Since 2009, two Canadian sectors had proven to the world the Canadian market can provide strong dividend growth stocks. It’s not by luck that four out of the ten Best Canadian Dividend Stocks for the Next Decade come from these two sectors.


    Both sectors are quite similar on many fronts. They both oligopolies, this is a mature market, but natural growth is still available and federal laws protect them from other competitors (mind you, it has become less protected for telecoms in recent years). In my opinion, they are the backbone of dividend stocks in Canada and all dividend portfolios should contain at least one of these companies.


    However not everybody thinks the same way. Many investors believe the growth potential for both banks and telecoms is gone for the years to come. Let’s take a dive into both dividend worlds and see if there is still potential for a new buy.


    Canadian Telecoms


     canadian telecoms

    Besides Rogers, the other three telecoms beat the S&P TSX60 over the past five years. Here, I’m not counting the dividend, so you can add a good 4-5% in yield per year to each of them. This is also a lot more than what the TSX60 pays. Rogers has been struggling for about a year now but it was ahead of the index for almost the entire period.


    There have been many fears from investors with regards to the obvious Government desire of enabling foreign competitors to enter into the Canadian mobile market. All telecoms dropped like a rock after the possibility of Verizon (VZ) joining the market during the summer of 2013. Fortunately for Telus & company, Verizon preferred buying back its shares from Vodafone than entering a new market. Since then, we all know it’s only a matter of time before another big player enters the market and puts additional pressure on margins. This could be good for consumers but a lot less for telecom investors.


    BCE (BCE) recently decided to buy Bell Aliant (BA) its sister company. BA is money making machine that will support BCE’s dividend growth over time. Bell’s diversification strategy among TV & entertainment (they also bought Astral not so long ago) can help them face any potential competitors in the mobile industry. BCE recently invested $600M in customer service to compete with Telus and Rogers. It seems to have paid off since their customer service surveys are going up. TV services (Fibe) and their media segments continue to go well with the integration of Astral Media posting operating revenue growth of 40.7% in this segment. BCE is undervalued compared to Telus. With a dividend yield around 5%, this could be your chance of adding a strong blue chip to your portfolio. BCE is a BUY.


    Telus (T) seems to be the super powered dividend stock we all look for. Revenues, earnings and dividend payouts are up, what more do you want? Strong from a 5% revenue jump and an 8.9% EPS surge, Telus decided to keep its good habit of increasing its dividend as the next payout will be 11.8% bigger. Both wireless and wireline segments were very strong during this quarter. Telus recently announced a $1.3B investment in infrastructure in Quebec. Strong from its position in Western Canada, Telus is now attacking both Ontario and Quebec battling with Rogers, Bell and Quebecor. T is a BUY.


    Rogers (RCI.B) was once able to follow the highly competitive telecommunication train in Canada but it seems to lag behind Telus (TSE:T) and Bell (TSE:BCE) of late. After posting disappointing results during the entire year in 2013, Rogers is keeping this bad habit for the first quarter of the year with a drop in revenues by 2% and missing analysts’ expectations on both earnings and revenue targets. Analysts are worried about its high debt-to-equity ratio (2.997 vs Telus at 0.98 for example). An aggressive stock buyback program combined with an increasing dividend payout will continue to erode Rogers’ cash flow. Telus is also hitting Rogers’ markets very hard. If I had to buy a telecom in Canada, I would turn around to buy Telus instead of Rogers. RCI.B is a



    Canadian Banks


     canadian banks

    There are two main fears around the Canadian banks and they are closely related: the high concentration of many banks in the mortgage industry combined with the ridiculous debt level of the Canadian population. There are several overheating housing markets in major Canadian cities and we all agree Canadians can’t sustain a 165% debt level forever. This is another reason why the Bank of Canada is highly reluctant to increase interest rates and prefers to increase borrowing rules to limit access to properties.


    Nonetheless, I believe some banks have more options than others and still believe there is growth for them.


