14.7% Dividend Yield? Buy Up This Passive-Income Stock in Bulk!

That dividend yield is high, but it still comes with some strong reasons to consider the stock outside of a high yield. Here’s what to consider.

Amy Legate-Wolfe

Author Bio Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Social Media Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published November 12, 2024 10:30 am EST

We could all use more passive income in our lives. But the key is that this income must be passive! Not side hustles, gigs, or any other quick scheme. Riches can come in time, and finding a solid dividend stock is the easiest way there.

Global Dividend Growth Split (TSX: GDV) presents a compelling opportunity for investors seeking long-term passive income through dividends. Managed by Brompton Funds, GDV focuses on large-capitalization global dividend growth companies, offering a diversified portfolio that spans various sectors and geographies. So, let’s get into why it might be a stellar option for your portfolio.

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The dividend

One of GDV’s standout features is its attractive dividend yield. As of November 7, 2024, the fund offers a forward annual dividend rate of $1.20 per share. This translates to a yield of approximately 14.71% at the time of writing. This high yield is particularly appealing for income-focused investors aiming to enhance their cash flow.

The fund’s consistent dividend payments further bolster its appeal. GDV has maintained a steady monthly dividend of $0.10 per share, reflecting its commitment to providing reliable income to shareholders. This consistency is crucial for investors who prioritize predictable income streams.

Financial stability

In terms of financial performance, GDV has demonstrated robust results. For the fiscal year ending December 31, 2023, the fund reported a net income attributable to common stockholders of $22.18 million. This equates to a diluted earnings per share (EPS) of $3.05. This strong EPS indicates effective management and a solid return on investment.

GDV’s valuation metrics also underscore its investment potential. With a trailing price-to-earnings (P/E) ratio of 3.70 and a price-to-book (P/B) ratio of 1.10, the fund appears undervalued — especially relative to its earnings and book value. These ratios suggest that GDV offers a favourable entry point for investors seeking value.

The portfolio

The fund’s diversified portfolio is another key advantage. By investing in a broad range of global dividend growth companies, GDV provides exposure to various industries and markets. Thereby reducing the risk associated with sector-specific downturns. This diversification enhances the stability of returns over the long term.

Looking ahead, GDV’s future outlook remains positive. The fund’s strategy of focusing on companies with a history of dividend growth positions it well to capitalize on global economic expansion. As these companies continue to increase their dividends, GDV is likely to pass on these benefits to its shareholders, supporting sustained income growth. Moreover, GDV’s management team employs active portfolio management, allowing for strategic adjustments in response to market conditions. This proactive approach aims to optimize returns and manage risks effectively, contributing to the fund’s resilience in various economic environments.

Bottom line

Global Dividend Growth Split offers a compelling combination of high dividend yield, consistent payouts, strong financial performance, and strategic diversification. These attributes make it an attractive option for investors seeking long-term passive income through dividends. By investing in GDV, shareholders can benefit from a well-managed fund for life. One that continues to prioritize income generation and capital appreciation for its investors.