As volatility increases in the equity markets, dividend investors are wondering where they can put new money to get decent yield without having to worry about a cut to the distribution.
At the moment, it makes sense to look at market leaders like BCE Inc. (TSX:BCE)(NYSE:BCE) and Potash Corp./ Saskatchewan Inc. (TSX:POT)(NYSE:POT).
BCE Inc.
BCE is the perfect example of a company that has a leadership position in its sector and benefits from substantial barriers to entry in its market.
Over the past several years, BCE has acquired a number of assets all along the media and telecom value chain. The company owns a television network, specialty channels, sports franchises, radio stations, and retail outlets.
Customers access the content using smartphones, tablets, home computers, or televisions that connect to BCE’s world-class wireless and wireline infrastructure.
The Canadian market is dominated by a handful of well-entrenched players. Despite the government’s efforts to increase competition, it is unlikely that an international company will invest the billions of dollars required to construct its own network and try to compete. By global standards, Canada is a relatively small market that spans a large geographic area. That isn’t overly appealing to foreign telecom companies.
BCE’s earnings continue to improve at a steady rate, and investors should see continued and reliable dividend growth in the coming years. BCE currently pays a dividend of $2.60 per share that yields about 4.9%.
Potash Corp.
Shares of Potash Corp. have sold off recently and the stock is now at a point where it looks very appealing to long-term dividend investors.
The global population is set to explode from seven billion in 2015 to as much as 11 billion by 2050. In order to feed everyone, farmers will need to boost their production. The best way to do that is to use crop nutrients such as potash.
Potash Corp. has known for years that demand growth is on the horizon and has invested heavily in expansion projects.
Many of these facilities are nearing completion and investors are going to see more cash available for distribution over the next few years as the projects shift from development to production.
Potash pays a dividend of US$1.52 per share that yields about 5.2%.
