Last week, I took a shot at Dividend Aristocrats [1] 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 Bank TD.TO $82.12 $0.68 3.31% 13.09 40.32% 40.57
Bank of Nova Scotia Halifax BNS.TO $53.97 $0.52 3.85% 11.69 19.53% 44.36
Suncor Energy Inc SU.TO $31.48 $0.11 1.40% 11.6 -31.17% 15.70
Barrick Gold Corp ABX.TO $39.33 $0.16 1.63% 8.93 18.24% 11.35
Imperial Oil Ltd IMO.TO $45.34 $0.11 0.97% 11.48 6.60% 11.06
Canadian Natural Resources CNQ.TO $32.62 $0.09 1.10% 13.6 -6.91% 14.92
Canadian National Railways CNR.TO $83.96 $0.32 1.52% 14.71 59.52% 23.81
TransCanada Corp TRP.TO $43.13 $0.42 3.90% 19.84 32.31% 76.27
Enbridge Inc ENB.TO $40.29 $0.28 2.78% 30.89 150.38% 76.59
Thomson Reuters Corporation TRI.TO $29.07 $0.32 4.40% #N/A -27.39%
Rogers Communications Inc B RCI.B $36.54 $0.35 3.83% 12.9 -3.44% 49.01
TELUS Corp T.TO $58.54 $0.58 3.96% 15.68 16.38% 58.65
Talisman Energy Inc TLM.TO $13.03 $0.14 4.30% 43.94 -44.66% 35.70
Canadian Pacific Railway Ltd CP.TO $76.44 $0.30 1.57% 19.26 15.02% 34.74
IGM Financial Inc IGM.TO $46.29 $0.54 4.67% 14.31 7.18% 64.56
Cameco Corp CCO.TO $21.57 $0.10 1.85% 18.94 -58.29% 35.05
Shaw Communications Inc B SJR.B $19.93 $0.08 4.82% 12.25 9.44% 72.56
Shoppers Drug Mart Inc SC.TO $42.00 $0.25 2.38% 14.81 -10.39% 35.29
Saputo Inc SAP.TO $45.52 $0.19 1.67% 19.35 128.42% 28.58
Fairfax Financial Hldgs Ltd FFH.TO $398.24 $10.12 2.54% #N/A 81.71%
Canadian Utilities Ltd A Nvtg CU.TO $68.58 $0.40 2.33% 17.87 74.64% 54.72
Tim Hortons THI.TO $55.58 $0.17 1.22% 23.55 72.60% 28.80
Intact Financial Corporation IFC.TO $61.86 $0.37 2.39% 15.58 51.82% 37.86
Fortis Inc FTS.TO $33.95 $0.30 3.53% 19.05 43.43% 68.24
SNC - LAVALIN GROUP INC. SNC.TO $36.78 $0.21 2.28% 14.75 14.06% 33.46
Canadian Tire Corp Ltd A Nvtg CTC.A $68.65 $0.30 1.75% 12.02 -5.50% 19.64
Metro Inc A MRU $53.64 $0.19 1.42% 13.23 51.40% 19.96
Finning Intl Inc FTT.TO $28.00 $0.13 1.86% 18.6 3.57% 33.73
Emera Inc EMA.TO $34.79 $0.34 3.91% 17.88 96.07% 65.82
Atco Ltd I Nvtg ACO.X $72.37 $0.28 1.55% 12.82 56.33% 20.14
Empire Co Ltd A Nvtg EMP.A $59.37 $0.22 1.48% 12.23 46.02% 14.73
Keyera Corp. KEY.TO $39.40 $0.17 1.73% 20.74 202.02% 100.71
Methanex Corp MX.TO $33.43 $0.18 2.15% 16.47 40.94% 30.75
Jean Coutu Group Inc A Subvtg PJC.A $14.10 $0.06 1.70% 14.91 5.15% 23.37
Ensign Energy Services ESI.TO $14.61 $0.11 2.87% 10.54 -21.61% 28.13
Canadian Real Estate Inv Trst REF.UN $38.55 $0.12 3.74% 56.49 61.96% 209.66
Ritchie Bros Auctioneers Inc RBA.TO $20.25 $0.12 2.37% 28.71 4.71% 60.27
Cogeco Cable Inc CCA.TO $47.79 $0.25 2.09% 12.57 14.61%
ShawCor Ltd A SCL.A $31.91 $0.08 1.00% 40.94 12.32% 39.10
Canadian Western Bank CWB.TO $28.82 $0.15 2.08% 14.53 27.68% 24.04
Corus Entertainment Inc B Nvtg CJR.B $24.25 $0.07 3.46% 13.11 21.61% 45.32
Constellation Software Inc. CSU.TO $91.74 $1.01 4.40% 12.58 278.30% 26.97
