Many investors like to have a process that simplifies the chaos of the stock markets. To that end, indexes and stock lists are created by financial institutions based on pre-determine set of criteria to satisfy the demand for investors. For example, there is a Canadian Dividend Aristocrats list or a BMO Monthly Income Fund.
As it happens, a DIY dividend investor, like myself, work outside of those lists by establishing a more rigorous process to select the next dividend stock or holding to receive more funds. The Dividend Aristocrats, on both side of the border, were an initial step in my investing journey but I have since established a more rigorous set of criteria helping me narrow down a strong set of companies. I have put a comprehensive list of Canadian dividend stocks with many important key dividend metrics with the Dividend Snapshot service to help investors with their investing decisions.
However, one key discussion point I regularly have around the Canadian Dividend Aristocrats is on how poor the criteria really are for including a stock in the list. Investors use those lists to filter out stocks. It’s an important process to go from 1,000 companies to less than 100 but I don’t think it’s enough. While you can break it down by sector or industry, you want to filter out the great businesses from the others. You also want to filter out the companies that match a simple criteria of increasing dividend every year by 1 cent. Where is the growth in that for a dividend growth investor?
Since 2009, I have been working on my criteria for selecting stocks and while I usually select 90% of my holdings using the Dividend Ambassadors strategy the technology sector has usually thrown in a curve ball where instinct comes in.
I would like to introduce the Dividend Ambassadors where a stock needs to meet the following 2 criteria:
- Have increase their dividends for 10 consecutive years
- Have grown their dividend by 10% on average over the past 10 years
Once a stock matches the criteria, it earns the stamp of honour. It is actually quite an achievement to make it part of this list so take note of these blue chip stocks.
Canadian Dividend Ambassadors
Jean Coutu Group
Canadian Western Bank
Gluskin Sheff + Associates
US Dividend Ambassadors
Due to the large amount of dividend stocks to review, the first list will be filtered by the US Dividend Aristocrats followed by the US Dividend Achievers.
Out of the US Dividend Aristocrats, we have 22 strong dividend growth aristocrats as seen below listed by market capitalization.
Walgreens Boots Alliance
Automatic Data Processing
Illinois Tool Works
Becton Dickinson & Co
The Sherwin-Williams Company
Archer Daniels Midland Co
The US Dividend Achievers is coming soon … Stay tuned.