompton Funds. This is an approximately equally-weighted portfolio that contains Canada’s four largest life insurance companies as well as the six largest banks. This fund has a proven record of delivering strong and positive returns. Due to the low competition in Canada, the life insurance companies and large banks have a preferable position in the market. It also contains companies that offer a high yield, which means that this fund provides an opportunity to invest in a diversified portfolio with a high dividend yield. This fund also provides leveraged exposure to the companies held in the portfolio, which may lead to an enhanced capital appreciation, but it comes at a higher risk.
This fund’s main objective is to replicate and amplify by x1.25 performance of Solactive U.S. Covered Call ETFs Index TR (SOLUSCCT), which is composed of equal weightings of 7 higher-yielding U.S. covered call ETFs. The composition of different ETFs is broadly similar to the S&P 500, which means that it moves closely with the S&P 500 index. This fund is designed for people who are looking to receive a monthly dividend income in either Canadian or US dollars.
Hamilton Enhanced U.S. Covered Call ETF is managed by Hamilton ETFs, which was founded in 2009. This is a relatively new investment company, but it already has nine different funds that focus on the multi-sector and financial sector in particular.
CI Tech Giants Covered Call ETF is a fund that mostly focuses on the technology sector with a little bit of telecommunications. The covered call strategy tends to be suitable for conservative investors because it allows them to receive a regular income stream through dividends and have a stable capital appreciation over time. It is a professionally managed covered call, which means that there is a degree of downside protection, which single stocks or ETFs may not have.
This fund is managed by CI Global Asset Management, which is one of Canada’s largest investment management companies with over 100 investment professionals with extensive expertise in different sectors. They provide tradable investment solutions, and investor and advisor services, and offer expert insights into capital markets.
Global Dividend Growth Split Corp. is another fund that is managed by Brompton Funds, and this is an actively-managed portfolio of large-capitalization dividend growth companies that are operating around the world. The fund claims that dividend growers outperform the broader global equity markets with lower volatility, which means that this is a well-diversified fund of high-quality companies that may outperform the broad market. This is also a global fund, which means that Canadians will have an opportunity to diversify their investments with markets that are underrepresented in Canada. This is a well-diversified portfolio that includes 12 sectors. The top 5 sectors included in the fund are as follows: Healthcare (19.5%), Information Technology (15.0%), Consumer Staples (10.5%), Financials (10.1%), and Materials (8.5%).
Labrador Iron Ore Royalty Corporation is a Canadian public company that holds ownership in ore-producing and processing companies. This company receives royalties from the Iron Ore Company of Canada (IOC). IOC is one of the largest ore-producing companies in North America. They are producers and exporters of premium iron ore pellets as well as high-grade concentrate. Their operations are mostly concentrated in Labrador City, Newfoundland, and Labrador.
Parkland Corporation is an independent supplier of fuel and petroleum products, and a leading convenience store operator. This company owns the brands like Chevron, Esso, On the Run, and many others. Parkland supplies petroleum products to individuals as well as businesses. Apart from owning gas stations, Parkland also delivers gas to companies when needed. This company also owns a chain of convenience stores that are located all around Canada. This is a large-capitalization company with some diversification in its business activities. On the other hand, it is still a single company, and a stock of a single company is usually less diversified than an ETF or a fund.
This index fund is trying to replicate a 1.25 times multiple of the performance of the Solactive Canadian Core Financials Equal Weight Index. To achieve this performance, this fund holds the equities of the companies that are held in the target index fund and writes covered call options on up to 33% of the stocks in the portfolio. The extent of the options used may change and depends on volatility and market conditions.
Evolve Canadian Banks Index Fund is managed by Evolve ETFs that have over $2 Billion in assets under management. Their ETFs provide investors with access to long-term investment themes, index-based income strategies, and some of the world’s leading investment managers.
