If you recall the article I shared last week, it indicated that this is a time that provides opportunities that have not been available before. For those seeking higher income, this is a great opportunity.

 

Guaranteed investments offer short-term interest rates going out 2 years currently at 4.30%.

 

Then there is dividend income that is more tax efficient and can work as an inflation hedge. To illustrate this we use banks as an example as they typically target a 4% yield. At a $100/share price the payout needs to be $4.00/share. If the price of the stock gets to $200/share, the payout would need to be $8.00/share to maintain the 4% yield. That would result in a Yield on Cost of 8%.

 

With bank stocks and other higher dividend-paying stocks having retrenched, the current yield is now higher than before. Examples of recent dividend yields exceeding 4.00% include:

Algonquin Power (4.86% Yield*), Bank of Montreal (4.41% Yield*), BCE Inc (5.74% Yield*), Enbridge (6.07% Yield*), Sunlife Financial (4.72% Yield*), Telus (4.65% Yield*) *As of Aug 2022.  

 

This presents a great opportunity as a silver lining during a period of incredible volatility fueled by geopolitical and economic concerns.