It’s an indicator we pay especially close attention to when we select stocks to recommend in our investment newsletters. It is the percentage you get when you divide the current yearly dividend payment by the share or unit price of the investment. The dividend yield is certainly one of the most concrete indicators of a sound investment. The best blue chips offer both capital gains growth potential and regular dividend income. More important, dividends are impossible to fake-either the company has the cash to pay them or it doesn’t. Dividends, after all, are much more stable than earnings projections. Buy blue chip stocks if you want to add some of the best Canadian stocks to your portfolioĪ company with a long-term record of paying dividends is generally one that is most deserving of the “blue chip” label in its traditional sense. Of course, many of our sales are due to a successful takeover of a company’s stock, which generally results in a major profit. We also sell if we decide that a stock isn’t as high-quality or well-established as it needs to be to cope with the challenges it faces. We advise selling particular stocks when we feel the situation has changed and they no longer qualify as high-quality investments. But we do not recommend that you hold indefinitely. Obviously, it is easier to hold high-quality stocks that perform well over time. In short, our strategy focuses on the concept of “buy and watch closely.” We prefer “buy and watch closely.” But we still think frequent trading is apt to make money only for your broker. “Buy and hold” is a bad way to describe what we recommend. Downplay or stay out of stocks that are in the broker/media limelight.Diversify across most if not all of the five main economic sectors (Manufacturing & Industry Resources & Commodities Consumer Finance Utilities).Invest mainly in high-quality, well-established companies, with a history of earnings if not dividends.To find those stocks, and build a sound portfolio, start with our Successful Investor philosophy: We believe that high-quality stocks are your best protection in a portfolio, especially given the economic uncertainty tied to the continuing COVID-19 pandemic. Learn how you can find the best Canadian stocks using our Successful Investor guidelines
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