E Split Corp. is a fund that holds only shares of Enbridge Inc., which is a leading North American company that builds pipelines and processes and distributes oil and gas. The objective of this fund is to provide monthly dividend distributions to the shareholders and provide an opportunity for capital appreciation through exposure to the portfolio.
Harvest Diversified Monthly Income ETF is built to provide consistent monthly income in a form of a dividend while holding a well-diversified portfolio. This ETF is an equal-weight basket of 5 of Harvest’s equity income ETFs. This is a multi-sector portfolio capturing a large and diverse set of high-quality companies.
This ETF is managed by Harvest Portfolio Group, which was founded in 2009 after the financial crisis in 2008.
Brompton Split Banc Corps. is a fund that focuses on big Canadian banks and is managed by the Brompton Funds. This fund has outperformed S&P/TSX Composite Fund by 96% on a return compounded over the past 10 years. In addition to that, the dividend income has more than doubled in the same period. This fund also provides an opportunity for potential capital appreciation due to the leverage used in the portfolio.
This fund holds the largest Canadian banks with equal weights. The composition of the portfolio is as follows:
Fiera Capital Corporation is an asset management firm with $174.5 billion in assets under management. They provide investment solutions that include a multi-market composition of private and public equities to institutional investors, financial intermediaries, and private wealth management clients across North America, Europe, and Asia. For the most part, Fiera Capital Corporation works with institutional investors (52%) and financial intermediaries (40%). Only 8% of their revenue comes from private wealth management clients. It is important to note that even though Fiera Capital offers investment products and services to its clients, the shareholders of Fiera Capital Corporation benefit from the profit the company receives rather than the gains their clients make on their investments.
Doman Building Materials Group Ltd. is one of the largest producers of pressure-treated lumber products in North America with 32 operating factories. This company also produces and distributes building materials, lumber, and renovation products. In Canada, Doman is considered a national distributor in the building materials and related products sector. In the US, Doman owns Texas-based Hixson Lumber division, California Cascade Division, Honsador Building Products Group in Hawaii, and is buying an office in Oregon. This company produces and sells the following products:
Similar to the other fund that is managed by Hamilton ETFs, this fund is trying to replicate a 1.25 times multiple of the Solactive Multi-Sector Covered Call ETFs Index TR (SOLMSCCT). This fund contains seven equally-weighted Canadian-listed sector-covered call ETFs with cash leverage of 25%. Hamilton Enhanced Multi-Sector ETF holds the following sectors in its portfolio:
Harvest Healthcare Leaders Income ETF is another ETF that is managed by Harvest Portfolio Group. This is the first ETF on our list that focuses solely on the healthcare sector, and it is designed to provide consistent income in a form of dividends. This ETF contains equally-weighted 20 large-cap global healthcare stocks that have been chosen for their potential to generate monthly dividend income.
Harvest Portfolio Group motivates the creation of this ETF using the fact that everyone requires healthcare, especially in the times when the average population age is increasing. As people live longer, they may require more healthcare services that will allow the industry to grow rapidly.
MCAN is a Canadian Loan Company that operates under the Trust and Loan Companies Act. MCAN Mortgage Corporation provides access to unique financing opportunities through strategic investment in a specialized portfolio of Canadian mortgages, loans, private investment funds, and REITs. Its mission is to provide sustainable returns to all involved stakeholders through relationship-driven lending and investing activities. They have 3 lines of business that offer services to individual households to buy a house (MCAN Home), offer investment solutions to retail and institutional investors (MCAN Capital), and accept term deposits with a range of short-term and long-term interest rates (MCAN Wealth).
Timbercreek Financial Corp. is a non-bank lender that provides short-term structured financing solutions to commercial real estate investors. Their service-oriented approach and sophisticated risk analysis allow the company to meet the needs of borrowers faster and in a more flexible manner than large banks and other large lenders. Their lending strategy focuses on issuing loans only on income-producing commercial real estate and mitigating the market risk by diversifying their collateralized loan portfolio with real estate from all over the world.