The Motley Fool

3 Top Dividend Stocks With Yields Over 5%

Investors should always be looking for a few great dividend stocks to help them get some extra cash while they wait on long-term investments. But there are a few things to look for when considering dividend stocks and knowing what to look for can make you find some superior stocks.

Top dividend stocks should pay consistently and reliably, with long histories of doing so, be competitive among peers, and have the strength to continue producing for years to come. Beyond that, a consistent dividend shouldn’t have a history of missing any payments or significant cuts; instead, it should have reliable increases every few years.

Three such stocks that fit into this category, producing dividend yields above 5%, are BCE (TSX:BCE)(NYSE:BCE)First National Financial (TSX:FN), and Great-West Lifeco (TSX:GWO).

BCE

BCE is well positioned to become Canada’s top wireline and wireless service, with an inferior network now out the window with its new fibre network. This new network doesn’t only offer a better product to customers, but also significantly reduces operating costs. This means it can charge higher prices for a better product and reap far more rewards than competitors.

This news means BCE shares should continue on a steady rate of increase, and investors should see the dividend increase along with it. In the next 12 months, those shares could reach $75 compared to currently trading at about $60 per share. Its books also remain strong, usually outperforming analyst estimates.

All this spells a solid future for investors who can take advantage of the company’s increasing dividend, which was increased by 5% (or $0.15) in February and yields 5.34% annually at the time of writing.

First National

This non-bank mortgage lender also boasts a strong financial background and stable dividend yield that should be produced for years to come. The company has about $106 billion worth of mortgages in its administration, doing business across Canada through small regional offices to keep costs down.

Through its loans, securities, and financing, the company brings in about $1.2 billion of revenue per year, meaning there is a significant cash flow coming in to support a dividend for years. The current dividend of 6.22% at the time of writing has been increased every year since 2011, and as a bonus, sometimes the company pays out special dividends, most recently at about 4% per share!

Great-West Lifeco

Compared with its competitors, Great-West Lifeco is considered the best run by analysts and therefore the best bet for investors. The average return on equity for the past five years has been almost 14%, which is incredibly difficult in the insurance industry. The company’s strategy has performed well over the past years, and management should continue to pump out excess returns for years to come.

That said, you shouldn’t wait for this stock’s share price to jump any time soon but continue on a steady incline. In the meantime, its excess returns mean it can serve up a stable dividend over the long term with consistent increases. Most recently, the company increased its dividend by 6% to $0.413 per share, or 5.11% annually, at the time of writing.

Free investor brief: Our 3 top SELL recommendations for 2019

Just one ticking time bomb in your portfolio can set you back months – or years – when it comes to achieving your financial goals. There’s almost nothing worse than watching your hard-earned nest egg dwindle!

That’s why The Motley Fool Canada’s analyst team has put together this FREE investor brief, including the names and tickers of 3 TSX stocks they believe are set to LOSE you money.

Stock #1 is a household name – a one-time TSX blue chip that too many investors have left sitting idly in their accounts, hoping the company’s prospects will improve (especially after one more government bailout).

Still, our analysts rate this company a firm SELL.

Don’t miss out. Click here to see all three names right now.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned.

I consent to receiving information from The Motley Fool via email, direct mail, and occasional special offer phone calls. I understand I can unsubscribe from these updates at any time. Please read the Privacy Statement and Terms of Service for more information.