Chasing high dividend yields without putting in the homework beforehand can lead to considerable downside in a hurry, especially when it comes to the firms (like the lesser-known mid-caps) that lack a long enough track record on the public markets. Indeed, those smaller-cap tend to be a more volatile ride that may be too much for investors to handle. With interest rates hovering close to highs (even with the latest rate cut from the Bank of Canada), investors don’t need to look too far for a battered bargain.
Some of the large-cap blue chips have actually been under serious pressure in recent years, and it’s these names that may look the most appealing through the eyes of investors. Undoubtedly, former market darlings that have fallen out of favour are definitely worth checking in on. That said, buying a huge position at one price may be a riskier endeavour than you think.
Sure, large-caps and ex-market darlings may be able to use their size to their advantage (think economies of scale) through the toughest of days. However, don’t think that a blue chip is 100% safe just because of its large market cap. Indeed, investors should always put in more than enough due diligence before loading up on any name, including the much-owned ones that some may refer to as no-brainer buys whenever they dip substantially.
BCE stock: A former market darling with an 8.9% yield Indeed, ( ) is a fallen telecom stock that has a huge dividend yield right now. As the share price tumbled, the y.
