The most important thing to know about investing is that dividend-paying stocks far outperform non-dividend-paying stocks over the long term when you participate in a dividend reinvestment plan. This means that every long-term investor should own at least one dividend-paying stock, and depending on your age, investment goals, and risk tolerance, maybe even a diversified portfolio full of them. If you are in the process of building a dividend-based portfolio today, you should take a closer look at these three stocks with yields up to 5.3%.
1. Arc Resources Ltd.: 5.3% yield
Arc Resources Ltd. (TSX:ARX) is one of the leading producers of crude oil and natural gas in Canada. It pays a monthly dividend of $0.10 per share, or $1.20 per share annually, giving its stock a 5.3% yield at today’s levels. Investors should also note that the company has maintained this monthly payment since July 2009, and as long as commodity prices continue to recover over the next few months, I think it could continue to do so for the next several years.
2. Laurentian Bank of Canada: 4.5% yield
Laurentian Bank of Canada (TSX:LB) is one of the largest financial institutions in Canada. It pays a quarterly dividend of $0.56 per share, or $2.24 per share annually, which gives its stock a 4.5% yield at current levels. The company has also increased its dividend 13 times in the last eight years, making it one of the top dividend-growth plays in the financial sector, and its consistent free cash flow generation could allow for another increase in the second half of this year.
3. Telus Corporation: 4.1% yield
Telus Corporation (TSX:T)(NYSE:TU) is one of the three largest telecommunication companies in Canada. It pays a quarterly dividend of $0.42 per share, or $1.68 per share annually, giving its stock a 4.1% yield at today’s levels. Telus has also increased its dividend nine times since it announced its multi-year dividend-growth program in May 2011, showing that it is strongly dedicated to maximizing the amount of capital it returns to shareholders.
Which of these top dividend stocks belong in your portfolio?
Arc Resources, Laurentian Bank, and Telus are three of the top dividend stocks in the market. Investors looking to build a dividend-based portfolio should take a closer look and strongly consider buying one or more of these stocks today.
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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 Joseph Solitro has no position in any stocks mentioned.