Many investors gravitate to high-yield high-risk companies in the current low-interest-rate environment because they fixate on the dividend yield. More often than not, however, the potential reward is not commensurate with the risk being assumed and this investment approach could very well haunt these investors.
Historically, high-yield high-risk companies have been susceptible to swift stock price declines and reductions in dividend distributions. The reason is that the underlying performance of these companies, more often than not, can not sustain these dividend distributions.
In my opinion, BCE (Canada’s largest communications company) is a far more attractive investment if an investor wishes to receive an attractive dividend that is sustainable.
My guest post at Dividend Power analyses BCE.
NOTE: Shares trade on the Toronto Stock Exchange and the New York Stock Exchange (TSX, NYSE: BCE). BCE reports in Canadian dollars and I express all financial information in my guest post in that currency.
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Disclosure: I am long BCE in retirement accounts for which I do not disclose details and in the FFJ Portfolio.
Disclaimer: I do not know your individual circumstances and do not provide individualized advice or recommendations. I encourage you to make investment decisions by conducting your own research and due diligence. Consult your financial advisor about your specific situation.
I wrote this article myself and it expresses my own opinions. I do not receive compensation for it and have no business relationship with any company mentioned in this article.