The highest paying dividend stocks will help you weather double-digit inflation much better even than real return bonds will. Just be sure to do a further check for (1) how safe the dividend yield is and (2) whether the stock also frequently raises its dividend. No point owning a dividend stock long term if it doesn’t keep up with inflation.
See this list of the best Canadian dividend stocks.
Highest Possible Dividend Stock Yield
Highest dividend stock yield, you say? Let’s separate out those monthly distribution stocks, then, like REITs. If we limit ourselves to dividends, we find that decent yields lie in the 2.5-4% range. This is relatively common. Even a 4.5% yield is common in certain industries, such as telecom. What should be considered a “high dividend yield“? I would say anything 5% and above.
Extremely high dividend yields would be yields 7% and above. Yields higher than 10% and I would venture to assume that something might be wrong with the stock.
How to buy stocks with no commission fees.
How to Find the Highest Dividend Stocks
Rather than me telling you what are the currently highest paying dividend stocks, you can just check yourself via a free online tool like the Google Stock Screener in Google Finance. The stock screener allows you to choose what parameters you want to filter out stocks with. From the list of stocks that remain, you can choose what the “minimum” amount of dividend yield is that you are interested in looking at.
Then just click on the “Dividend Yield” header to sort the rows by yield. Whether you have a list of 100 or of 1000 stocks, the highest yielding dividend stocks will appear right at the top. At the moment, there’s one in there at 10-something percent, and another outlier around 20% which didn’t fit the parameters that I’d put in.
Learn what a dividend reinvestment plan (DRIP) is.
How To Tell If a High Yield Dividend Is Safe
Check the company’s fundamentals and price charts and recent news. Has the stock been on a general down trend over the past 12 months (i.e., lower lows)? Does it have very high debt levels? Is there a piece of recent news that might be causing some uncertainty for the company, such as a CEO stepping down, or new regulations being introduced into the industry that might affect it?
If the answer to one or more of the above is yes, there may be some concern that the company might not be able to maintain its high payouts. Find out the company’s actual (current) payout ratio and compare it with their target payout ratio. If they are currently paying out more than their historical average or their intended payout, this should be a bit of a warning sign.
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