Dividend investing can be very lucrative in Canada. Our leading industries comprise many safe, reliable, blue-chip companies that have paid some of the most consistent and high-yielding dividends throughout the last 20 years.
Not all dividend companies are equal, though. Some companies have a consistent history of increasing dividends and maintaining payouts. Others are known for their exceptionally high yields. Today, we’ll be focusing on three companies that exhibit the latter from the financial sector.
Canadian Imperial Bank of Commerce
As one of Canada’s “Big Six” banks, Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) offers a great combination of a solid balance sheet, good management, and attractive valuation ratios. The stock has a great history of beating earnings estimates and delivering on forecasts and guidance.
In terms of dividends, CM currently pays $2.59 per share for a yield of 4.63%. This is very high compared to the overall TSX, and even the rest of the financial sector The payout ratio is 43.52%, which is sustainable. The stock goes ex-dividend on June 27, so buy before then if you want the payout.
As one of Canada’s three leading life insurance companies, Sun Life Financial (TSX:SLF)(NYSE:SLF) occupies an important role in the financial sector. The company has matured into an industry mainstay, boasting strong margins and a large amount of cash on the balance sheet.
In terms of dividends, SLF current pays $1.11 per share for a yield of 5.25%. Historically, SLF has always paid strong dividends, with a five-year average yield of 5.08%. The stock recently went ex-dividend on May 31, so investors buying now will have to wait until the next quarter for a payout.
Power Corporation of Canada
Power Corporation of Canada (TSX:POW) can be thought of as a diversified holding company, with controlling interests in investment management, brokerages, life insurance, and wealth management, along with a portfolio of other businesses across various industries.
Thanks to its strong cash-generating portfolio, POW pays a high dividend of $1.98 per share for a great yield of 5.37% and a strong five-year average yield of 5.25%. The stock goes ex-dividend on June 29, so consider buying before then if you want to snag the upcoming dividend.
The Foolish takeaway
Buying these three stocks and reinvesting the dividends can snowball quickly over time, leading to a high total return. However, as with all investments, diversification is key. Concentrating a dividend portfolio in these three companies could expose you to the risk of either underperforming or even going bankrupt. There is no guarantee that the Canadian financial sector will outperform in the future. Consider seeking out additional dividend stocks from other TSX sectors.