On Monday, I discussed how I modified my filter in the search of the best US dividend stocks. What I like about the US market is its size and diversification. You can “easily” find great dividend stocks across different sectors and complete your asset allocation without much trouble. Well when I ran the same filters on the Canadian market, I wasn’t able to get 49 great picks. In fact, I was only able to get 13 dividend stocks that made the grade with the following criteria:
– Dividend yield over 3%
– Maximum dividend yield 7%
– Payout Ratio under 60%
– Dividend growth (min 5% annualized growth over 5 years)
– P/E ratio under 15
Here are the best Canadian Dividend Stocks:
| Ticker | Name | Dividend Yield | Payout Ratio |
|---|---|---|---|
| AFN | AG Growth International Inc | 4.85 | 58.09 |
| BNS | Bank of Nova Scotia | 3.55 | 59.21 |
| MSD | Mosaid Technologies Inc | 3.71 | 50.8 |
| CU | Canadian Utilities Ltd | 3.06 | 37.96 |
| CVL | Cervus Equipment Corp | 5.93 | 59.48 |
| RCI/B | Rogers Communications Inc | 3.17 | 48.78 |
| PNG | Pacific Northern Gas Ltd | 4.2 | 55.66 |
| NA | National Bank of Canada | 3.7 | 50.06 |
| CTY | Calian Technologies Ltd | 4.63 | 30.21 |
| CTU/A | Le Chateau Inc | 5.46 | 57.19 |
| IAG | Industrial Alliance Insurance & Financial Services Inc | 3.19 | 38.54 |
| SPS/A | Sportscene Group Inc | 4.62 | 55.95 |
| GDL | Goodfellow Inc | 5.31 | 45.96 |
I must admit that the P/E ratio under 15 cut a lot of companies since the Canadian market has recovered more than the US market since 2008. Therefore, the chances of finding undervalued companies are smaller. Nonetheless, among these 13 stocks, I think there could be some great buys.
I already own about 70 shares of National Bank. While it is the smallest of the 6 most important banks in Canada and that BMO (which is in 5th position) is 5 times bigger than NA, the stock seems very appealing. As I have mentioned before, it is also expected to be among the first Canadian banks to increase their dividend yield in 2011.
I would be careful with Rogers (RRCI) as Videotron just entered the cell phone playground in September. This could affect Rogers’ profitability since their marketing costs should increase while their profit margins could fall upon the introduction of another competitor in this oligopoly (BCE, Telus, Rogers and Shaw are almost alone in their markets).
I like Sportscene (SPS), owner of sport restaurant food chain. Why? Because their management has proven that they could survive without one of their best paying events; hockey games. A few years ago, during the 1 year lock-out, they were able to find other ways to make money and went through this huge crisis (hockey is pretty big in Canada) by being strong. What doesn’t kill you, makes you stronger, right?
In the upcoming weeks, I will review both US and Canadian dividend stocks that I filtered. Do you have any ticker you want me to look at first?
I like Dividend Posts! I have been thinking about selling off my BNS since the stock value has gone up since I acquired them in 2007 ..( wish I had room on the LOC in 2008 when they were at $22) but after reading this post I feel I should stick to my original gameplan of buy and hold.
Worth checcking out is Fortis : FTS on the TSX.
I have a few of each of these and wish to add more in the future.