    National Bank (NA) is the smallest Canadian bank but shows very interesting growth potential. First, 38% of its revenues come from their market segment (e.g. trading). As long as we are in a bull market, NA can take advantage of this concentration. Since I believe we are in a long term bull run, this bank will definitely continue to show growth. It also aggressively acquires clientele in the private wealth management segment. This is also another growth generator for this company. NA is probably the bank that is the least affected by the overheating housing market. NA is a BUY.


    TD Bank (TD) has shown the strongest growth across Canadian banks for the past ten years (NA is very close but TD is a lot bigger). On top of being a leader in Canada, TD is also the most productive Canadian Bank (e.g. more earnings relative to its risk-weighted assets). Its earnings volatility is lower than its peers due to a smaller exposition to capital markets. Finally, TD has deployed a very lean structure into its branches which benefits greatly from their expansion in Quebec and the US. TD Bank it is now known as “America’s Most Convenient Bank”. They recently beat analysts’ estimates once again. Their lean structure gives them one of the best customer service SCOREs across Canada. TD is a BUY.


    Royal Bank (RY) is another bank that did very well in the US. Since 2008, it has benefitted from the crisis to grow outside Canada. It has also a very strong market segment generating about a third of its revenues. Royal Bank has shown very strong earnings beating analysts’ estimates on a regular basis. This is not an easy task right now considering Bay Street’s heavy appetite. RY obviously has a strong mortgage market share and this should be a concern for new investors in this stock. However, the largest bank in Canada has also one of the most solid balance sheet and it can better endure a lending crisis than its peers.


    I Don’t Think the Party is Over for Banks and Telecoms


    Telecoms have started to diversify their services in order to benefit from their strong wire and wireless phone segment as a cash cow to open their business in other industries. A similar movement is happening with banks going after specific niches to avoid being too much at risk with mortgages.


    This is why I believe both industries will continue to grow and pay solid dividends. I agree with you that the easy money is probably gone, but this is the case with most sectors at the moment anyways. For any Canadian dividend investors, an investment in banks and telecoms still remains a good play.


    Disclaimer: I hold shares of NA, BNS & T

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  • I’m taking a quick pause in my new investing series about how to build an investment strategy (read part 1 and part2) to publish my stock pick returns as at March 31st and the usual TSX60 dividend yield and ex-dividend date chart. After a full quarter, I’m already taking a step ahead of both US and CDN benchmarks. Lets check how I beat both benchmarks by more than 1%.

    PSST! If you are curious to know how I keep beating the market with dividend stocks for the past 3 years, check out my new website!


    Best 2014 Dividend Stock Pick Returns


    I started this “tradition” on my blog in 2012. The goal is to pick 20 US and 10 CDN dividend stocks that I think will outperform their peers. This is the reason why I use VIG and XDV as benchmarks. I keep track of my results for accountability purposes. I find that too many analysts and blogs just drop the ball on their picks when they are not so great. By posting monthly results, I have no other choice but to face my performance and explain it. You can look at my previous picks and returns:

    Best Dividend Stock Picks 2012 (-1.47% vs VIG (US dividend ETF), + 8.32% vs XDV (CDN dividend ETF)

    Best Dividend Stock Picks 2013 (+11.07% vs VIG, + 0.77% vs XDV)


    You can also buy my 2014 Best Dividend Stock Picks for Kindle ( on Amazon) to get the full analysis:


    2014 book cover


    2014 Best US Dividend Stocks: +2.76% vs -0.01% (VIG)

    top US dividend stocks

    13 stocks out of 20 beat my benchmark. This is a 65% ratio… not bad, but not incredible either. However, I have 4 stocks (ALF, APPL, XOM, WMT) that could easily come back to life with some good news. After a quarter, I’m adding almost 3% to the benchmark which is a pretty solid performance.  My portfolio dividend yield is also 1% higher than VIG.


