The Top 5 Yields in the TSX 60

Great yields, but are they sustainable?

| More on:
The Motley Fool

When most people think of dividend stocks in the Canadian market, the three sectors that generally come to mind are Telecom, Financials, and Utilities.

However, given the low interest rate environment that we’ve been locked into, stocks in all 3 of these sectors, and especially the Telecom and Utilities space, are expensive.  You don’t have to look very hard into these sectors to find a number of stocks trading very close to their 52-week high.

Where’s the yield?

For investors looking for juicier yields from Canadian large caps, we must turn to a slightly less traditional source – the Energy sector.  All of the top five yielding Canadian large caps are energy related entities.  Four of them are oil and/or natural gas producers.  The other, Transalta (TSX:TA), is in fact classified as a utility, but is a non-regulated one.  The company is exposed to risks that regulated (and lower yielding) utilities don’t face.

Tabled below are the top 5 and their respective yields:

Company Name

Current Yield

Penn West (TSX:PWT)

11.3%

TransAlta (TSX:TA)

7.8%

Enerplus (TSX:ERF)

7.5%

Crescent Point (TSX:CPG)

7.3%

Cdn Oil Sands (TSX:COS)

7.0%

Source:  Capital IQ

To have a high yield is one thing.  To have a sustainable high yield is another.  Several years ago, U.S. based research firm Sanford Bernstein found that a yield of 7% or greater served as a great flag to identify those companies that would be forced to cut their dividend at some point.

According to this study, the market currently expects all 5 of these companies to cut their dividend.  This may or may not occur, but, with its yield of 11.3%, the market has clearly deemed Penn West’s current dividend the “most unsustainable” of the bunch.

If you’re looking for sustainable dividend stocks click here and we’ll send you our special FREE report “13 High-Yielding Stocks to Buy Today”.  This report will have you rolling in dividend cheques before you know it!

Follow us on Twitter and Facebook for the latest in Foolish investing.

Fool contributor Iain Butler owns shares in Canadian Oil Sands.  The Motley Fool has no positions in the stocks mentioned above.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

More on Investing

A worker gives a business presentation.
Dividend Stocks

TSX Communications in April 2024: The Best Stocks to Buy Right Now

Here are two of the best TSX communication stocks you can buy in April 2024 and hold for years to…

Read more »

Man holding magnifying glass over a document
Tech Stocks

Watching This 1 Key Metric Could Help You Beat the Stock Market

One key metric that Buffett looks at is the return on equity. Here's why you should watch it.

Read more »

Man considering whether to sell or buy
Dividend Stocks

Royal Bank of Canada Stock: Buy, Sell, or Hold?

Royal Bank of Canada (TSX:RY) has a high dividend yield. Should you buy it?

Read more »

oil tank at night
Energy Stocks

Is Suncor a Buy, Sell, or Hold?

Suncor Energy stock is off to a strong start in 2024. Is the TSX energy stock a good buy right…

Read more »

Daffodils in bloom
Tech Stocks

2 Best “Magnificent Seven” Stocks to Buy in April

Two surging mega-cap tech stocks are the best buys among the “Magnificent Seven” this April.

Read more »

A golden egg in a nest
Stocks for Beginners

Got $5,000? 5 Stocks to Buy for Lasting Wealth

Got $5,000 to build a long-term compounding stock portfolio? Here are five top Canadian stocks to building lasting lifetime wealth.

Read more »

Businessman looking at a red arrow crashing through the floor
Dividend Stocks

BCE’s Stock Price Has Fallen to its 10-Year Low of $44: How Low Can it Go?

BCE stock price has dipped 39% in two years and shows no signs of growth in the next few months.…

Read more »

Dollar symbol and Canadian flag on keyboard
Dividend Stocks

Invest $10,000 in This Dividend Stock for $3,974.80 in Passive Income

This dividend stock gives you far more passive income than just from dividends alone, so consider it if you want…

Read more »