Life is good for Canadian dividend growth investors as 14 companies made the cut to be added to the Canadian dividend aristocrats.
To be considered an 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 as it is the minimum requirement for U.S. aristocrats.
Here’s a Complete List of Canadian Aristocrats Rules:
- The company’s security is a common stock or income trust listed on the Toronto Stock Exchange and a constituent of the S&P Canada BMI.
- The security has increased ordinary cash dividends every year for five years, but can maintain the same dividend for a maximum of two consecutive years within that five year period.
- The float-adjusted market capitalization of the security, at the time of the review, must be at least C$ 300 million.
- For index additions, the company must have increased dividend in the first year of the prior five years of review for dividend growth. This rule does not apply for current index constituents.
Here are the new additions:
Aecon Group (ARE.TO)
Aecon Group Inc. is Canada’s largest publicly traded construction company, providing a range of services to private and public sector clients (roughly 50/50) across its three core segments of Infrastructure, Energy, and Mining.
Aecon is a pure Canadian play if you are looking to invest in Canada’s infrastructure. As the Liberal government promise, we expect lots of billions to be spent in this industry in the upcoming 10 years.
Allied Properties REIT (AP.UN.TO)
You will see may REITs in this new aristocrats’ update. Allied Properties concentrate their effort in urban office environments across major Canadian Cities. The company currently owns 155 properties spread across downtowns of cities such as Toronto, Calgary, Vancouver and Montreal. Allied is growing through acquisition but remain attractive with a low 37.5% debt / total assets.
AltaGas Ltd.’s is a North American diversified energy infrastructure business with a focus on owning and operating assets to provide clean and affordable energy to its customers. Their purpose is to stock energy during excess period and offer it when the market requires additional power. AltaGas has grown its asset base to over $10 billion from just $3 billion at the end of 2010.
Bank of Montreal (BMO.TO)
After the 2008 crisis, there was a pause in paying dividend for all banks. Since then, they all have been back to their previous policy: double dividend hike each year. BMO is the latest bank to get back on the Aristocrat list.
Boardwalk REIT (BEI.UN.TO)
Boardwalk REIT is a multi-residential rental landlord that owns and operates apartment buildings in Canada. While BEI.UN is mainly concentrated in Alberta, it is the second largest REIT in term of units (200 properties for 33,000 units) and market capitalization. Edmonton and Calgary are showing over 50% of all unites managed. No wonder their revenue fell in the past couple of years. Still, the company seems to manage well through this challenging environment. This could be a nice addition with a dividend yield close to 5%.
Brookfield Asset Management (BAM.A.TO)
Brookfield is an alternative asset manager with over 100 years of operation. They manage $250 billions across more than 30 countries. What are alternative assets? BAM manages 4 divisions: Real Estate, Infrastructure, Renewable Energy and Private Equity. Those are interesting sectors if you are looking to diversify your portfolio in other types of industries.
CAN Apartment Prop REIT (CAR.UN.TO)
Canadian Apartment Properties REIT owns apartments, townhouses, and land-lease communities in or near major urban centres in Canada. It now has around 48,000 units across the country. Interesting fact 50% of its properties are in Ontario and only 6% in Alberta. In other words, this company will not suffer from the gas price shock. The company shows a strong profile and a solid dividend yield near 4%.
First Capital Realty (FCR.TO)
First Capital manages shopping center in Canada. They own 160 properties representing a $23.8 million gross leasable area. The company focuses on growth with over 14M square feet in development worth over $1 billion over the next several years. The business is well spread across the country with 34% of its portfolio in Western Canada, 42% in Central and 24% in Eastern Canada.
Intertape Polymer Group (ITP.TO)
Intertape Polymer makes one of my favorite product for RVing…. Duct Tape! But the company is more than making this famous product, it also manufactures all other kinds of packaging tapes and materials. The company is celebrating 100 years of history and is poised for a long life if we look at how revenues are growing for the past 5 years!
Loblaw is the largest food retail in Canada with over 2,400 stores and 70,000 million square feet of store space to feed Canadians. One of the major strength is Loblaw ability to create #1 and #2 private labelled brand in Canada with President’s Choice and No Name. Private Label brands are more profitable for stores and drive margins up. Loblaw also owns Shoppers Drugs giving them opportunities in the drug market.
North West Co (NWC.TO)
While most companies focused on urban area, North West is doing the opposite. It specializes in opening retail stores in underserved rural communities. While they are present in Canada, they also have stores in Alaska, South Pacific islands and the Caribbean. They basically operate small stores in small places leaving the competition to none. Interesting business model, and obviously successful when you look at how earnings and growth went up over the past 5 years.
Pembina Pipeline (PPL.TO)
Pembina is one of western Canada’s largest transporters of liquids, carrying approximately 50% of Alberta’s conventional crude oil and 30% of western Canada’s natural gas liquids production. As many plants continue their production, PBA benefits from a steady cash flow to support its dividend during the crisis.
While we often hear about SNC Lavalin (SNC.TO) and WSP Global (WSP.TO), Stantec is another very important engineer firm with over 22,000 employees working in 400 locations across the world. Stantec is expected to benefit from major investment in infrastructure from both Canadian and U.S. Government in the upcoming years.
Weston is selling more than bread. In fact, it remains in control of Loblaw (L) and Shoppers Drug Mart. Weston Foods is the largest Canadian baker. As it wasn’t enough, Weston also controls one of the Canada’s largest REITs; Choice properties REITs (guess which stores is their biggest renter?). One way or another, if you are Canadian, you do buy something from Weston each week!
My Favorite New Aristocrats?
If I had to put a dollar in a new aristocrat this year, I think it would be in Brookfield Asset Management. This investment would mainly to profit from alternative assets which are not always easy accessible for investors. I also appreciate Loblaw and Weston but their dividend yield is not incredibly high for income seeking investors.
What about you? What is your favorite new aristocrats?
Disclaimer: We own BMO and BEI.UN.TO in our Dividend Stocks Rock Portfolio.