    What I can see is that consumer (staple or discretionary) stocks like Clorox (CLX), Mattel (MAT), Philip Morris (PM) and Wal-Mart (WMT) have had a rough start this year. In fact, if I look closer at my portfolio, I can also add that PepsiCo (PEP), McDonald’s (MCD), Hasbro (HAS) are beating the benchmark, but lagging the overall stock market. They show a YTD performance of 0.68%, 1.03% and 1.11% respectively.


    Its only normal that dividend stocks lag a bull market. Last year, dividend stocks were almost entering bubble territory since the market was hungry for revenue. The year-end results weren’t as high as expected by the market and this is why dividend stocks were penalized more than other stocks. Nonetheless, the overall return including dividends is still pretty good, even compared to the global market.


    2014 Best CDN Dividend Stocks: +2.66% vs 1.23% (XDV)

    top canadian dividend stocks

    I’m offering another solid performance in the Canadian market by adding 1.43% in value to the benchmark. For this portfolio, only 50% of my stocks beat the benchmark. This is not exactly a good batting average as this could have resulted in lagging behind the index. I was *lucky* to pick Black Diamond Group (BDI) and Gluskin Sheff (GS) boosting my results through the roof with a +14.16% and +24.23% YTD performance.


    I was expecting a more solid performance from Chorus that is evolving in a profitable market and shows strong fundamentals. Banks (BNS and RY) are not rising quickly during the first quarter and ScotiaBank has been hit by bad results from its Latin American branch results. I made another bet on consumers again with Dorel (DII.B) and North West Company (NWC) but they are also lagging due to deceiving results. Lassonde (LAS.A) is saving the consumer group with a good performance so far… but the dividend yield is anemic.


    Still, I was able to beat both benchmarks after three months and looking forward to the next quarter with enthusiasm!


    TSX60 Ex-Dividend Date & Dividend Yield


    Dividend Yield
    Payout Ratio
    Ex-DVD Date
    CPGCrescent Point Energy Corp40.356.84746.544/28/2014
    PWTPenn West Petroleum Ltd9.246.06N/A6/25/2014
    COSCanadian Oil Sands Ltd23.196.0481.295/21/2014
    TATransAlta Corp12.845.61N/A5/28/2014
    BCEBCE Inc47.625.1991.526/13/2014
    ERFEnerplus Corp22.14.89452.0341674
    SJR/BShaw Communications Inc26.44.1761.5841947
    NANational Bank of Canada44.34.1538.366/24/2014
    CMCanadian Imperial Bank of Commerce/Canada95.254.1244.496/25/2014
    BMOBank of Montreal73.964.1146.864/29/2014
    FTSFortis Inc/Canada31.524.0678.385/14/2014
    BNSBank of Nova Scotia64.03446.0641736
    RCI/BRogers Communications Inc45.813.9953.6941949
    ARXARC Resources Ltd30.453.94155.384/28/2014
    RYRoyal Bank of Canada72.893.945.24/22/2014
    TRIThomson Reuters Corp37.793.88848.035/23/2014
    POTPotash Corp of Saskatchewan Inc39.993.8764.4241855
    POWPower Corp of Canada30.223.8464.1841796
    TRPTransCanada Corp50.253.8275.996/27/2014
    TCK/BTeck Resources Ltd23.863.77N/A41949
    SLFSun Life Financial Inc38.283.7650.865/26/2014
    TTELUS Corp39.633.6367.2641735
    TDToronto-Dominion Bank/The51.833.6346.7241643
    HSEHusky Energy Inc33.163.6264.965/20/2014
    CVECenovus Energy Inc31.973.33110.5741949
    AGUAgrium Inc107.733.0834.016/27/2014
    ENBEnbridge Inc50.212.79234.165/13/2014
    TLMTalisman Energy Inc11.022.69N/A41765
    GGoldcorp Inc26.972.47N/A4/15/2014
    BBD/BBombardier Inc4.112.4732.5241949
    MFCManulife Financial Corp21.322.4431.9641887
    SUSuncor Energy Inc38.612.3828.025/29/2014
    CNQCanadian Natural Resources Ltd42.372.1227.5841949
    THITim Hortons Inc61.142.0936.85/22/2014
    LLoblaw Cos Ltd46.92.0541.9441949
    WNGeorge Weston Ltd82.342.0236.2541949
    SNCSNC-Lavalin Group Inc48.341.99389.785/16/2014
    BAM/ABrookfield Asset Management Inc45.031.9818.384/29/2014
    SCShoppers Drug Mart Corp60.831.8728.66/25/2014
    MRUMetro Inc64.91.8512.945/14/2014
    YRIYamana Gold Inc9.681.71N/A6/25/2014
    CTC/ACanadian Tire Corp Ltd104.231.6821.384/28/2014
    SAPSaputo Inc55.691.6533.5441919
    CNRCanadian National Railway Co62.111.6127.7241735
    MGMagna International Inc106.281.5918.195/28/2014
    CCOCameco Corp25.311.5849.666/25/2014
    ECAEncana Corp23.611.32209.3241949
    SLWSilver Wheaton Corp25.081.2342.6141674
    ABXBarrick Gold Corp19.681.13N/A5/28/2014
    AEMAgnico Eagle Mines Ltd33.471.0656.185/28/2014
    IMOImperial Oil Ltd51.481.0114.675/28/2014
    FMFirst Quantum Minerals Ltd20.430.9121.1341916
    GILGildan Activewear Inc55.710.8513.665/13/2014
    CPCanadian Pacific Railway Ltd165.650.8528.116/25/2014
    ELDEldorado Gold Corp6.150.3333.8541981
    VRXValeant Pharmaceuticals International Inc145.4400N/A
    KKinross Gold Corp4.57009/17/2014
    BBBlackBerry Ltd8.9500N/A
    CCTCatamaran Corp49.4600N/A
    GIB/ACGI Group Inc34.1300N/A
    1 Comment   |   Read more >


