Canadian Aristocrats; They Have it Too!!

 

 

 

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 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). 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

 

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Disclaimer: I hold T, NA, BNS

 

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