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The Top 10 Dividend Yields on the TSX

It’s tough finding income in this market.

Saving accounts pay 0%, GICs earn next to nothing, and the yields on bonds are appalling.

That’s why dividend stocks are so attractive. If you can build a portfolio of names paying between 4% to 6%, you’re well on your way to generating a respectable income.

In search of these high-yield names, I ran a screen for the highest-paying dividend stocks on the Toronto Stock Exchange. The only limitation is that every firm must be a corporation (no REITs, MLPs, preferreds, etc.) and have a market capitalization of at least $100 million (no penny stocks please). Here are the results.

Company

Market Capitalization ($M) Yield

Sprott Resource (TSX: SCP)

$305.32 13.55%

Twin Butte Energy (TSX: TBE)

$584.00 11.50%

Chorus Aviation (TSX: CHR.B)

$522.85 10.34%

Norbord (TSX: NBD)

$1,280.35 9.93%

CanWel Building Materials (TSX: CWX)

$162.75 9.84%

Atlantic Power (TSX: ATP)(NYSE: AT)

$512.76 9.78%

AGF Management (TSX: AGF.B)

$1,020.45 9.14%

Exchange Income (TSX: EIF)

$420.57 8.81%

Rogers Sugar (TSX: RSI)

$420.31 8.09%

Student Transportation (TSX: STB)(NASDAQ: STB)

$582.18 8.01%

Source: Google Finance

Now for a word of warning. This list is only a place to begin your research. These are not formal buy recommendations. High-yield stocks can be a red flag, indicating that investors don’t believe the yield is sustainable.

Take Rogers Sugar, for example. For years, the company’s business has not been able to generate enough profits to fully fund its dividend. Now the firm is running out of cash reserves. This could end in disaster for any shareholders counting on the company’s distribution.

Atlantic Power is another troubled name. While the stock’s 9.4% yield sure looks tasty, the company hasn’t turned a profit in four years. It’s difficult to pay shareholders when you’re bleeding money every quarter.

However, there are some good names on this list. Conglomerate Exchange Income nosedived after troubles developed at the firm’s WesTower Communications division. However, shares found a bid after management reported that operations have “stabilized and began its recovery”. While investors wait for a turnaround, they can lock in a juicy 8.8% yield.

Chorus Aviation is another remarkably cheap stock. The market is worried about the solvency of its biggest customer, Air Canada, and a potential dividend cut. However, Chorus continues to generate healthy cash flow and that payout should be sustainable.

The bottom line is that top yielding stocks are a great place to look for new income ideas. Just be sure to dig into the financials to ensure you’re buying a sustainable payout and not a dividend time bomb.

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