The Globe and Mail attempts to identify
dividend payers that offer safety and value in its Friday edition. The Globe's Sean Pugliese writes in the Number Cruncher column that he only considered Canadian companies with a market cap of $10-billion or more. Some investors, particularly
retirees, have a thirst for income.
Mr. Pugliese says he likes to get paid while
waiting, and dividends generally
reflect safety and stability.
He only considered stocks that offer a dividend yield of 4 per cent or more. He only considered companies with a low payout ratio, which implies
the dividend is safer. Mr. Pugliese notes, as well, that a very low payout ratio could also signal the
possibility of a future dividend
increase. He also looked for companies with low price-to-earnings ratios. He says the lower the number, the better the value. He measures earnings momentum. Positive momentum is preferred, which again could indicate dividend safety and a possibility of a future payout bump. Finally, he only looked at companies with small debt-to-equity ratios, which is another sign of safety. Mr. Pugliese's picks are Royal Bank of Canada, Toronto-Dominion Bank, Bank of Nova Scotia, BCE, Bank of Montreal and Thomson Reuters.
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