Look at average dividend yield over past 5 years which is on Yahoo. It likes to look at the 20 year average and he calculates this. Note that dividends are not guaranteed. Buy from the Dividend Aristocrats. Stocks such as Canadian Utilities, Fortis, Canadian Western Bank and ATCO Ltd.
Dividends are not paid from stock price, but paid from earnings. Dividends reward shareholders. He has bought TransCanada because of passive growing income.
He says there are 12 rules for dividend investing.
- Understand the product or service of the company
- Will people still be using product or service in 20 years’ time?
- Does the company have a low cost, durable, competitive advantage?
- Is the company recession proof?
- Does company have EPS growth over the past 8, 10 and 20 years? Last 8 years is most important.
- Can company grow at least 8% per year?
- Can the company cover its dividend?
- Does the company have good debt ratios?
- Does the company have a good credit rating?
- Is the company active is buying back shares?
- Is the stock undervalued? Is the P/E Ratio under 25 and P/B Ratio under 3.00?
- Keep emotion out of investing, you need discipline
On my other blog I wrote yesterday about Finning International Inc. (TSX-FTT, OTC-FINGF) ... learn more. Next, I will write about Quarterhill Inc. (TSX-QTRH, NASDAQ-QTRH) ... learn more on Friday, November 30, 2018 around 5 pm.
This blog is meant for educational purposes only and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
See my site for an index to these blog entries and for stocks followed. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.