    Each year, the Aristocrats lists are updated. The dividend aristocrats are a group of US companies showing 25 consecutive years of dividend increases. When you think about it, only the strongest companies can make this list. In order to be part of this elite group, a company must be in a good position to increase both their sales and earnings year after year on a very consistent basis. If one fails to do so, it will quickly become impossible to raise its dividend. Canadians also have their dividend aristocrats, but the criteria used for selection is fairly different.


    Canadian Aristocrat Requirements

    In order to be considered a S&P Canadian Dividend Aristocrat, the company must have increased its dividend payout every year for five years but have a free pass 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 minimum market capitalization 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 for the Canadian Aristocrats list. But the Canadian stock market is less diversified and we don’t have an economy promoting behemoths such as Colgate-Palmolive (CL) or Procter & Gamble (PG). Still, they are pretty solid dividend payers.


    Here’s the current list of Canadian Aristocrats:

    *The list is provided by Dividend Stocks Rock

    Market Cap
    DVD Yield
    EPS Basic
    DVD Growth
    AGF.B.TOAGF Management Limited1$B9.2135.52302.22-22.44-8.156.72
    ACO.X.TOAtco Ltd.6$B1.6614.3355.989.175.959.8
    BNS.TOBank of Nova Scotia78.2$B3.9812.3550.5511.0512.754.48
    BCE.TOBCE Inc36.4$B5.2718.39104.720.252.9326.13
    BDT.TOBird Construction Inc0.6$B5.6247.56263.47-285.089.26
    BYD.UN.TOBoyd Group Income Fund0.5$B1.42#N/A-233.2911.8917.9572.11
    CAE.TOCAE, Inc.3.9$B1.6221.7623.11-2.098.1336.56
    CCO.TOCameco Corp10.5$B1.5132.9849.66-8.752.2410.76
    CNR.TOCanadian National Railway Co51.5$B1.6120.0627.729.374.5113.33
    CNQ.TOCanadian Natural Resources Ltd43.2$B2.2619.1223.04-6.65.2420.26
    CP.TOCanadian Pacific Railway Ltd29.8$B0.8234.1827.894.874.467.18
    REF.UN.TOCanadian Real Estate Investment Trust3$B3.7535.6493.961.884.813.59
    CTC.A.TOCanadian Tire Corp7.6$B1.7614.420.788.485.2611.43
    CU.TOCanadian Utilities Ltd10.4$B2.6918.5930.664.9147.84
    CWB.TOCanadian Western Bank2.8$B2.1514.5734.518.2613.9910.76
    CCL.B.TOCCL Industries Inc.3$B1.0731.3728.3915.579.718.96
    CGX.TOCineplex Inc2.6$B3.4331.46105.4719.146.632.6
    CCA.TOCogeco Cable Inc.2.7$B2.1814.0327.276.729.4721.06
    CGO.TOCogeco Inc.0.9$B1.7112.6771.0920.4910.5922.1
    CMG.TOComputer Modelling Group Ltd.1.1$B2.5942.74106.6623.5319.6426.19
    CSU.TOConstellation Software Inc.5.5$B1.7255.7292.7240.3626.4181.15
    CJR.B.TOCorus Entertainment, Inc.2$B4.287.9225.234.290.416.89
    DII.B.TODorel Industries, Inc.1.2$B3.5620.1368.4-14.14-0.3316.16