Home Capital Group Inc HCG.TO $48.00 $0.20 1.67% 8.79 35.68% 14.24
Cineplex Inc. CGX.TO $30.03 $0.11 4.40% 35.72 146.98% 229.70
Atlantic Power Corporation ATP.TO $14.01 $0.10 8.57% #N/A 98.81%
AGF Management Ltd B Nvtg AGF.B $13.85 $0.27 7.80% 13.66 -53.61% 88.59
CCL Industries Inc B CCL.B $38.78 $0.17 1.75% 15.52 3.31% 27.55
Pason Systems Inc PSI.TO $13.35 $0.20 5.99% 12.74 -12.12% 36.10
Transcontinental A Subvtg TCL.A $11.60 $0.14 4.83% 26.53 -39.58% 40.10
Reitmans Canada Ltd A RET.A $15.23 $0.20 5.25% 21.25 -20.83% 110.76
Northern Property REIT NPR.UN $32.78 $0.13 4.76% 10.79 65.54% 50.09
Enbridge Income Fund Holdings Inc. ENF.TO $21.57 $0.10 5.73% 14.45 175.23% 140.05
Dorel Industries B DII.B $29.82 $0.15 2.01% 9.47 -13.39% 18.62
Cogeco Inc CGO.TO $51.19 $0.18 1.41% 4.76 31.06%
Computer Modelling Group Ltd CMG.TO $15.61 $0.11 2.82% 27.44 491.26% 98.86
Bird Construction Inc. BDT.TO $14.84 $0.05 4.04% 21.14 210.01% 110.00
Ag Growth International Inc AFN.TO $40.16 $0.20 5.98% 20.95 150.89% 122.78
Exchange Income Corporation EIF.TO $24.90 $0.14 6.75% 22.54 233.26% 130.63
Canadian Aristocrats Show Very Interesting Dividend Yield
There are 58 Canadian Aristocrats (so 7 more than the “original” Dividend Aristocrats [1]). 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 [2] and Telus [3]. You also find 2 other stocks in the telecom industry: Rogers [4] (3.83%) and Shaw Communications [5] (4.82%).
Half of my Best Canadian Stock Picks for 2012 are Part of Canadian Aristocrats
Reviewing my Best Canadian Stocks for 2012 [6], I noticed that I have picked 4 stocks out of 9 from the Aristocrats list:
Corus Entertainment Inc – CRJ.B [7]
IGM Financials – IGM
Telus Corp – T [3]
Toronto-Dominion Bank – TD [8]
I also think that it’s only a matter of time before National Bank (NA) [9] and BCE (BCE) [10] 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 [11] showing strong results: The Northern Property REIT [12] (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 [13].
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
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- [ALL] #1 Stock Pick Report (2012) [14]
- [TSI] 20 MORE Stocks You Need to Dump Now [14]
- [TSI] 3 Little-Known Strategies to Help You Thrive in the Market Rebound [14]
- [TSI] 4 Stocks That Tap into Water Power [14]
- [TSI] 5 Essential Resource Stocks for Conservative Investors [14]
- [TSI] 5 Secrets to Beating Rising Interest Rates and Inflation While Increasing Your Wealth [14]
- [TSI] 5 Top Dividend Stocks for Maximum Safety [14]
- [TSI] 7 Volume Investor’s Guide [14]
- [TSI] How a “Conservative” Broker Can Send You to the Poorhouse [14]
- [TSI] Profiting from Metals in the High-Tech Age [14]
- [TSI] The 5 Stocks You Must Have in Your Retirement Portfolio [14]
Disclaimer: I hold T, NA, BNS
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