Do you like dividends? You will love these 3 actions
Investing in dividends can help you achieve financial independence. In theory, by investing in dividend-paying stocks, an investor would be able to supplement and possibly replace their primary source of income. Because of this constant income, investors can receive money every quarter without having to sell shares. This allows the investor to be rewarded for owning shares, while still giving the positions enough time to grow. In this article, I’ll discuss three great dividend-paying stocks to consider for your portfolio.
This stock of dividends is growing on all fronts
Many growth investors will argue that dividend-paying stocks do not appreciate quickly enough and stay away for this reason. However, if you look in the right places, you might find dividend paying stocks that outperform even the best growth stocks. An example would be kid (TSX: GSY). The company provides high-interest loans to subprime borrowers and sells furniture and other household items on a lease-to-buy basis.
Aided by the pandemic, goeasy has achieved record numbers over the past year. Investors were clearly watching goeasy very closely during the pandemic and were impressed with its performance. Over the past year, goeasy stock has gained 228%. Even more impressive is its dividend. Since 2014, goeasy’s dividend has increased by 776%! A true dividend aristocrat with an exceptional growth profile, goeasy is a stock you should consider adding to your portfolio.
This industry is a Canadian favorite
When it comes to investing, many Canadians will look to the banking industry. The reason for this widespread affinity for the Canadian banking industry is its highly regulated nature. This makes it harder for small businesses to displace industry leaders, giving these companies a secure position at the top of the industry. Among the leaders of the Canadian banking sector, my first choice remains Bank of Nova Scotia (TSX: BNS) (NYSE: BNS).
Unlike its peers, the Bank of Nova Scotia has not concentrated all of its assets in North America. Instead, he decided to expand to the Pacific Alliance. It is a region that includes Chile, Colombia, Mexico and Peru. While this exposes the company to geopolitical risks, it could be a tremendous opportunity for growth. The Bank of Nova Scotia is also a Canadian dividend aristocrat, increasing its dividend over the past 10 years. The Bank of Nova Scotia offers a term dividend of 4.59% with a payout ratio of 58%. This company is positioned to be one of the premier dividend paying stocks for years to come.
Choose a stock with a strong history of dividend increases
One of the ways that investors should filter dividend companies is to look at dividend growth sequences. Companies whose management is able to intelligently allocate capital over long periods of time will always be one step ahead of their peers with weaker management teams. This is important to consider, as it tells investors that a company’s dividend is sustainable. For example, take a look at Fortis (TSX: FTS) (NYSE: FTS). It has the second longest streak of active dividend growth in Canada at 47 years.
The secret to Fortis’ success lies in the industry in which it operates. The company provides regulated gas and electricity utilities to 3.4 million customers in Canada, the United States and the Caribbean. Because it provides an essential service, Fortis’ business does not experience many difficulties in times of economic downturn. As a result, this stock was able to increase its dividend, despite the many periods of economic uncertainty that have occurred over the past five decades.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We are straight! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer, so we post sometimes articles that may not conform to recommendations, rankings or other content. .
Foolish contributor Jed Lloren has no position in any of the stocks mentioned. The Motley Fool recommends BANK OF NOVA SCOTIA and FORTIS INC.