Investing in dividend stocks is often seen as a reliable way to generate income, but it’s important to be cautious when the payout ratio of a company, like Birchcliff Energy, becomes too high. This could mean that the dividends may not be sustainable in the long run, which poses risks for investors seeking stable returns.
Here are the top 10 dividend stocks in Canada:
1. Bank of Nova Scotia (TSX:BNS) – Dividend Yield: 6.78%
2. Whitecap Resources (TSX:WCP) – Dividend Yield: 7.29%
3. Enghouse Systems (TSX:ENGH) – Dividend Yield: 3.45%
4. Boston Pizza Royalties Income Fund (TSX:BPF.UN) – Dividend Yield: 8.48%
5. Secure Energy Services (TSX:SES) – Dividend Yield: 3.30%
6. Royal Bank of Canada (TSX:RY) – Dividend Yield: 3.90%
7. Russel Metals (TSX:RUS) – Dividend Yield: 4.51%
8. Canadian Natural Resources (TSX:CNQ) – Dividend Yield: 4.31%
9. Canadian Western Bank (TSX:CWB) – Dividend Yield: 3.23%
10. Firm Capital Mortgage Investment (TSX:FC) – Dividend Yield: 9.08%
One top pick from our exclusive screener is Total Energy Services (TSX:TOT). This company has a dividend yield of 3.7% with a sustainable payout ratio and consistent dividend declarations. However, its historical volatility in payouts may pose uncertainty for long-term income-focused investors.
On the other hand, Birchcliff Energy (TSX:BIR) has a dividend yield of 6.7% but struggles with a high payout ratio of 500.8%. This indicates that its dividends may not be adequately covered by earnings or free cash flow, making it a less attractive option for those seeking stable dividend income.
Overall, it’s important for investors to carefully consider the financial stability and dividend strategy of companies before investing in dividend stocks.