Investing

High Yield (6%+) and Monthly / Quarterly Dividend Distribution ETFs / Stocks

  • Last Updated:
  • Oct 30th, 2017 6:53 pm
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High Yield (6%+) and Monthly / Quarterly Dividend Distribution ETFs / Stocks

I'm looking for ETFs / stocks that pay either a monthly or quarterly dividend distribution with a 6% or higher annual rate. Some that I have started looking into within that range include AX.UN, IPL, BPF.UN, ENF, FIE. Should I stay away from any of these? Are there any other good ones I should look into? Thank you in advance for any advice / recommendations.
Last edited by illusion81 on Oct 26th, 2017 4:06 pm, edited 1 time in total.
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Dec 7, 2007
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Well to start with - those are individual stocks/companies and not ETFs....

I'm hoping that is a simple error and not just chasing something you don't understand for the sake of a high yield.
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Dec 14, 2009
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Are there any stock ETFs that pay that high? Probably only REITs, fixed income, or preferred share ETFs pay in that range.

Since you mentioned individual holdings, T.US (AT&T) is hovering around 5.8% ish
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Sep 18, 2007
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I was looking at some monthly dividend stocks like TSE:DGS (15%) and was wondering how the heck do they maintain such high yield. Quick google search found the following:
It's a split corp, which is a unique structure. It buys a stock, then splits into 2 stocks, one gets all the dividends, the other gets all the capital gains.
The dividend portion trades as a preferred share would and will often pay out more than it can, thereby eroding capital value. The capital portion trades in a leveraged fashion like an option might.
buy the capital portion if you bullish on the underlying. Buy the dividend portion if you believe the dividends are safe and the share prices of the underlying aren't in jeopardy
Anytime I read terms like leveraged or derivatives you have to be wary. In fact you should be wary of stocks with 7%+ in dividends in general.
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Feb 4, 2017
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If you want a stock that pays high dividend, Corus entertainment: CJR.B. Pays 9.37%. Dividend is safe but not much growth potential.
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[OP]
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Thanks for the replies thus far, very informative. I guess I'm not just looking at ETFs, but relatively safe stocks that pay a high monthly / quarterly dividend. I understand that nothing is guaranteed in life, but I'm sure there are stocks out there that don't move too much throughout the month and offer a decent monthly / quarterly dividend. They may not offer much growth, but I'm OK with that as I'm more interested in the dividend.
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illusion81 wrote:
Oct 26th, 2017 6:43 pm
Thanks for the replies thus far, very informative. I guess I'm not just looking at ETFs, but relatively safe stocks that pay a high monthly / quarterly dividend. I understand that nothing is guaranteed in life, but I'm sure there are stocks out there that don't move too much throughout the month and offer a decent monthly / quarterly dividend. They may not offer much growth, but I'm OK with that as I'm more interested in the dividend.
There's a thread on dividend stocks investing-idea-dividend-growth-1587815/109/#p28384902
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Feb 26, 2017
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Some more high dividend ones that are covered by cash flow. NYSE:OHI 8.3% NASDAQ:UNIT 13.8%, NYSE:CBL 13.1%, DIR.UN 7.6%

I own OHI and DIR.un is one I'm considering. Keep in mind the market views there as being risk or the dividend would not be this high. Lower but growing dividend stocks usually have better returns.
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May 10, 2009
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CJR.B has a 9 percent dividend yield
AD.TO has almost an 8% yield
CPX.TO has over an 6% yield
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Theoretically, capital gains are the same as dividends: they are a form of return to the shareholder either in directing excess retained earnings back to the shareholder or the value of the share is higher due to a larger amount of retained earnings. But what this means is that if the same company was to pay less in dividends, they would have more retained earnings and cash that could be used to build their business to earn more. In other words, regardless of whether a company pays out a dividend or not, the value proposition of owning the share in theory is the same. Of course in practice, you tend to see different pricing of companies away from this. Some companies do better paying out their cash, or perhaps the business cannot invest more (eg. mature market or business). Dividends can also act as a disciplinary pressure making sure management steers the company to ensure they can meet payouts.

As has also been mentioned by many above, high dividend yields can be indicative of a market being skeptical of the company. This has rung true with many companies out there. Take for example Aimia. When they lost the Air Canada contract, they lost their future ability to generate cash flow. The company has suspended dividends for the time being and shares have plummeted. To be fair, it is still to be seen if the company can recover, but this is definitely a risk that higher yield companies have.

