Consistent Cashflow & Dividends

Steve Proceviat of the Globe&Mail interviews Toron Capital Markets portfolio manager David Driscoll about a long-term dividend payer Novo-Nordisk discussing the advantage of holding good dividend paying stocks year after year.

"It’s important to invest in the company and not trade stock prices. If you have a good quality company, and the market’s falling because of macroeconomic conditions, not because of business risk, then [you should] feel comfortable, because they pay the dividend, to continue to buy more.  You don’t have to trade actively to make money."

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Canadian Dividend Stocks & Higher Interest Rates

Jonathan Ratner of the Financial Post writes a column discussing the influence of higher interest rates on Canadian dividend paying stocks.  While higher rates influence stock valuations the question of how they'll effect dividends this time has been a highly talked about topic.

"In the six months prior to the last 13 tightening cycles (between 1956 and the middle of 2004), he found that Canadian stocks historically provided average annualized returns of 22% (including dividends and capital gains). In the six months following a rate trough, Canadian stocks returned 8.3% in annualized terms.  While higher dividend sector do tend to be more impacted by rising rates, the economist noted that telecom stocks are an exception."

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Are Preferred Shares Set for a Shake Up?

Rob Carrick of Globe Investor writes a piece on preferred shares asking the question of how future inflation might shake up sleepy preferreds in your portfolio highlighting the behaviour of both fixed rate resets and perpetuals.

"There's bad news for all investors who held preferred shares through the past two years of turbulence and are looking ahead to calmer times. Higher interest rates are coming, and that means more upset for preferred shares. Plan now and avoid any unpleasantness to come. Preferred shares are a more conservative version of the common shares that most people think of when the stock market comes to mind. Preferred shares fluctuate somewhat less in price and are primarily owned by people who want a reliable flow of dividend income."

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Dividends and Defense to Lead Growth?

Mark Noble of Advisor.ca writes an article on the topic of dividends and potential upside in 2010 with healthcare and consumer staples getting a specific mention.

"As the stock market recovery begins to mature, investors increasingly focus attention on the sectors and companies that demonstrate more consistent sales, earnings and dividend growth. We believe we are now in the early stages of this shift, another part of a rotation of market leadership," says Gorman. "As part of this trend, investors will increasingly emphasize dividends as a larger element of total return. Today, dividends in a number of sectors are abnormally high relative to bond yields, even before considering the dividend tax credit, which makes each dollar in Canadian dividends like earning $1.30 in interest."

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Why Dividend ETFs Will Make You Richer

John Heinzl takes the time to answer the questions of readers in the Globe&Mail's Investor Clinic video series discussing dividend ETF's.

"...the great thing about ETF's is that they provide a diversification of a mutual fund but with much lower fees..."

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No Longer Pillars of a Select Dividend Club

John Heinzl of the Globe&Mail writes on the recent revisions made to the S&P/TSX Canadian Dividend Aristocrats index after losing 15 names from the list of companies to consecutively raise their dividends. Some notable deletions?; CIBC, BMO, Royal Bank, Sunlife and Manulife Financial.

"After a year in which some high-profile companies slashed their dividends and many others failed to increase their payments as they dug in for the recession, the S&P/TSX Canadian Dividend Aristocrats index is losing 15 members - including most of the banks - and gaining just one."

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Dividends - Even Better Than Bonds

Andrew Bary of Barron's published an article on Monday that caught the attention of a number of dividend investors within the blogsphere. The article discusses some alternatives over bonds as income investors look for better yields than traditional fixed income products.

"The 'safest' part of the market, Treasuries, seems to be the most overvalued, and high-grade corporate bonds don't look much better. Treasury yields range from just 0.85% on two-year notes to 4.4% on 30-year bonds, while high-grade corporates generally offer 3% to 5%. Federally backed mortgage securities also look unattractive at 4% yields. These securities are apt to return little or nothing after inflation and taxes. While investors are apt to have their principal repaid if they hold their bonds until they mature, they will suffer losses if rates rise and they sell prior to maturity. As for investors in bond funds, they typically have no guarantee of getting their money back. And the funds often levy stiff management fees on their holdings."

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Six Common Misconceptions about Dividends

Jason Whitby of Investopedia.com writes about six common misconceptions involving dividends that investors should be aware of especially during periods of questionable returns and high volatility in markets.

"During periods of low yields and market volatility, more than a few experts recommend dividend stocks and funds. This may sound like good advice, but unfortunately, it is often based on misconceptions and anecdotal evidence. It is time to take a closer look at the six most common reasons why advisors and other experts recommend dividends and why, based on these reasons, such recommendations are often unsound advice."

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