Yesterday, I went to the fine credit union where I do my banking. I’m such an exciting person.
Now, as I’ve discussed before, there’s basically only one reason why I continue to go to this particular credit union. They continue to hire the hottest chicks. That’s it. The girls are relatively competent, but not impressively so. The service charges are no better than any other bank. As long as I continue to enjoy the scenery, I will continue to do my banking there.
So while I was there yesterday, I was checking out the big board at the front of the building, the board that shows you the interest rates charged for mortgages and the interest rate paid on GICs. I know interest rates are really low right now, so I didn’t expect much from the GIC rates. It’s a good thing I didn’t expect much, because wow are GIC rates really bad. My credit union is paying out 2.25%/year only if you lock up your money for 5 years. I just checked on the internet, and that’s the best rate in town.
As you probably guessed by the title, this post is going to take a look at some stocks that yield more than twice as much as a 5 year GIC. Before we get to it though, I just want to say that you need to just suck it up and put your cash in a GIC (that’s a CD for my American readers, but you probably already knew that) if you’re going to need that cash in the next 2 years.
Anyway, let’s get to it. Your obsessive quest for yield has almost been quenched.
1. Roger’s Sugar (current yield 6.56%)
Being in the sugar business in Canada is awesome. To protect the domestic producers, the feds have ruled that any imported sugar be hit with a steep tariff, thereby making any imported sugar automatically uncompetitive. So the business is shared by Roger’s and their lesser competitor, Redpath. It’s a remarkably steady business, and Roger’s just passes any price increases in sugar onto it’s customers. I’ve been a happy shareholder of Roger’s for years.
2. Husky Energy (current yield 5.12%)
One of Canada’s largest energy producers, Husky has been plagued with some operational issues lately. That, combined with a weaker oil price has pushed the value of the shares down to the $23 range, thereby pushing the dividend yield above our magic 5% threshold. If you’re a believer in higher oil prices long term, this could be a great time to pick up shares in Husky. The dividend will warm your cold, cold heart as you wait for the stock to appreciate.
3. Reitmans (current yield 5.21%)
Reitmans is a chain of women’s clothing stores, operating in just about every shopping mall across Canada. They also own other banners such as Smart Set, Penningtons and Addition Elle (that last one is for fat chicks). The recession obviously hurt Reitmans, but women will continue to shop for clothes. Just as long as they don’t use my money to do so. I’ve owned the stock for a few years, and it’s done nothing in that time. But I have collected a nice 5% dividend as I’ve waited.
4. Great West Life (current yield 6.01%)
One of Canada’s largest insurance companies, Great West Life has gotten hammered lately, as any weakness in the stock market translates into weaker results for any life insurance company, since they invest the premiums they get each month. Low interest rates are negative as well, for the same reasons. So if you buy it now and forget about it, you’re getting 6% just to wait. It’ll bounce back when the market does.
5. BCE (current yield 5.44%)
Canada’s oldest telecom is next on the list. This bad boy isn’t going to give you a whole lot of growth, but offers a steady, highly profitable business, and a dividend that’ll just keep on chugging upwards. They are getting some growth from their media division, and we all know that text messaging is ridiculously profitable.
6. Transalta (current yield 5.25%)
As I type this, the light is on in the living room, my laptop is plugged in and the TV is on. I just got done eating toast and drinking chocolate milk. All of this stuff requires power to run, meaning power generator Transalta’s business looks pretty secure. Plus, like Roger’s Sugar, they can just pass on any cost increases to their customers. What are you supposed to do, sit in the dark?
7. Inter Pipeline (current yield 6.02%)
Okay, so maybe you don’t want to own a business like Husky that’s exposed to oil prices. So why not own a pipeline then? The “toll roads” of the oil business, pipelines get paid a fixed fee, no matter how low the price of oil gets. Building the pipeline takes a huge upfront cost, and then it collects a small fee over and over again. This is a great business model to invest in, it almost acts like a bond. This stock has done quite well for me.
8. AGF Management (current yield 6.81%)
AGF is one of Canada’s largest mutual fund companies. Yes, I know, I hate mutual funds. And hopefully, you do too. Their high fees make them a bad idea for investors. As long as there’s the current network of mutual fund salespeople (who are solely compensated by commission) who continue to push these funds, they’re not going to go away. So why not invest in the company that charges the outrageous fees? Besides, you probably held some of these crummy mutual funds at some point. You’re just getting your money back.
9. Chartwell Senior’s Housing REIT (current yield 7.35%)
Not me personally, but the rest of you are getting old, especially those pesky baby boomers. There will come a point where you will not be able to control your bowels anymore, and will therefore be a burden to your family. Luckily for all of us, we can just put you into a home once you become an inconvenience. Until that happens, invest in Chartwell, where hopefully you’ll get some of that dividend money, which will eventually be paid to them for taking care of you. It’s a full circle.
10. Groupe Aeroplan (current yield 5.02%)
You’re a sucker for Aeroplan points, so why not invest in the company? A warning on this one though, it doesn’t look like the company is earning enough to cover that dividend.
So, there you go, you can stop whining about minuscule GIC yields. Finding a 5% yield is pretty easy.