Skip to main content

I’m coining the phrase “yield nostalgia” for my fellow investors who have been around long enough to remember when it was possible to get a substantial return from bonds and guaranteed investment certificates.

Let’s use 5 per cent as a threshold. I remember stuffing a five-year GIC with a 5-per-cent yield into our sons’ registered education savings plan back in the mid-2000s. Today, half that yield would be typical if you’re GIC shopping. But if you’re open to 5-per-cent yields from blue chip stocks rather than GICs or bonds, you do have a few possibilities.

First off, we should make it clear that dividend stocks in no way substitute for bonds in a diversified portfolio. But if you’re an income-focused investor and have some leeway in your asset allocation, these 5-per-centers may be of interest because they’re blue chip companies with a history of dividend growth. Here’s the group.

  • Enbridge Inc. (ENB): The yield was just under 6 per cent as of Nov. 11 and five-year annualized dividend growth was 16.3 per cent. A high yield such as this suggests investor skepticism that this pace of growth can be maintained.
  • Pembina Pipeline Corp. (PPL): A yield of 5.1 per cent and five-year dividend growth of 6.4 per cent.
  • Power Corp. of Canada (POW): A 5.1-per-cent yield and five-year dividend growth of 5.3 per cent.
  • BCE Inc. (BCE): A 5-per-cent yield and dividend growth of 5.3 per cent.
  • Canadian Imperial Bank of Commerce (CM): A 5-per-cent yield and dividend growth of just under 7 per cent.

To put these numbers in perspective, the yield on five-year Government of Canada bonds wavered between 1.5 per cent and 1.6 per cent in the early part of November. The 5-per-cent yields on these five blue chip stocks suggest they’re out of favour with investors, yet each of them except CIBC had a positive return for the 12 months to Nov. 11. CIBC was down just 0.6 per cent.

It’s hard to see bond and GIC yields getting even close to 5 per cent these days. Meantime, a few blue chip stocks may help you get over your yield nostalgia.