Last week, I took a shot at Dividend Aristocrats on theUS side. But did you know that Canadians have Dividend Aristocrats too? Mind you, I’m going to temper your hype right away, the minimum requirements are far from the “original” aristocrats lists. Unfortunately, the Canadian stock market is way smaller and less diversified than the US market. It is actually impossible to find a good amount of stocks that have been increasing their dividend for 25 consecutive years in Canada. However, that doesn’t mean that the list isn’t good either!

 

Canadian Dividend Aristocrats Rules

 

In order to be considered as a S&P Canadian Dividend Aristocrat, the company must have increased its dividend payout every year for five years but have a free way and is still eligible if the company maintains the same dividend payout for a maximum of 2 years. Therefore, we are looking at stocks that have a good potential for raising its dividend but still pretty far away from 25 consecutive years.

 

The Most Important Rule

 

Along with the main rule, the stock must also have a market capitalization minimum of $300M and have increased its dividend in the first year of the prior five years reviewed for dividend growth.

 

As you can see, it’s not “that difficult” to qualify under the Canadian Aristocrats list. But the Canadian stock market is less diversified and we don’t have an economy allowing behemoths such as Colgate-Palmolive or Procter & Gamble. Nonetheless, the Canadian Aristocrats don’t have anything to envy in their southern neighbors. Here are the results over the past 5 years:

 

Canadian Aristocrats Lists + 5 Years Performance Return

 

Company Name
Ticker
Price
Dividend
Yield
P/E
Total Return 5Y
DVD_PAYOUT_RATIO
Toronto-Dominion BankTD.TO$82.12$0.683.31%13.0940.32%40.57
Bank of Nova Scotia HalifaxBNS.TO$53.97$0.523.85%11.6919.53%44.36
Suncor Energy IncSU.TO$31.48$0.111.40%11.6-31.17%15.70
Barrick Gold CorpABX.TO$39.33$0.161.63%8.9318.24%11.35
Imperial Oil LtdIMO.TO$45.34$0.110.97%11.486.60%11.06
Canadian Natural ResourcesCNQ.TO$32.62$0.091.10%13.6-6.91%14.92
Canadian National RailwaysCNR.TO$83.96$0.321.52%14.7159.52%23.81
TransCanada CorpTRP.TO$43.13$0.423.90%19.8432.31%76.27
Enbridge IncENB.TO$40.29$0.282.78%30.89150.38%76.59
Thomson Reuters CorporationTRI.TO$29.07$0.324.40%#N/A-27.39%
Rogers Communications Inc BRCI.B$36.54$0.353.83%12.9-3.44%49.01
TELUS CorpT.TO$58.54$0.583.96%15.6816.38%58.65
Talisman Energy IncTLM.TO$13.03$0.144.30%43.94-44.66%35.70
Canadian Pacific Railway LtdCP.TO$76.44$0.301.57%19.2615.02%34.74
IGM Financial IncIGM.TO$46.29$0.544.67%14.317.18%64.56
Cameco CorpCCO.TO$21.57$0.101.85%18.94-58.29%35.05
Shaw Communications Inc BSJR.B$19.93$0.084.82%12.259.44%72.56
Shoppers Drug Mart IncSC.TO$42.00$0.252.38%14.81-10.39%35.29
Saputo IncSAP.TO$45.52$0.191.67%19.35128.42%28.58
Fairfax Financial Hldgs LtdFFH.TO$398.24$10.122.54%#N/A81.71%
Canadian Utilities Ltd A NvtgCU.TO$68.58$0.402.33%17.8774.64%54.72
Tim HortonsTHI.TO$55.58$0.171.22%23.5572.60%28.80
Intact Financial CorporationIFC.TO$61.86$0.372.39%15.5851.82%37.86
Fortis IncFTS.TO$33.95$0.303.53%19.0543.43%68.24
SNC - LAVALIN GROUP INC.SNC.TO$36.78$0.212.28%14.7514.06%33.46
Canadian Tire Corp Ltd A NvtgCTC.A$68.65$0.301.75%12.02-5.50%19.64
Metro Inc AMRU$53.64$0.191.42%13.2351.40%19.96
Finning Intl IncFTT.TO$28.00$0.131.86%18.63.57%33.73
Emera IncEMA.TO$34.79$0.343.91%17.8896.07%65.82
Atco Ltd I NvtgACO.X$72.37$0.281.55%12.8256.33%20.14
Empire Co Ltd A NvtgEMP.A$59.37$0.221.48%12.2346.02%14.73
Keyera Corp.KEY.TO$39.40$0.171.73%20.74202.02%100.71
Methanex CorpMX.TO$33.43$0.182.15%16.4740.94%30.75
Jean Coutu Group Inc A SubvtgPJC.A$14.10$0.061.70%14.915.15%23.37
Ensign Energy ServicesESI.TO$14.61$0.112.87%10.54-21.61%28.13
Canadian Real Estate Inv TrstREF.UN$38.55$0.123.74%56.4961.96%209.66
Ritchie Bros Auctioneers IncRBA.TO$20.25$0.122.37%28.714.71%60.27
Cogeco Cable IncCCA.TO$47.79$0.252.09%12.5714.61%
ShawCor Ltd ASCL.A$31.91$0.081.00%40.9412.32%39.10
Canadian Western BankCWB.TO$28.82$0.152.08%14.5327.68%24.04
Corus Entertainment Inc B NvtgCJR.B$24.25$0.073.46%13.1121.61%45.32
Constellation Software Inc.CSU.TO$91.74$1.014.40%12.58278.30%26.97
Home Capital Group IncHCG.TO$48.00$0.201.67%8.7935.68%14.24
Cineplex Inc.CGX.TO$30.03$0.114.40%35.72146.98%229.70
Atlantic Power CorporationATP.TO$14.01$0.108.57%#N/A98.81%
AGF Management Ltd B NvtgAGF.B$13.85$0.277.80%13.66-53.61%88.59
CCL Industries Inc BCCL.B$38.78$0.171.75%15.523.31%27.55
Pason Systems IncPSI.TO$13.35$0.205.99%12.74-12.12%36.10
Transcontinental A SubvtgTCL.A$11.60$0.144.83%26.53-39.58%40.10
Reitmans Canada Ltd ARET.A$15.23$0.205.25%21.25-20.83%110.76
Northern Property REITNPR.UN$32.78$0.134.76%10.7965.54%50.09
Enbridge Income Fund Holdings Inc.ENF.TO$21.57$0.105.73%14.45175.23%140.05
Dorel Industries BDII.B$29.82$0.152.01%9.47-13.39%18.62
Cogeco IncCGO.TO$51.19$0.181.41%4.7631.06%
Computer Modelling Group LtdCMG.TO$15.61$0.112.82%27.44491.26%98.86
Bird Construction Inc.BDT.TO$14.84$0.054.04%21.14210.01%110.00
Ag Growth International IncAFN.TO$40.16$0.205.98%20.95150.89%122.78
Exchange Income CorporationEIF.TO$24.90$0.146.75%22.54233.26%130.63

