My Top 5 Canadian Dividend Aristocrats

Dividend AristocratsWhen we think of the dividend aristocrats, we usually think of the select group of US stocks that has been increasing its dividend payout consecutively for at least 25 years. While the past doesn’t guarantee the future, it is still a good indication of businesses with good balance sheets and sound financials. Don’t worry, Canadians also have their aristocrats… they are just not that impressive!

What is an Aristocrat?

In order to be part of this elite group, a company must be in a good position to increase both their sales and earnings year after year on a very consistent basis. If one fails to do so, it will quickly become impossible to raise its dividend. Canadians also have their dividend aristocrats, but the criteria used for selection is fairly different.

Canadian Aristocrat Requirements

In order 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 yet still pretty far off 25 consecutive years.

Here’s a Complete List of Canadian Aristocrats Rules:

  1. 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.
  2. 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.
  3. The float-adjusted market capitalization of the security, at the time of the review, must be at least C$ 300 million.
  4. 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.

Where Can You Find The Canadian Aristocrats List?

If you do a simple search on the internet you will probably find it quickly, but just to save you some time; here it is.

Open Dividend Aristocrats List

SymbolNameMarket CapDVD YieldP/EPayoutEPS BasicRevDVD Growth
AGF.B.TOAGF Management Limited0.7$B13.0312.73160.81-29.25-7.769.06
ACO.X.TOAtco Ltd5.3$B1.8613.4562.729.175.959.8
BNS.TOBank of Nova Scotia79.2$B4.0611.5147.2511.3310.625.49
BCE.TOBCE Inc43.9$B4.6617.8289.9820.252.9326.13
BDT.TOBird Construction Inc0.5$B6.4917.11111.13-285.089.26
BYD.UN.TOBoyd Group Income Fund0.8$B1.03#N/A-63.37#N/A22.4917.91
CAE.TOCAE Inc4$B1.8720.622.43-1.574.9412.89
CCO.TOCameco Corp7.5$B2.143.0488.97-8.752.2410.76
CNR.TOCanadian National Railway Co63.1$B1.2921.6326.889.374.5113.33
CNQ.TOCanadian Natural Resources Ltd40$B2.4612.8126.88-14.722.123.3
CP.TOCanadian Pacific Railway Ltd37.5$B0.6434.7922.134.874.467.18
REF.UN.TOCanadian Real Estate Investment Trust3.2$B3.7737.4899.411.884.813.59
CTC.A.TOCanadian Tire Corp9.7$B1.6216.5223.338.485.2611.43
CU.TOCanadian Utilities Ltd10.3$B2.741632.224.9147.84
CWB.TOCanadian Western Bank2.6$B2.5912.0232.1312.9314.0912.13
CCL.B.TOCCL Industries Inc3.9$B0.9822.5718.3415.579.718.96
CGX.TOCineplex Inc2.9$B3.2644.52142.7819.146.632.6
CCA.TOCogeco Cable Inc3.4$B1.7316.3227.93#N/A9.8520.11
CGO.TOCogeco Inc1$B1.6815.180.37#N/A10.8422.42
