The question on the minds of many investors, and one I'm thinking about more every day, is just how safe are some of the dividends that many Canadian investors take for granted?
Many assume certain dividends will never be cut, such as dividend distributions from Canada's “Big Six” banks.
It seems to be heresy to suggest that these dividends could be cut (or those and other extremely safe or defensive sectors like pipelines, for example) but I do think the risk of dividend cuts among blue-chip companies continues to increase every day as recession fears continue to grow.
Of course, smaller-cap companies like Chemtrade will be in a position where dividend cuts take place out of necessity. But I do think that any investor who's thinking “I'll pick up shares with that blue-chip bank utility or pipeline company at these ridiculously low prices and pick up a guarantee dividend yield in the high single digits, low double digits” needs to check his or her logic.
Markets aren't stupid (they're smarter than all of us) and they seem to be starting to price cuts in now.
Invest wisely, my friends.