Canadian Aristocrats Show Very Interesting Dividend Yield

 

There are 58 Canadian Aristocrats (so 7 more than the “original” Dividend Aristocrats). They show an average dividend yield of 3.13% (as compared to 2.72% in the US). There are 25 Canadian aristocrats paying over 3% in dividend. This could be explained by the fact that the TSX dropped by 16% over the past 12 months and currently show a P/E ratio around 13 (while the historic average is near 16). Among the top dividend payer, I currently hold positions in BNS and Telus. You also find 2 other stocks in the telecom industry: Rogers (3.83%) and Shaw Communications (4.82%).

 

Half of my Best Canadian Stock Picks for 2012 are Part of Canadian Aristocrats

 

Reviewing my Best Canadian Stocks for 2012, I noticed that I have picked 4 stocks out of 9 from the Aristocrats list:

Corus Entertainment Inc – CRJ.B

IGM Financials – IGM

Telus Corp – T

Toronto-Dominion Bank – TD

 

I also think that it’s only a matter of time before National Bank (NA) and BCE (BCE) join this elite group of dividend payers.

 

The 5 Years Average Return is Quite Impressive (+52%)

 

I was quite surprised to see that even with the market crunch, dividend aristocrats are holding well with an average total return of 52% (dividend included) over the past 5 years. You can see how strong dividends play a role in the total return: The average dividend yield of theCDNAristocrats is 3.13%; over 5 years, this represents 30% of the total return (15.65% / 52%). This shows you that dividend rules during market volatility!