CMG.TOComputer Modelling Group Ltd0.9$B3.3833.23105.458.0611.1423.41
CSU.TOConstellation Software Inc6.9$B1.4160.7179.1943.128.8884.68
CJR.B.TOCorus Entertainment Inc2$B4.7213.0448.0138.991.114.17
DII.B.TODorel Industries Inc1.3$B3.3417.0953.59-12.461.6218.43
EMA.TOEmera Inc5.5$B4.0719.7777.075.4110.867.92
EMP.A.TOEmpire Co Ltd8$B1.2533.0440.59-6.1378.24
ENB.TOEnbridge Inc48.8$B3.2360.43138.41-21.2815.3313.81
ENF.TOEnbridge Income Fund Holdings Inc2.1$B3.7124.33#N/A19.73#N/A5.89
ESL.TOEnghouse Systems Ltd1.1$B0.9538.0929.8831.9527.6823.73
ESI.TOEnsign Energy Services Inc1.7$B4.413.0755.85-12.944.236.12
ET.TOEvertz Technologies Ltd1.3$B4.1718.44218.62-8.970.614.87
EIF.TOExchange Income Corp0.5$B7.442.77314.83-5.2545.562.22
FTT.TOFinning International Inc4.3$B2.8514.1737.3728.672.436.8
FTS.TOFortis Inc8.2$B3.5827.971.592.620.734.4
FNV.TOFranco-Nevada Corp8.4$B1.59283.82#N/A-28.3120.8426.32
MIC.TOGenworth MI Canada, Inc.3.5$B4.239.234.695.031.91N/A
GS.TOGluskin Sheff & Associates Inc0.9$B3.267.7170.5637.5929.0917.23
HLF.TOHigh Liner Foods Inc0.7$B1.8819.2833.0625.5912.9826.22
HCG.TOHome Capital Group Inc3.2$B1.7511.2#N/A18.7816.5316.65
IGM.TOIGM Financial Inc11.6$B4.9114.4768.021.820.161.46
IMO.TOImperial Oil Ltd43.4$B1.0210.4410.38-5.30.845.22
IFC.TOIntact Financial Corp10.8$B2.3415.7839.3324.1812.127.26
PJC.A.TOJean Coutu Group PJC Inc5.3$B1.4423.773.01#N/A2.916.27
KEY.TOKeyera Corp6.4$B3.3326.1784.17-6.528.546.38
LB.TOLaurentian Bank of Canada1.4$B4.210.9843.321.255.348.66
MDI.TOMajor Drilling Group International Inc0.5$B3.55#N/A-28.68#N/A-7.468.45
MX.TOMethanex Corp5.1$B2.1111.0131.4113.214.874.72
MRU.TOMetro Inc7.6$B1.3317.7622.59.710.6916.43
NPR.UN.TONorthern Property Real Estate Investment Trust0.8$B6.638.7957.9624.596.460.89
PSI.TOPason Systems Inc1.9$B321.2752.63-17.316.6219.23
RBA.TORitchie Bros Auctioneers Inc3.2$B2.1530.5558.6-2.315.047.59
RCI.B.TORogers Communications Inc23.2$B4.0617.4267.315.452.3111.71
SAP.TOSaputo Inc13.3$B1.5323.89#N/A15.049.7710.76
SJR.B.TOShaw Communications Inc14.2$B3.5716.6841.078.049.15.32
SCL.TOShawCor Ltd2.7$B1.418.8323.9911.576.0213.47
SNC.TOSNC-Lavalin Group6.5$B2.2422.73#N/A-34.882.1713.9
SJ.TOStella-Jones Inc2.3$B0.8422.73#N/A18.9620.3118.66
SU.TOSuncor Energy Inc52.4$B3.117.4545.192.847.0729.56
T.TOTELUS Corp25.4$B3.8518.3663.652.753.278.31
TRI.TOThomson Reuters Corp37.3$B3.280.63#N/A-37.891.04-0.63
THI.TOTim Hortons Inc13.1$B0#N/A41.0712.729.7626.62
TD.TOToronto-Dominion Bank99.7$B3.4813.0742.371910.98.57
TRP.TOTransCanada Corp39.2$B3.472389.31-0.811.745.02
TCL.A.TOTranscontinental Inc1.3$B3.9712.0749.69#N/A-0.9421.1
UNS.TOUni-Select Inc0.6$B1.9712.3621.3-12.711.13.95
WIN.TOWi-Lan Inc0.4$B5.7831.78150.13#N/A31.98N/A