    EMA.TOEmera, Inc.4.7$B4.3320.4691.135.4110.867.92
    EMP.A.TOEmpire Company Limited3.8$B1.5813.0121.863.314.727.78
    ENB.TOEnbridge, Inc.40.8$B2.8590.6209.86-21.2815.3313.81
    ENF.TOEnbridge Income Fund Holdings Inc1.4$B5.2816.36#N/A5.45-30.83N/A
    ESL.TOEnghouse Systems Limited0.9$B1.1434.9429.2431.9527.6823.73
    ESI.TOEnsign Energy Services Inc.2.6$B2.7917.2744.83-2.66.855.67
    ET.TOEvertz Technologies Ltd1.3$B3.7722.07268.61-5.543.0331.06
    EIF.TOExchange Income Corp0.4$B8.0249.22399.48-5.2545.562.22
    FTT.TOFinning International Inc.5.1$B2.0515.330.6528.672.436.8
    FTS.TOFortis, Inc.6.7$B4.0918.358.694.566.17.91
    FNV.TOFranco-Nevada Corp8.6$B1.3139.63#N/A#N/A165.54N/A
    MIC.TOGenworth MI Canada, Inc.3.5$B3.759.68345.031.91N/A
    GS.TOGluskin Sheff & Associates, Inc.0.9$B2.5910.5293.274.383.417.08
    HLF.TOHigh Liner Foods Inc0.7$B1.5723.0633.6823.1910.8223.8
    HCG.TOHome Capital Group Inc1.5$B1.4711.8214.618.7816.5316.65
    IGM.TOIGM Financial Inc.13.3$B4.0717.4471.451.820.161.46
    IMO.TOImperial Oil Ltd43.3$B1.0215.3514.39-5.30.845.22
    IFC.TOIntact Financial Corp8.8$B2.8821.2858.9324.1812.127.26
    PJC.A.TOJean Coutu Group PJC Inc4.1$B1.5610.6715.96#N/A12.76N/A
    KEY.TOKeyera Corp5.3$B3.4835.78119.39-6.528.546.38
    LB.TOLaurentian Bank of Canada1.3$B4.4611.3447.610.936.438.78
    MDI.TOMajor Drilling Group International Inc.0.7$B2.17#N/A-56.14-8.853.35N/A
    MX.TOMethanex Corporation7.2$B1.1920.9835.7111.042.862.72
    MRU.TOMetro Inc.5.6$B1.938.5113.4623.661.2314.52
    NPR.UN.TONorthern Property Real Estate Investment Trust0.9$B5.63.2724.649.929.1612.09
    PSI.TOPason Systems Inc2.3$B2.1498.44218.6-17.316.6219.23
    RBA.TORitchie Bros. Auctioneers, Inc.2.7$B2.327.21#N/A-
    RCI.B.TORogers Communications, Inc.22$B4.2813.6652.4915.452.3111.71
    SAP.TOSaputo, Inc.10.8$B1.6521.45#N/A11.87.619.25
    SJR.B.TOShaw Communications, Inc.11.2$B4.0415.5746.441.0110.626.87
    SCL.TOShawCor, Ltd.2.6$B1.1410.3131.6416.017.1910.56
    SC.TOShoppers Drug Mart Corporation12.1$B1.8920.1137.563.233.255.8
    SNC.TOSNC-Lavalin Group7$B2.07206.12#N/A-34.882.1713.9
    SJ.TOStella-Jones, Inc.1.9$B0.7221.15#N/A17.4121.6120.9
    SU.TOSuncor Energy Inc53.3$B2.5414282.847.0729.56
    T.TOTELUS Corp24.1$B3.7319.2365.841.43.789.15
    TRI.TOThomson Reuters Corporation30.4$B3.94240.71844.71-39.08-0.89-2.54
    THI.TOTim Hortons, Inc.8.7$B2.0721.8837.4712.729.7626.62
    TD.TOToronto-Dominion Bank94.1$B3.6714.2744.17.2513.26.54
    TRP.TOTransCanada Corp35$B3.8820.82#N/A-0.811.745.02
    TCL.A.TOTranscontinental Inc.1.2$B4.32#N/A-1565.06#N/A-2.7813.35
    UNS.TOUni-Select Inc.0.6$B1.7927.9351.91-14.378.981.96
    WIN.TOWi-Lan Inc.0.4$B4.76#N/A-105.82#N/A21.8346.73

