Yield is perhaps one of the most important aspects of any stock to consider when thinking about adding a position as a long-term holding. After all, a one- or two-percentage-point difference in two stocks over decades can mean the world of difference for an investor relying on dividend income to support a retirement portfolio or a young investor looking to build up an initial nest egg to begin with.
That said, it is important to remember that, barring dividend increases, a rising dividend yield for a company means a declining stock price – a situation which may prove to be a solid buying opportunity for value investors, or a potential value trap, depending on the ability of said company to generate long-term returns for shareholders.
In the case of High Liner Foods Inc. (TSX:HLF), the frozen seafood producer has certainly dealt with its fair share of problems over the past year.
An expanded recall in addition to a recent earnings miss have propelled shares of High Liner lower in recent months. Year-to-date the company is down more than 30%, representing much of the downside many investors have priced into the embattled food company.
High Liner is an established company with a very solid dividend; for those willing to speculate as to the ability of the company to turn around expectations in the near-term, now may be the time to scoop up some shares. For long-term investors, however, the best course of action in this case may be to stay away.
Invest wisely, my friends.