My Top 5 Canadian Dividend Aristocrats

The complete list includes 65 stocks. This is enough to build 2 different portfolios! The aristocrats’ list is a good place to start, but there are still lots of work to do before picking the right stocks. Following my 7 investing principles, I’ve highlighted my top 5. The list is in no particular order and some of them are the safest Canadian dividend stocks.

Intact Financial (IFC.TO) (Intact Stock Trend)

Intact Financial Corporation provides property and casualty insurance in British Columbia, Alberta, Ontario, Quebec and Nova Scotia. It distributes insurance under the Intact Insurance brand through a network of brokers and its subsidiary, BrokerLink.

IFC is now working on a stronger distribution platform and plans to expand in Brazil to diversify its business outside Canada. We expect IFC to keep its growth rate in the double digits for both revenues and EPS. This should give more room for additional dividend increases. The demand remains strong in Canada for insurance products and IFC has a well establish business model. Since Mother Nature should not be as rough as it was last year with Alberta’s flood, we should see bigger profits in 2015 for IFC.

We don’t see any major clouds over the head of IFC at the moment. The market for insurance is robust and IFC continuously posts stronger results than its peers. Only a big natural disaster could hurt IFC in 2015.

Telus (TSE:T) (Telus Stock Trend)

Telus offers residential phone, internet, TV and mobile phone services. Back in 2008, Telus also bought Emergis, a leading electronic healthcare solutions provider and then created Telus Health Solutions. Considering the number of wireless subscribers, Telus is the 3rd largest provider in Canada. Interesting enough, T gets 49% of its revenue from Wireline and 51% from Wireless.

Telus continues to outperform its peers and the stock market year after year. The best part is that T is doing this while continuing to increase its dividend year after year. It went from $0.24/share in 2009 to $0.40/share in 2014. There is still a lot of room in Ontario and Quebec for this company to raise its profit in the upcoming years. Telus TV services are also growing very fast, stealing clients from Shaw at the same time. It currently shows 800,000 customers and 75% of its mobile subscribers are on a smartphone. Therefore, it means higher bill per customer for Telus.

Telus has to deal with a continuous flow of massive investment to keep up with its other competitors. It is true that Telus is currently stealing customers from Shaw but the client acquisition cost is very high (some promotions included laptops giveaways).  Also, mobile subscribers only grew by 1.3% in 2013, the slowest pace in the firm’s history.

Emera (TSE:EMA) (Emera Stock Trend)

Emera is an energy and service company. Emera’s main market is Nova Scotia as it owns Nova Scotia Power, the province’s main electricity provider. Emera actually owns power plants and distributes natural gas in Canada, the USA and the Caribbean. It is actively developing more energy projects in Eastern Canada.

Emera is pretty much alone in its main market which provides a very good income flow year after year. As long as EMA is using this cash flow to generate more projects, we should see consistent sales growth. Notably, 2 projects (a participation in Maritime Link and an undersea power cable) should be under operation for 2017. The future looks bright for EMA as it shows several projects for the next decade. Both revenues and EPS are growing steady over the past five years and the dividend has grown accordingly. EMA is definitely a strong utility to hold.

Considering the weaker Canadian economy outlook for 2015, EMA growth might not be spectacular in 2015. We see this stock as a defensive play to benefit from a relatively high dividend if the economy is not doing so well. If we are wrong, EMA will simply continue to grow higher. It’s a win-win for this pick for 2015!

Gluskin & Sheff & Associates (TSE:GS) (GS Stock Trend)

Gluskin Sheff & Associates Inc provides discretionary investment management services to high net worth private clients and institutional investors in Canada and abroad.

The company evolves in a highly profitable market and has become appealing to other big players looking for a takeover target. I also like the fact that private clients tend to be more loyal than the average. In 2014, GS made an acquisition (Blair Franklin) instead of being bought out by a bigger player. I still think it can happen in the future. In the meantime, private wealth management is where the money is for any of the financials. Many analysts see this stock over $30. We are definitely in a good time to add this growth stock.

After the acquisition of Blair Franklin, there was a net redemption of 1% of their AUM which was unexpected. It obviously reduced this acquisition profitability over the long term. If markets slowdown, the interest from investors to add money to their portfolio will follow in the same trend, leading to less profit for a company such as GS.

Finning International (TSE:FTT) (Finning Stock Trend)

Finning International Inc is the Caterpillar equipment dealer, which sells, rents and provides parts and service for equipment and engines to customers in various industries.

FTT is directly linked to Caterpillar (CAT) as the dealer in Canada. While analysts downgraded the stock to “hold” due to the current slow environment for mining exploration, FTT is showing strong fundamentals. The dividend paid has increased significantly and is perfectly in line with the EPS as the payout ratio hasn’t moved since mid-2011. The company is appealing for a long term play. Right now, it pays 3% dividend and trades at a P/E ratio of 13. You might have to be patient in 2015, but this is a company to hold for the upcoming years.

The fact that FTT depends mainly on the mining and construction industry might hurt the stock in 2015. Over a few years, it is a very interesting play but I’m expecting FTT not to contribute too much to my 2015 portfolio performance. However, in 3-4 years, you will be happy to have selected such a promising dividend stock.

How did I pick these 5 companies? (+ I have 4 more on my personal list!)

Throughout my ten years of experience in the market, I’ve built my own investing model described by the following 7 investing principles:

Principle #1: High Dividend Yield Doesn’t Equal High Returns

Principle #2: If There is One Metric; It’s Called Dividend Growth

Principle #3: A Dividend Payment Today is Good, A Dividend Guaranteed For the Next 10 Years is Better

Principle #4: The Foundation of Dividend Growth Stocks Lies in its Business Model

Principle #5: Buy When You Have Money in Hand

Principle #6: If You Know Why You Bought, You Will Know Why You Sell

Principle #7: Think Core, Think Growth

If you are interested in reading more about my investing philosophy; I discuss each principle and provide academic research confirming my investing process in the following article: The 7 Investing Principles I Follow to Succeed.

