Here’s my trick to find the Best Canadian Dividend Growth Stocks
At the beginning of the month, I discussed about a fast lane to finding the Best dividend growth Stocks without putting too much effort into it. Is it possible to build a strong dividend portfolio without having to spend hours studying the stock market? There are no magic tricks to find the best dividend stocks, but there are some short cuts.
One of them is to follow the most important dividend growth ETFs. As ETFs gain in popularity, they constantly receive new cash from investors. This means they constantly increase their positions in their pre-selected dividend growth stocks. So by following dividend growth ETFs, you are not only doing some piggybacking on professional portfolio managers, but you are also buying stocks where there is a continuous demand.
Michel, a long time reader of The Dividend Guy Blog asked me if I could pull out the top holdings of the biggest dividend ETFs. And this is what I did!
Top Dividend Growth Canadian ETFs
I’ve pulled out the top 7 dividend ETFs by market cap:
Ticker Name Market Cap Price Return YTD Fees 1Y Return Dividend Yield
XDV iShares Dow Jones Canada Select Dividend Index Fund $1027026000.98 $20.78 4.8% 0.55% 7.91% 3.97%
CDZ iShares S&P/TSX Canadian Dividend Aristocrats Index Fund $739359008.79 $21.81 5.2% 0.67% 8.03% 3.26%
CYH iShares Global Monthly Advantaged Dividend Index Fund $127881996.15 $14.87 4.98% 0.83% 6.33% 3.93%
ZDV BMO Canadian Dividend ETF $96596000.67 $15.58 4.74% 0.39% 7.97% 4.32%
XTR iShares Diversified Monthly Income Fund Unit $593072998.05 $12.32 6.63% 0.57% 8.87% 5.84%
ZMI BMO Monthly Income ETF $56951999.66 $15.82 8.29% 0.62% 10.67% 4.73%
HAZ Horizons Active Global Dividend ETF $46432468.41 $11.8 2.72% 0.99% 6.37% 3.11%
Then, I searched through their top holdings and found 2 interesting things:
– Out of 7 ETFs, only 3 of them are holding Canadian dividend stocks (the rest is a mix of both ETFs and global equity)
– Out of the 3 ETFs with Canadian dividend stocks, only 3 stocks (AGF.B, ATP, were duplicated among the list of top holdings (including 10 dividend stocks per ETF).
So this means that depending on where you invest your money amongst XDV, CDZ and ZDV, you will earn a very different return! Nonetheless, I’ve broken down the top 27 Canadian Dividend Growth stocks in regards to their holdings:
Company name Ticker Dividend Yield
A.G.F. MANAGEMENT LTD. CL B AGF.B 11,23%
AG GROWTH INTERNATIONAL INC. AFN 8,62%
ATLANTIC POWER CORP ATP 9,55%
BANK OF MONTREAL BMO 4,93%
BANK OF NOVA SCOTIA BNS 4,24%
BCE INC BCE 5,33%
BIRD CONSTRUCTION INC. BDT 4,95%
BONTERRA ENERGY CORP. BNE 7,13%
CANADIAN IMPERIAL BANK OF COMMERCE CM 4,88%
Crescent Point Energy Crp CPG 7,23%
ENBRIDGE INCOME FUND HOLDINGS INC. ENF 5,32%
EXCHANGE INCOME CORP. EIF 6,07%
Great-West Life Company GWO 5,28%
HUSKY ENERGY INC. HSE 4,32%
IGM FINANCIAL INC. IGM 5,47%
NATIONAL BANK OF CANADA NA 4,14%
Pembina Pipeline Inc PPL 5,92%
REITMANS (CANADA) LTD. CL A RET.A 6,67%
ROYAL BANK OF CANADA RY 4,30%
SHAW COMMUNICATIONS INC. CL B SJR.B 4,51%
Sun Life Financial Inc. SLF 5,51%
TELUS CORP. T 3,78%
TORONTO-DOMINION BANK/THE TD 3,85%
TransAlta Corp. TA 7,51%
Transcontinental Inc Cl A TCL.A 5,81%
Veresen Inc. VSN 7,96%
Best Canadian Dividend Growth Stocks For Real?
After pulling out this chart, I can say that it looks weaker than the US Top Dividend Growth holding. There are some very high dividend yield stocks which I’m not too sure I would pick for my portfolio (notably ATP which is currently losing money right now).
As the strategy of looking at the top dividend growth ETFs’ holdings in the US seems to work well, I’m not convinced I would use the same strategy with Canadian stocks. What do you think?
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Careful with canadian dividend stocks. Most that have high yields don’t have a very long track record of increasing dividends. Then if you trim the non-aristocrats out of this list you get a shorter list. Trim the loosers (stocks that have been going down for a long time) your list gets cut in half. What’s left? Financial institutions. No diversification. I personaly bought ATP, AFN and EIF on the fact that they were long time winners and i loved their juicy dividends. But when i look at the value of my investments these days, i cry… nontheless what’s important is the dividend growth. The value, we’ll see in 20 years from now.
Good post and great strategy. Are you reading my blog? 🙂
Maybe I just read your book 🙂
Mark
Hey Mark,
I am reading your blog, but I don’t understand your question. maybe I’m too tired 😉
I lean towards holding the stocks directly, either through DRIPS or if you have enough money in a brokerage account. The reason is that the universe do decent stocks (buy and hold forever) is relativity small, maybe 5-10 stocks max.
@ My Own Advisor – check out your blog fairly regularly, doing a great job, but I’m not an often commenter though.
Big yields but a lot of the stocks have no growth. The best Canadian dividend growth stocks in my opinion are ones like NA, CWB, BNS, ENB, BCE, THI, HCG, IMO, etc. stocks that may not yield 7-11% now but have reasonable payout ratios and reasonable dividend growth over the past 3-5 years.