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

data analyze research
Bank Stocks

Better Buy: Royal Bank Stock or Bank of Nova Scotia?

Bank stocks appear cheap after the latest plunge. Is Royal Bank or Bank of Nova Scotia a buy today?

Read more »

A person builds a rock tower on a beach.
Dividend Stocks

3 Stocks to Anchor Your Portfolio in a Rocky Market

Three stocks are solid anchors in any portfolio today for their outperformance in a weak market and defiance of the…

Read more »

Metals
Metals and Mining Stocks

Better Metals Buy: Gold Stocks vs. Lithium Stocks

Gold is the evergreen choice as a hedge against inflation and weak markets. In contrast, battery metals may offer unique…

Read more »

Man making notes on graphs and charts
Bank Stocks

TD Bank Stock: A TSX Top Pick Amid U.S. Banking Rout?

TD Bank (TSX:TD) stock could prove a worthy bet for brave investors who aren't fearful over the recent wave of…

Read more »

edit Sale sign, value, discount
Tech Stocks

2 Cheap Tech Stocks to Buy Right Now

Many tech stocks offer exceptional returns compared to other stock sectors when the market is bullish. You can add to…

Read more »

money cash dividends
Dividend Stocks

3 Solid Dividend Stocks That Cost Less Than $30

Given their solid financials and healthy cash flows, the following under-$30 dividend stocks are a good buy in this volatile…

Read more »

HIGH VOLTAGE ELECRICITY TOWERS
Investing

Is Now the Right Time to Buy Fortis Stock?

Fortis stock looks cheap today. Should you buy now or wait?

Read more »

edit Woman calculating figures next to a laptop
Investing

TFSA Investors: 2 Stocks to Make the Most of a Sad-Trombone Economy

TFSA investors can make the most of the heightened volatility by taking positions in stocks with tremendous resiliency amid the…

Read more »