Granted, although there are very few honorable exceptions, banks are not boosting their dividend payouts. Considering the hits they’ve taken in the subprime fiasco, this is hardly a surprise. I guess we could say banks have had us spoiled, what with all the dividends doled out over the years. But just because banks aren’t sharing their earnings now as they did before, it doesn’t mean that no one else is.
While I still think holding quality financial stocks should be a part of any well-diversified and balanced portfolio, it might be quite beneficial for investors seeking dividend income to look outside the financial sector. For example, construction and infrastructure companies are posting huge profits and are boosting their dividends.
Now, before you start thinking I’m out of my mind, when I said construction and infrastructure companies, I didn’t mean homebuilding companies. I’m thinking of companies that are building highways, bridges, etc., particularly in the booming areas around Alberta’s oil sands. Another option to look at might be established and conservative income trusts, particularly those where the underlying commodities are oil sands projects, which have enjoyed considerably higher distributions following the recent surge in crude oil prices.
Things for dividend investors don’t have to end with commodities and construction. There are plenty of solid, specialty retail companies in Canada announcing double-digit dividend increases as of late. While within the retail realm, investors should look into cable companies as well. Canadians appear to be very fond of their high-definition TV sets and want only the best programming showing on them, thus boosting cable companies’ bottom lines and dividends in the process.
Finally, there are companies building pipelines and producing energy. Canada’s big pipeline companies have been paying more than decent dividends for decades now, as have power suppliers. But, in recent months, their strong earnings allowed them to increase their dividends, adding to the number of available dividend income stocks.