As an income investor, you have to love stock market corrections.
Falling stock prices mean rising dividend yields. As a result of the big market declines of last week, the menu of blue chip stocks listed on the TSX with dividend yields above 4 per cent is as varied as it's been in a while. If you have new money to invest, you have a chance to earn yields of more than double the 1.9 per cent inflation rate.
A total of 14 stocks in the S&P/TSX 60 index of big blue chips made "4 per cent list" as of mid-February, including pipeline, bank, utility, telecom and energy companies. To narrow down the group some, let's include only companies that have increased their dividend by 5 per cent or more in the past year. This leaves us with:
- Enbridge Inc. (ENB-T): This one time darling of dividend investors was falling out of favour even before the recent market sell-off. The yield has lately been in the low 6-per-cent range, which would have been unthinkably high a couple of years ago. Investors are concerned that a big U.S. acquisition will slow profit and dividend growth going forward. One-year dividend growth came in at 15 per cent, according to Globeinvestor.com
- Pembina Pipeline Corp. (PPL-T): Stocks in the pipelines and utilities sectors are vulnerable to the kind of interest rate increases we've seen lately. PPL's yield has been in the 5.5-per-cent range, while one-year dividend growth was 12.5 per cent.
- Emera Inc. (EMA-T): This utility stalwart has a yield in the 5-per-cent range, and one-year dividend growth of 8 per cent. Higher rates would be a headwind for this stock.
- BCE Inc. (BCE-T): One-year dividend growth of 5 per cent is just enough to put this telecom giant onto our list. The dividend yield was just above 5 per cent.
- Power Corp. of Canada (POW-T): This conglomerate had a 4.8-per-cent yield and one-year dividend growth of 7 per cent.
- TransCanada Corp. (TRP-T): If you don't mind the downside risk posed by high rates, you can tap into a yield of 4.7 per cent and a dividend growth record that produced one-year growth of 10.6 per cent.
- Telus Corp. (T-T): A slightly lower yield than BCE, with similar dividend growth over the past year.
- Bank of Nova Scotia (BNS-T): The only bank to make this list offers a yield of 4 per cent and dividend growth over the past year of close to 7 per cent. Scotiabank stock has lagged compared to other banks in the past five years.
- Fortis Inc. (FTS-T): The final stock on this list brings a 4-per-cent yield and dividend growth of just over 6 per cent.