With the recent turbulence and unrest in the market, some stocks are still trading relatively low. Some financial stocks are trading at prices that make huge dividend yields reasonable to obtain.
Now, even for those on the hunt for juicy dividends, the yield itself isn’t the only important factor to consider. The sustainability and reliability of that yield – and the business itself for that matter – must be considered.
After all, a massive dividend yield is useless if it’s bound to be cut or halted anyways. So, investors need to be diligent during these times when it comes to picking dividend stocks.
Today, we’ll look at two financial stocks that fit the bill when it comes to stocks with reliable dividend yields.
RBC
Royal Bank of Canada (TSX: RY)(NYSE: RY) is Canada’s largest bank with a market cap of $135.73 billion.
This financial stock has one of the longest dividend payment streaks around, as it has made dividend payments since 1870.
Even during tough economic times, the bank tends to simply maintain its yield rather than cut it.
Now, of course the bank faces challenges today, but as Canada’s biggest bank, it has the resiliency to persevere.
This financial stock has a strong and conservative balance sheet, solid market position, and access to plenty of cheap liquidity.
These are all major positives given the current economic climate. Even with some bumps in the road ahead, this dividend superstar is still well positioned to deliver great long-term results.
Investors can pick up shares of RY for $95.37 as of this writing, which makes for a 4.53% dividend yield. This yield exceeds RY’s five-year average yield, so investors can lock in an outsized yield now.
Scotiabank
Bank of Nova Scotia (TSX: BNS)(NYSE: BNS) is another major Canadian bank with a market cap of $67.87 billion.
The bank also has a fantastic track record for paying its dividend, making every payment since 1833. Beyond simply maintaining its yield, the bank has in fact increased its dividend in 43 of the last 45 years.
Now, like RY, BNS faces a lot of challenges under current conditions, and these factors have weighed on the company’s bottom line.
However, this financial stock has a lot of flexibility and support when it comes to dealing with the challenges ahead.
Plus, while its position in Latin America has caused short-term concerns given the commodities-based nature of those economies, it’s also one of the most promising drivers of growth for the long run.
With a yield of 6.43%, investors can lock in a monster yield with this financial stock. Despite potentially tough times ahead, the payout ratio is just 58.72%.
Given the stock’s history and current financial support and positioning, I wouldn’t bank on the yield getting cut. Plus, the stock’s five-year average yield is only 4.45%, so investors are now able to secure an outsized yield with BNS.
Financial stock strategy
Both TSX giants are offering investors dependable and juicy yields now. For long-term investors, there’s a lot to like here and positive sentiments for the long run.
If you’re looking to add to a dividend income strategy, be sure to give these bank stocks a look.
