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Income-oriented investors must be feeling like kids in a candy store these days. There are great deals everywhere you look.

Whether you prefer stocks, ETFs, REITs or preferreds, cash flows of 5 per cent or more abound. We haven’t seen anything similar in decades.

The reason for this yield bonanza is clear: inflation, which has prompted the Bank of Canada and the U.S. Federal Reserve to raise interest rates at the fastest pace in 40 years. Combined with an inverted yield curve, the result has been across-the-board increases in investment cash flow.

Even short-term securities have cracked the 5-per-cent ceiling. Based on the current level of distributions, HISA (high-interest savings account) ETFs are currently yielding around 5 per cent. They include the CI High Interest Savings ETF CSAV-T, which currently has a forward yield of 5.1 per cent, based on my calculations. The Purpose High Interest Savings Fund (PFA-T) and the Horizons High Interest Savings ETF CASH-T both have a forward yield of 4.9 per cent.

It’s important to note that neither forward nor trailing yields are accurate predictors of what your money will earn over the next year in these funds. Trailing yields will skew the return to the downside because rates were much lower a year ago. Forward yields assume the current rate of the monthly distribution will be maintained. That’s unlikely in this turbulent interest rate environment. So be skeptical of yields in these funds and be prepared to move money quickly if they start to decline.

Unusually, HISA ETFs offer better yields at this time than traditional bond ETFs and mutual funds. But you can find bond fund returns in the 5-per-cent range in some fringe areas.

One example is the iShares U.S. High Yield Bond Index ETF (CDN Hedged) XHY-T. The name tells the story. The fund invests in a wide-ranging portfolio of U.S. high-yield bonds. At a current monthly distribution of $0.078 ($0.936 annually), the forward yield is 5.85 per cent. The ETF lost 11.5 per cent in 2022 but is ahead 5.2 per cent this year. It has $405-million in assets but should be viewed as high-risk.

If you want something safer, try GICs. Several small companies offer one-year terms of more than 5 per cent, according to ratehub.ca, with Motive Financial topping the list at 5.6 per cent. There are even a few five-year GICs in this range, led by EQ Bank at 5.1 per cent. But long-term yields are generally lower than short-term ones because of the inverted yield curve we’re currently experiencing.

Yields of 5 per cent and more are easy to find in the equity markets. You don’t have to look far – most interest-sensitive stocks are offering yields at levels we’ve rarely seen. The following examples are my calculation based on current dividends and the closing price on July 28.

In the pipeline sector, TC Energy TRP-T is paying 8.2 per cent after the shares sold off last week following its sale of 40 per cent of its interest in Columbia Gas Transmission and Columbia Gulf Transmission pipelines and the announcement that the company will split into two publicly traded entities next year. The yield on Enbridge shares ENB-T is currently 7.4 per cent, while Pembina Pipeline PPL-T pays 6.5 per cent.

Utilities are in a similar situation. Emera EMA-T pays 5.1 per cent, Canadian Utilities CU-T offers 5.4 per cent, and Capital Power CPX-T is at 5.6 per cent. Industry leader Fortis FTS-T is an outlier at 4 per cent.

In the REIT sector, RioCan REI-UN-T yields a healthy 5.4 per cent. Choice Properties REIT CHP-UN-T is also at 5.4 per cent, while Primaris PMZ-UN-T is at 6.2 per cent and Slate Grocery REIT SGR-UN-T is offering 8.5 per cent.

You can even find 5-per-cent-plus yields among the major banks, which is rare. Check out Bank of Nova Scotia BNS-T, which yields 6.4 per cent. CIBC CM-T is also in this group at 6 per cent.

I’ve just scratched the surface here. There are many other stocks with yields of 5 per cent or more. If you want a portfolio with strong cash flow, they’re easy to find.

Perpetual preferred shares are another option. It’s easy to find yields of more than 6 per cent with high credit ratings from companies such as Fortis FTS-PR-F-T, Great West Life GWO-PR-Y-T and Intact Financial IFC-PR-E-T.

I don’t think we’ll see yields in this range a year from now. Take advantage of them while you can.

Gordon Pape is the editor and publisher of the Internet Wealth Builder and Income Investor newsletters.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 01/03/24 9:30am EST.

SymbolName% changeLast
CSAV-T
CI High Interest Savings ETF
+0.04%50.07
CASH-T
Horizons High Interest Savings ETF
+0.04%50.01
XHY-T
Ishares US High Yield Bond Index ETF
+0.06%16.38
TRP-T
TC Energy Corp
+0.26%53.82
ENB-T
Enbridge Inc
+0.71%46.98
PPL-T
Pembina Pipeline Corp
+0.68%47.55
EMA-T
Emera Incorporated
+0.36%47.77
CU-T
Canadian Utilities Ltd Cl A NV
+0.88%30.83
CPX-T
Capital Power Corp
+0.68%38.61
FTS-T
Fortis Inc
-0.19%52.23
REI-UN-T
Riocan Real Est Un
+1.29%18.11
CHP-UN-T
Choice Properties REIT
+0.75%13.49
PMZ-UN-T
Primaris REIT
+0.96%13.62
SGR-UN-T
Slate Grocery REIT
+0.27%11.17
BNS-T
Bank of Nova Scotia
+0.62%66.22
CM-T
Canadian Imperial Bank of Commerce
+2.49%65.82
FTS-PR-F-T
Fortis Inc Pref Shares Series F
-0.3%20
GWO-PR-Y-T
Great-West Lifeco Inc.
-0.51%17.55
IFC-PR-E-T
Intact Financial Corp Pref Cl A Ser 5
-1.54%20.43

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