One "safer" (I mean this in a general sense because safety is more dependent on the company the share represents. Aimia's preferred's dividends are suspended) could be to look at preferred shares. Preferred shares are like a hybrid debt & stock. Generally they are issued at a specific price ($25, $10 is most common) and pay a set yield dividend, often linked to bond yields this day in age. Many of these yield 5-8%. Because they generally are redeemed at the issue price, they generally do not rise above the issue price, so you cannot earn big capital gains on these, however, they can be an alternative high yield income vehicle that's safety dependent on the company.
Many big 6 banks have preferred shares that yield 3~4%. Other companies like Versabank have preferreds that yield about 7%. Some companies like Bombardier where the risk is perceived to be higher are at almost 9% (they are priced way below their issue price because of the perceived risk/ or due to rate resets).
Last edited by xgbsSS on Oct 26th, 2017 7:52 pm, edited 1 time in total.
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Just my opinion, but I would consider Slate office REIT (SOT.UN), they own office property and are small player but I they give you ~9%. Pretty stable overall IMO. The capital growth is not much, rather the gain is in their dividend.
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xgbsSS wrote:
Oct 26th, 2017 7:52 pm
One "safer" (I mean this in a general sense because safety is more dependent on the company the share represents. Aimia's preferred's dividends are suspended) could be to look at preferred shares. Preferred shares are like a hybrid debt & stock. Generally they are issued at a specific price ($25, $10 is most common) and pay a set yield dividend, often linked to bond yields this day in age. Many of these yield 5-8%. Because they generally are redeemed at the issue price, they generally do not rise above the issue price, so you cannot earn big capital gains on these, however, they can be an alternative high yield income vehicle that's safety dependent on the company.
Many big 6 banks have preferred shares that yield 3~4%. Other companies like Versabank have preferreds that yield about 7%. Some companies like Bombardier where the risk is perceived to be higher are at almost 9% (they are priced way below their issue price because of the perceived risk/ or due to rate resets).
I have always wondered about these as I see them come into my email.

If I understand correctly, one of these preferred shares going down in value is because there is skepticism as to whether they will repay? And this is why the big bank ones are relatively safe? The advantage compared to owning the common share is that their value remains more static - the downside is that their dividend is lower than common shares usually (at least when it comes to the banks)?
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TrevorK wrote:
Oct 26th, 2017 10:07 pm
If I understand correctly, one of these preferred shares going down in value is because there is skepticism as to whether they will repay?
Yes and no. It really depends. The example Bombardier is likely due to the perceived risk in paying out the preferred. When a company redeems preferred shares, all outstanding dividends and the par value generally have to be paid back. So let's say Bombardier fails to pay the dividend. The dividend it is supposed to pay out then becomes outstanding and for Bombardier to buy it out, it has to pay the outstanding dividend and the share itself (unless... reorganization or bankruptcy). The nice part about preferreds vs common shares though is that the dividends of preferred must always be paid out before the dividend of common shares are paid. In other words, Preferred shareholders are ahead of common shareholders when it comes to payout. That is why preferred shares are considered "safer" than common shares.

In the majority of cases, a lot of new preferreds are below par value because of a new type of preferreds that have been issued of late: rate-reset preferreds.

Rate-reset preferreds became a popular type issued and the majority of preferred shares issued these days are rate-reset. Rate-reset are set to a specific yield. A common one is the Bank of Canada 5 year Bond. As an example, let's look at VersaBank's Series 1 Preferred Share prospectus. (http://www.versabank.com/investor-relations/securities/), You will notice that this series pays 7.0% (on $10.00 par value) annualized dividend quarterly until October 31, 2019. On October 31, 2019, the dividend rate will "reset" to the same yield 5 year Bank of Canada Bond yields plus 543 basis points. This means the dividend rate may be higher or lower starting October 31, 2019. When these preferreds were first being issued, interest rates were historically low already and so there was a need to add these kind of rules so that people weren't stuck with low yielding preferreds. But interest rates further fell and many issues ended up yielding even lower, hence the drop in price.

So because of these rate-resets, it is very important to read the prospectus so you understand what you are actually buying. The yield you are currently getting may not be permanent..

But I believe now that interest rates are slowly increasing now, some rate-reset preferreds are a good investment and may be safer than bonds in some cases because higher interest rates will be compensated with a higher reset yield whereas bonds will just decline in price with higher interest rates with no such yield-reset.
TrevorK wrote:
Oct 26th, 2017 10:07 pm
And this is why the big bank ones are relatively safe? The advantage compared to owning the common share is that their value remains more static - the downside is that their dividend is lower than common shares usually (at least when it comes to the banks)?
The downside is not that the dividend is lower than common. You have it backwards. Generally, yield is always higher on the preferred. You just cannot get the same kind of capital gain as a common share. Bank ones are generally safer because of their high income and stability.

There have been some times when a preferred yielded lower than the common. The mortgage crisis saw SOME commons drop in price because of perceived risk in financials. But since preferred are paid out first, they didn't drop as much. This resulted in many bank common shares in Canada yielding over some of their preferred shares. This is fairly rare!
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