Using these principles, I didn’t make a top 5 but a top 9 Dividend Aristocrats but this list is available to Dividend Stocks Rock members only:

Read about my 7 Investing principles and confirm that my investment philosophy works with yours. Who knows, we may work together in the future?

This is a guest post by Mike, aka The Dividend Guy Blog.

Related: 2 Overlooked Dividend Aristocrats

“Image courtesy of cooldesign – FreeDigitalPhotos.net”.

10 Responses to "My Top 5 Canadian Dividend Aristocrats"

    1. @Asset Grinder

      Comparing the telecoms is very interesting as it is an oligopoly in Canada and there exists only 3 major wireless players. Wireless generates at least 50% of their revenues. Telus has seen a lot of growth but Bell is the major player in Quebec and Ontario with ownership of major telecom infrastructures. There is also Rogers in the mix… Both Bell and Rogers own stakes in sport teams and compete for sports broadcasting which requires subscriptions to watch and can help drive revenue from advertising.

      It really depends what you are looking for in the end as a holding. I realize it doesn’t answer who is best and that’s because I think they are all good in their own way and worth holding based on your portfolio goals.

      Reply
      1. Hello Asset Grinder,
        I’d say Bell has more diversified activities (owns medias (TV Channels, shares in hockey teams) and Telus is more aggressive in the mobile business. Since the mobile business is more profitable, Telus has outperformed BCE for the past 5 years. On the other side, Telus’ business model is more at risk than BCE.

        My two cents: I prefer Telus (but I prefer more growth to my portfolio!).

        Cheers,

        Mike

      2. @ Asset Grinder & Div Guy

        As you can see in my stock holdings, I own all three. I have a different exposure but I will admit that the one that does better is the one I bought first a number of years ago. While I could have tried to predict which of the 3 would have done better 5 years ago, as of today, the one I bought first does better. What I am trying to say is that time is a much better factor than trying to figure out how the company will do compared with another.

        I also usually buy that one that’s more attractive at the time I need to buy telecoms. I have also read comments from analyst that telecoms go through a phase or investing and then there is a higher growth afterwards. Some predict that Rogers is ready to bounce back … but who knows. Truth be told, my Computershare holding has done the best since I DRIP fractional shares so I have had a much better compound growth.

  1. Interesting list, I will do my DD for some.

    I love GS. Bought a first time in 2012 when the company and its industry was out of favor, and since the previous year I’m a shareholder again of it. The management is top notch, and they reward us fairly well with growth and fat dividends. I have usually high dividend yield companies, but GS is one of the exception.

    Reply
    1. When you consider the special dividend, GS pays over 3% almost every year. Now the stocks has been slightly affected by the overall market over the past 3-4 months, it is a great opportunity to buy more!

      Cheers,

      Mike.

      Reply
  2. I know of the “Canadian Dividend Aristocrats List” but I much prefer the “Canadian Dividend All-Star List” which is updated monthly and available here:

    http://www.dividendgrowthinvestingandretirement.com/canadian-dividend-all-star-list/

    The Canadian Dividend All-Star List is comprised of Canadian companies that have increased their dividend for 5 or more calendar years in a row. There is no free pass for a one year freeze which is allowed in the Aristocrats list.

    Reply
    1. @Bernie

      I agree that the free pass introduced after the 2008 financial down turn is not really helping and that the Achiever is probably a really good filter. Unfortunately, you are removing all the banks from it … Since the S&P manages the Aristocrats, they probably had to adjust the requirements to avoid an index catastrophe which highlights the possible anomalies of the stock market and why judgement is really important.

      The rule prior to 2009 required 5 years of dividend growth with no free pass and I believe it will be re-established at some point … Nevertheless, the achiever is a good list to look at but I would rather have a list of Canadian companies that have increased dividends for 10, 15, or 20 years … There are also other factors such as how long dividends have been paid too. Lots of possible filters when it comes to dividends and data is crucial.

      Reply
  3. Hi, I’ve been investing in US dividend stocks for years but would like to add a few Canadian ones to my portfolio, so I really appreciated your recommendations. Still need to do some more research, but this is a good starting point.E

    Reply

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