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
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
I just wanted to point out that a correction might be required on your list.
Talisman Energy Inc – the yield is less than what you have quoted. They only do a semi-annual payment, which makes their yield half of what you have posted.
I enjoy reading your blog! keep up the great work.
Hey Vikas,
thx for pointing it out! I noticed that my Excel program doesn’t work when the company is not paying quarterly dividend!
I’ll look into it!
Mike
I’m not familiar with most of these companies, except the Telecom ones. I see they are doing well. That’s one industry that seems to be able to move with the technology.
Nice roundup, The criteria that you state for the Canadian dividend Aristocrats that they have a freeway that they may maintain their dividend for 2 years, where did you find this information?
I investigated this extensively earlier in the year after the new 2012 lineup was annoounced and they added back such companies as TD and BNS. S&P appeared to announce the new line up in the index and then followed up with the changed criteria later. Clearly the adjustments were made to try to maintain some breadth in the index that was decimated by the 2008 financial crisis.
Anyway thanks for providing the payout ratio and the return numbers on the names in the index. Great post and great site.
-Dtb
MIke,
Thanks for your blog. I’m just a newbie to investing after years of mutual fund investing.
Would you still recommend these stocks now in 4th quarter of 2012?
Hey Jeff,
it depends on the stock you are looking at. Before you pick any of them, you should go through a real stock analysis and not base your decision on dividend growth only.