Yield is not enough when choosing global dividend stocks

Mackenzie manager favours companies that are less vulnerable to rising interest rates.

Diana Cawfield 24 September, 2015 | 5:00PM

In building a global portfolio of dividend-paying stocks, Darren McKiernan, manager of Mackenzie Global Dividend, focuses on companies that are able to increase their dividend payments and maintain their payout ratios, regardless of where interest rates are headed.

Expecting an interest-rate hike before too long by the U.S. Federal Reserve, McKiernan has been avoiding companies that are highly sensitive to rate increases. "We think that investors who have just purchased companies like utilities, infrastructure assets or airports, simply because they've got a 4% or 5% yield, are going to be impacted (when interest rates go up)," says McKiernan, a senior vice-president and portfolio manager at Mackenzie Investments.

Nor is McKiernan influenced by market-wide comparisons of the dividend yields and payout ratios of Canadian stocks versus foreign stocks. This is like "comparing apples to oranges," he says.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
HSBC Holdings PLC ADR27.82 USD-2.21
Motorola Solutions Inc173.71 USD0.82
Royal Bank of Canada107.36 CAD-0.45

About Author

Diana Cawfield

Diana Cawfield  Diana Cawfield is an award-winning writer who has been a regular Morningstar contributor since 2000. Her numerous publication credits include the Toronto StarAdvisor's Edge and Chatelaine, as well as the Canadian Securities Institute's online educational services.

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