The Globe and Mail reports in its Tuesday edition that investors and companies face a bleak reality: dividend cuts. The Globe's Tim Shufelt and David Berman write, however that the big Canadian banks will probably not do any cutting, despite the crisis in the economy brought on by the COVID-19 pandemic. Dividends from Canadian insurance companies also look sustainable, according to RBC Dominion Securities, given insurers' strong capital ratios, low leverage and a sector-wide commitment to the payouts after being tarnished by Manulife Financial's dividend cut in 2009.
For dividend investors looking for bargains, there is a lot to choose from.
As a result of falling stock prices, dividend yields have soared -- widening the spread with very low bond yields and offering a potentially tantalizing opportunity for investors. The average dividend yield on a Big Six bank stock is now 5.8 per cent, up from 4.3 per cent just five weeks ago.
"There are a lot of companies out there that, even in this environment, will still be receiving revenue and making profits – maybe a little lower, but the cash flow is there," said Renato Anzovino, a portfolio manager at Montreal-based Heward Investment Management.
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