    Dividend Aristocrat Additions


    There have been several changes this year. With gold hurting mining companies and pushing them to cut their dividend, several companies were taken off the aristocrats list. On the other hand, 8 companies were added to the list by the S&P for 2014:


    BCE Inc (BCE) Telecom, 5.27% dividend yield

    Cogeco Inc (CGO) Communication, 1.71% dividend yield

    Enghouse Systems Limited (ESL) Technology (software), 1.14% dividend yield

    Franco-Nevada Corp (FNV) Resource (gold mining), 1.37% dividend yield

    Gluskin Sheff + Associates (GS) Financial, 2.59% dividend yield (+ special dividend)

    High Liner Food Inc (HLF), Consumer (food), 1.57% dividend yield

    Uni-Select Inc (UNS), industrial (auto pieces), 1.79% dividend yield

    Wi LAN Inc (WIN), technology (license), 4.76% dividend yield


    I can’t say that I’m very impressed by the dividend yield of the newcomers. BCE and WIN seem to pay an interesting dividend yield and therefore I would advise to look closely at GS since their special yearly dividend pushes their yield over 4% year after year (but it’s always a gamble). As for the rest, I rarely look at stocks paying under 2% dividend yield. I’m looking to buy companies whose dividends cover at least rate of inflation. The only exception I have made was with Disney (DIS) but their stock growth potential is very interesting.


    Dividend Aristocrats Delisted

    While the aristocrats found 8 new members, they also withdrew 5 companies from the list.


    Reitmans Canada Ltd A (RET), Consumer (clothing), 3.48% dividend yield

    Talisman Energy Inc (TLM), Resources (oil & gas), 2.73% dividend yield

    Ag Growth International Inc (AFN), industrial (grain handling), 5.15% dividend yield

    Atlantic Power Corporation (ATP), utilities (electricity), 12.82% dividend yield

    Barrick Gold Corp (ABX), resources (gold mining), 0.96% dividend yield


    What’s Your Favorite Aristocrat for the Year?


    Before I tell you which my favorite is, I must admit that I personally own a few Canadian aristocrats already:

    ScotiaBank (BNS)

    Gluskin & Sheff (GS)

    Telus (T)


    My all time favorite is definitely Telus. This is a great company with a great future and it keeps increasing their dividend significantly. However, for 2014, you can guess that my favorite aristocrat will be Gluskin & Sheff (GS). What about you?

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