Money Should Investors Buy This 10% Yield Now?

20:25  16 april  2017
20:25  16 april  2017 Source:   The Motley Fool

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Therefore, investors should focus on adding fantastic companies with long-term prospects rather than chasing high yields . Fool on! 1 Massive Dividend Stock to Buy Today (7.8% Yield !)

But these days, low interest rates mean bond yields are also low, so investors should be aware of what they're getting into, he says. The 10 -year Treasury note is yielding 1.7 percent. To get that 6 percent yield now , investors would have to buy corporate bonds from companies with higher credit

thinking 16-9 © Provided by Fool thinking 16-9

As Foolish investors know, exposure to the real estate industry is needed in every portfolio. It’s a proven wealth builder, and many REITs provide steady dividend yields to investors.

However, the dividend yields can range significantly; some REITs produce yields above 10%. With the stock market providing annual average returns in the range of 8-10%, can investors obtain superior returns by having a stock that pays out 10% with a chance of capital appreciation?

Cominar REIT (TSX:CUF.UN) is a REIT that’s a part of the 10% yield club; however, does it belong in your portfolio?

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For example, 10 -year German government bonds now yield negative 0. 10 percent, Swiss 10 -year bonds yield negative 0.58 percent and Japan's 10 -year bonds return negative 0.11 percent. This means " investors should look overseas for high- yielding dividend stocks.

Get Top 10 Stocks in Sure Dividend Newsletter NowGet The 5%+ Yield Sure Retirement Newsletter Now . One data-driven formula that determines whether you should buy now or wait for a better price. With the stock market historically overvalued, should investors purchase stocks at this time?

Here’s a closer look at the company.

Management’s focus

The company owns and operates over 500 commercial properties throughout Canada with over $8.3 billion in assets. In 2016, management made efforts to reduce the company’s debt levels after significant acquisitions in 2014. The company achieved this goal by bringing its debt ratio to 0.52, which is close to its debt ratio of 0.51 in 2013.

Now management is shifting its focus to improving its occupancy rates and financial results. The company currently has an occupancy rate of 92.4% which is significantly lower than some of the other large REITs in the market. However, this also indicates that there is room for improvement regarding the company’s current cash flows.

Is the yield safe?

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These 10 Dow stocks may provide traders with speculative profits, but buy -and-hold investors should be wary. Investors attracted to Verizon's 6.4% dividend yield should look to the company's senior bonds as a safer income play.

Succesfull investors know that small cap stocks have historically outperformed the market. Dividend investors should consider these 10 high- yield If it makes it to billion, and you've invested , you double your money; if the large cap company adds 0 million to its market cap, you've only made 1%.

Although the company hasn’t cut its dividend in the past seven years, the company’s payout ratio is now above 100%. In addition, the funds from operations per share have started to decline since the company’s expansion in 2014. Therefore, unless Cominar can increase its occupancy rates, it may struggle to service its dividend yield in the future.

Foolish bottom line

Until Cominar can improve its cash flows and increase its occupancy rates, I would suggest refraining from adding this stock to your portfolio. A high dividend yield is not a shortcut to accelerating returns, and investors are better off investing in companies with more conservative yields and potential for growth.

Building wealth takes time and patience, and there are no shortcuts. Therefore, investors should focus on adding fantastic companies with long-term prospects rather than chasing high yields.

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Latest Investing News. Gainers & Losers in the Market Today. 3 Top Dividend Stocks to Buy Now . With its 10 % forward yield Thus, any income investors who want to acquire units at today's prices should be aware of the increased risks and allocate their diversified income portfolios accordingly.

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Fool contributor Colin Beck has no position in any stocks mentioned.

Why I’m Skipping This Succulent 10% Yield .
Cominar REIT (TSX:CUF.UN) offers one of the best dividends around. There's just one problem: I'm not convinced it can maintain the payout.CVX

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