Dividend investors have to be careful these days because the market is loaded with beaten-up stocks offering big yields.

Any time a dividend gets above 5%, the warning signals start to go off, and a yield above 7% often means a cut could be in the cards.

The market is normally right, but sometimes good companies with strong long-term stories become oversold, and investors get a chance to buy in at a great price and collect a fantastic yield.

Here’s why I think RioCan Real Estate Investment Trust (TSX:REI.UN) and Potash Corporation of Saskatchewan Inc. (TSX:POT)(NYSE:POT) are two companies that fit that description right now.


RioCan operates more than 340 retail properties in the United States and Canada. The stock has come down this year as investors worry about the health of the Canadian economy and the impending move by the U.S. to increase interest rates.

A slowing economy can certainly cause consumers to tighten their belts, but RioCan’s anchor tenants tend to be names that do well in any environment. They sell groceries, medication, discount products, and everyday household goods.

These products are always in demand, and some of the stores will actually benefit in a time of economic uncertainty because shoppers move down a notch on the value chain.

As for interest rates, the increases south of the border are likely to be small and spread out, so the REIT should be able to adjust without incurring much pain.

RioCan just reported solid Q3 2015 operating funds from operations of $140.2 million, or $0.44 per trust unit, up 5% from the same period last year.

During the quarter the company renewed 1.3 million square feet of retail space at an average rent increase of 8.6%.

RioCan pays a monthly distribution that yields 5.6%.

Potash Corporation

Shares of Potash Corporation are down more than 30% this year as a result of weakening potash and nitrogen prices.

Commodity markets run in cycles, and the current downtrend in the fertilizer space will likely continue into 2016, but Potash Corporation is well positioned to ride out the slump.

The company is wrapping up a multi-year capital program, and the conclusion of the projects should mean more free cash flow will be available for dividends in the coming years.

Potash Corporation also just abandoned its US$8.7 billion bid to acquire a German competitor, which means shareholders don’t have to worry about being diluted by a stock issue or burdened by a big debt obligation.

The company is doing a good job of reducing costs and is still profitable, despite the tough environment.

For the first nine months of 2015, the company earned US$1.1 billion or US$1.28 per share. The company pays a quarterly dividend of US$0.38 per share that yields about 7%.

Market conditions should start to improve in the second half of 2016. In the meantime, Potash Corporation has the means to cover the payout without much trouble.

The dividend looks safe at Potash Corporation, but what about the banks?

Canadian banks are considered must-have investments. After all, they're very stable, well capitalized, and face limited competition. That said, there are concerns for the banks and their investors.

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Fool contributor Andrew Walker has no position in any stocks mentioned.