If you are Canadian and you are looking to invest in dividend stocks, I am ready to bet my first born (not really!) that you have Canadian banks in your portfolio. Why? Because Canadian Banks have several awesome qualities any dividend investor is looking for:
- They are leaders in their industry (they are actually part of the most solid banks in the world).
- They are steady dividend payers (they can’t qualify as dividend aristocrats, but they are still pretty solid).
- They show steady revenue and profit growth.
- Competition is protected and legislated by strict government laws (which improve their chances of having steady financial results!).
- They pay more than 3% in dividends (and are now starting to increase their dividends again since 2008!).
And on top of that, some of them (think about National Bank: NA) are reporting great growth for what is considered a “mature” market.
But is there anything else to buy in Canada for dividend investors?
Oohhh… that’s a good question! I am also a big fan of Canadian banks…. But this is far from being enough if you want to build a solid investment portfolio.
Then you have 2 choices… high dividend yield stocks or solid companies with lower dividend yields?
If you take option #1, I suggest you take a look at the high yield Canadian dividend stocks list over at What is Dividend. The list was created by looking at the highest dividend yield stocks on the Canadian market with no other criteria. In other words, it is to be used at your own risk ;-). However, I would take a closer look at the first stock on the list: CFX: Canfor Pulp Products. The stock is literally on fire and pays high dividends. On the other hand, I haven’t looked at their financials yet so I could not write much about it… I was just surprised when I looked at it this morning. First National: FN could be interesting as well as they work in the Canadian mortgage industry (all right, almost like a bank ;-0 ).
Option #2 look among the best Canadian Dividend Stocks
I maintain 2 lists over @ The Financial Blogger:
The difference between the 2 lists is the criteria. The top 10 is way more selective since it includes dividend growth over 5 years along with a dividend payout ratio under 60%. But since following 10 stocks is sometimes not enough, I have decided to add a second list quarterly with different criteria. My favorites among them? Here they are:
NPR – Northern Property Real Estate Investment Trust
I have already mentioned that Canadian REITs could be a great investment in your portfolio. Well, one of the strongest Canadian Dividend Stocks is Northern Property Real Estate Investment Trust. Strong with a P/E ratio under 12 (which has become rare on the Canadian market), NPR is ranked second in the Top 10 Canadian Dividend Stocks according to my list. The current dividend yield is 5.36% with a dividend payout ratio of 57%
SJR – Shaw Communications
As I mentioned in my article about sector investing, I am a strong believer of choosing the right industry before choosing the right stock. Anything that touches the internet and telecommunication these days will grow in my opinion. Technologies have never evolved so fast and all distributors will greatly benefit from it. The current dividend yield is 4.78% and dividend payout ratio of 69.85%
POW – Power Corp
I like Power Corp as it is a very well diversified financial corporation. Under its umbrella, let’s just mention Investors Group, Great West and London Life. I have worked in a partnership with this company and I can attest to the strength of their upper management. This certainly one of the most steady dividend stocks in Canada. The current dividend yield is 4.09% and dividend payout ratio of 61.32%
T – Telus
With employers opening up to home offices and communications across their multiple offices, I think that Telus can play an interesting role in managing telecommunication for companies. Along with that, the cell phone market seems unstoppable with the multiple gadgets we find on the market (iPhone, wifi tablets, BlackBerries, etc.). The current dividend yield is 4.28% and dividend payout ratio of 62.09%
Have a look at the 2 lists, tell me which are your favourite Canadian Dividend
Stocks for 2011?
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