 

Nonetheless, there are 14 stocks out of 58 that show a negative return with Cameco leading the way at -58.29%. A recession doubled with a nuclear tragedy in Japan could easily explain this bad result. On the brighter side of things, 10 stocks have doubled (+100% and over) in the past 5 years.

 

Dividend Payout Ratio Seems Reasonable

 

If I ignore the 13 highest payout ratios on the list, I still have 40 stocks (I have 4 stocks where I couldn’t get the payout ratio from my Excel system) showing ratios less than 70%. In this category, the “best deal” is probably Constellation Software with a dividend yield of 4.40%, a 5 year total return of 278% and a dividend payout ratio of only 26.97%! TD,BNS andCJR.B (Corus) are also strong players in all 3 categories.

 

We also have 2 Canadian REITs showing strong results: The Northern Property REIT (NPR.UN) and Canadian Real Estate Investment Trust (REF.UN).  You can’t consider the payout ratio (you are better of using the AFFO or the FFO) but the dividend yield (4.76% & 3.74%) and 5 year total return (65.54% & 61.96%) are quite impressive for a business that should show very stable numbers. You can find over 23 Canadian REIT analyses over at CanadianDividendStock.com.

 

Investing in Canadian Aristocrats is Quite Tempting

 

After looking at the Canadian Aristocrats list along with their performance over the past 5 years, I can tell that this Elite group of dividend payers is definitely worth looking into it. They show a high potential of facing recessions while paying investors to wait in the meantime. In the end, if I had selected this portfolio 5 years ago, I would have showed a better investment return than I have now!

 

What about you? J

 

Awesome Deal for Canadian Investors

 

If you are looking for a place to start your stock picking journey, I strongly suggest you look up to my limited time offer to subscribe to the best Canadian Stocks Newsletter: The Successful Investors written by Pat McKeough. On top of getting a monthly newsletter (roughly 10 pages of Canadian Stocks analysis – mostly dividend stocks), you get access to the archive + 11 exclusive reports. Instead of paying the regular price of $89, I get a special discount for The Dividend Guy Blog readers. You can sign-up for $39 (that’s $3.25 per issue!)

The Successful Investor

here’s the list of all the report you can download in addition to the newsletter archive:

 

 

 

Disclaimer: I hold T, NA, BNS

 

Start Dividend Investing
Subscribe to our exclusive Dividend Mailing List and download your free Dividend Investing Guide
We hate spam just as much as you & will respect your privacy


You are interested in dividend investing? Check out my Free Dividend Investing eBook and don't forget to sign-up to my RSS Feeds!
7 Comments   |  

7 Comments

Vikas
May 28, 2012, 8:07 am

I just wanted to point out that a correction might be required on your list.

Talisman Energy Inc – the yield is less than what you have quoted. They only do a semi-annual payment, which makes their yield half of what you have posted.

I enjoy reading your blog! keep up the great work.

Mike
May 29, 2012, 6:58 am

Hey Vikas,

thx for pointing it out! I noticed that my Excel program doesn’t work when the company is not paying quarterly dividend!

I’ll look into it!

Mike

May 30, 2012, 11:22 pm

I’m not familiar with most of these companies, except the Telecom ones. I see they are doing well. That’s one industry that seems to be able to move with the technology.

June 1, 2012, 12:01 am

Nice roundup, The criteria that you state for the Canadian dividend Aristocrats that they have a freeway that they may maintain their dividend for 2 years, where did you find this information?

I investigated this extensively earlier in the year after the new 2012 lineup was annoounced and they added back such companies as TD and BNS. S&P appeared to announce the new line up in the index and then followed up with the changed criteria later. Clearly the adjustments were made to try to maintain some breadth in the index that was decimated by the 2008 financial crisis.

Anyway thanks for providing the payout ratio and the return numbers on the names in the index. Great post and great site.

-Dtb

June 4, 2012, 5:00 am

[…] Canadian Dividend Aristocrats […]

Jeff
October 31, 2012, 11:03 am

MIke,
Thanks for your blog. I’m just a newbie to investing after years of mutual fund investing.

Would you still recommend these stocks now in 4th quarter of 2012?

Mike
October 31, 2012, 7:18 pm

Hey Jeff,

it depends on the stock you are looking at. Before you pick any of them, you should go through a real stock analysis and not base your decision on dividend growth only.

Post Comments

Notify me of followup comments via email