The Top 10 Dividend Yields in the S&P/TSX 60

These top income ideas that pay out 4.7%… 5.8%… even 6.4%.

| More on:
The Motley Fool
You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

Who else wants higher dividend yields?

Given today’s low interest rates, a lot of people are raising their hands. Chequeing accounts pay next to nothing. GIC’s return less than 2% per year. Heck, even a 50-year bond yields less than 3%. At those rates, you can’t even keep up with inflation, let alone fund a comfortable retirement.

That’s why top-yielding dividend stocks can be so tantalizing. As long as the payout is sound, that yield is sorely appreciated in today’s dividend desert. If you can build a portfolio around a handful of names yielding 4% to 6%, you’re well on your way to generating a respectable income.

With that being said, let’s have a look at the current crop of top yielding stocks on the large-cap S&P/TSX 60 index.

Company Yield
Crescent Point Energy 6.37%
Canadian Oil Sands 6.17%
Penn West Petroleum 5.77%
Transalta 5.55%
BCE 5.04%
Enerplus 4.70%
Potash Corp. of Saskatchewan 4.25%
Rogers Communications 4.13%
Shaw Communications 4.07%
Canadian Imperial Bank of Commerce 4.05%

Source: Yahoo! Finance

Keep in mind that an abnormally high yield could be a red flag. Since yield and share prices move in opposite directions, a high payout could indicate that the market is worried about the underlying business or that the current dividend is unsustainable.

Case in point is Penn West Petroleum (TSX: PWT)(NYSE: PWE). The company is trimming costs and selling assets to boost profitability. Management has already cut the dividend to conserve cash and has announced plans to sell up to $2 billion in assets to lightened up its debt load.

It’s a solid turnaround plan. The problem? Penn West has admitted that production volumns will fall in the near term, and likely in the coming years as well. With less cash coming in through the door, the dividend could once again be at risk.

Then there’s Potash Corp. (TSX: POT)(NYSE: POT). At 4.25%, that dividend yield sure looks tasty. However, potash prices are plunging after producers in Russia and Belarus broke up their marketing alliance last year. While the company’s dividend is likely safe, don’t expect much in the way of payout hikes or capital gains in the near future.

However, there are a few good income ideas on this list. BCE (TSX: BCE)(NYSE: BCE), for example, has increased its payout at a 9.9% compounded annual clip over the past five years. Given the enormous free cash flow that the company generates and the barriers to entering the industry, shareholders can count on that dividend for decades to come.

CIBC (TSX: CM)(NYSE: CM) is also a great addition to any income portfolio. Have you tried starting your own bank in Canada? The cost of complying with regulations are prohibitive. And today, customers prefer the convenience of using one institution for all of their banking needs. Given the fact that stealing new clients is tougher than ever, CIBC’s 4.05% payout is likely safe from any competitive threats.

Top yielding names on a respected list like the S&P/TSX 60 is a great place to starting looking for income ideas. Just be sure to dig into the financials to ensure you’re buying a sustainable payout and not a dividend time bomb.

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.

Fool contributor Robert Baillieul has no positions in any of the stocks mentioned in this article. The Motley Fool owns shares of PotashCorp.

More on Investing

A solar cell panel generates power in a country mountain landscape.
Top TSX Stocks

3 TSX Stocks You Can Hold for the Next 3 Decades

While the market faces significant headwinds, it's crucial to ensure that you can commit to the TSX stocks you're holding…

Read more »

energy oil gas
Dividend Stocks

2 High-Yield Energy Stocks to Buy as Recession Approaches

Energy stocks such as TC Energy and Canadian Natural Resources allow investors to generate income even in recessionary times.

Read more »

green power renewable energy
Dividend Stocks

3 Top Dividend Stocks to Drive Your Passive Income

These three high-yielding, safe dividend stocks could boost your passive income.

Read more »

Dial moving from 4G to 5G
Tech Stocks

TFSA Investors: 2 Canadian Stocks With Unbelievable Staying Power 

Amid economic uncertainty, investors look for stocks that can thrive in any crisis and grow long term. Here are two…

Read more »

protect, safe, trust
Dividend Stocks

TFSA Wealth: How to Earn $363 in Monthly Passive Income for Life

Canadian investors can harness the power of the TFSA to generate steady tax-free passive income for decades.

Read more »

Canadian Dollars
Dividend Stocks

TFSA Millionaire: How to Turn $40,000 Into $1.2 Million for Retirement

Here's how TFSA investors are using the power of compounding to buy top Canadian dividend stocks to build retirement wealth.

Read more »

potted green plant grows up in arrow shape
Stocks for Beginners

3 Superb Income and Growth Stocks for Every Portfolio

The market is full of superb income and growth stocks, but not all belong in your portfolio. Here are three…

Read more »

stock market
Stocks for Beginners

Worried About Stagflation? 2 Canadian Stocks for All Market Cycles 

Stagflation delays economic recovery. You can keep your portfolio stagflation ready with these Canadian stocks that are suitable for all…

Read more »