By Angela Harmantas
Dividend-paying companies may be increasingly attractive after last week’s selloff, but there are many factors to consider before buying shares. Today on SmallCapPower we discuss what to look for in a dividend stock, and share a few picks with increasing cash flow. Also, we discuss Rick Rule’s recent comments on the state of the resources markets, and anticipate some key economic figures that will tell us if Canada is in a recession – here’s what you need to know today:
Dividend-paying stocks are something of a mixed blessing for investors: on the one hand, they reward shareholders with cold, hard cash. On the other hand, however, companies often pay dividends at the expense of reinvesting profits into their business. After a rough week in the markets, I wouldn’t be surprised to see an increased interest in dividend-yielding stocks. Our analysts put together a list of 5 small cap stocks with growing cash flows and a 7%+ dividend yield that may be attractive to the risk-weary investor. For more insight into how and where to invest in dividend stocks, check out this helpful article published recently in the Globe and Mail. Are you looking for the relative safety of a dividend payer, or do you see flaws in the model? Let us know your thoughts.
Speaking of thoughts, I’m always interested in hearing what Rick Rule, chairman of Sprott US Holdings Inc., has to say about resource investing. Rule is an unapologetic optimist when it comes to resources investing, so I don’t know whether I’m worried or relieved to hear him say in a new interview that “scary times are upon us” as capitulation takes hold in the market. He does, however, share his belief that it could be the end of the bear market for the resources and precious metals sector based on his interpretation of the VIX (CBOE Volatility Index) rising above 30 last week. I’m curious if you agree – do you think we need to see all-out capitulation in order for resource stock performance to improve?
Elsewhere this week, Canadians will learn whether the country has truly fallen into a recession when Statistics Canada announces the GDP figures on Tuesday. They’ll also release updated job figures on Friday – watch for these numbers to become a focal point for the remaining two months of the federal election. We’ve been pleasantly surprised with Q2 earnings from the banks, so I’m hopeful that we’ll have a similar situation with the new data.
Do you have a burning question you’d like answered by an investment expert or analyst? Let me know and I can post the answer here in the blog. Contact me by email at angela@smallcappower.com or on Twitter: @aharmantas.
