Top 20 Dividend Stocks – January 2012 Edition

Questrade Democratic Pricing - 1 cent per share, $4.95 min / $9.95 maxWith a new year comes new investing opportunities. I have found that doing my Top 20 Dividend Stocks every 2 months work well as there are enough changes in the markets that it can highlight opportunities. It’s very important to understand that it is simply a screening method to look further into the companies.

One thing I have noticed since doing my Top 20 Dividend Stocks is that U.S. conglomerates do not make it on the list very often. It’s not because they aren’t good, it’s mostly because the yield tend to be lower than many Canadian corporations. I have also adjusted my formula to give a multiplier to larger corporation. I like to focus on corporations that own the market they are in and that usually translate into a larger market capitalization.

Top 20 Dividend Stocks – Technical Screening

The technical screening is based on 5 criteria that I can easily fetch from Google Finance. Dividend growth is still missing as I have not had the time to track it down and add it. Nevertheless, I wanted to share the list.

  • P/E : Target is 15
  • 52 Week Range : The lower in the range the higher the score
  • Yield : Normalized up to 6% (this one is manual)
  • Payout Ratio : Under 60%
  • Market Cap : Bonus multiplier with a target of $25B or more (+/- 10%)

I did a comparison between my previous filtering and my new filtering with the market capitalization multiplier and I like it. Basically, every corporations are normalized between 0 and 1 with a 1 for any companies above $25B. Than I normalize it between 0.9 and 1.1 and use that to multiply my previous total of the first 4 criteria.

I made a couple of changes to my formulas:

  • Yield value is now normalized up to 6%. I used to disregard anything below 3% and above 8% but too many companies that perform well can also have a yield in the 2%. Instead I decided to normalize it and reduce the cap to what makes sense as in anything above 6% is either an anomaly, or there is trouble looming.
  • I fixed a payout ratio calculation problem as well where payout below 25% were disregarded. I was ranging the payout since I did not want to give too much wait to the low payout ratio since they also tend to have a low yield. I think the combination of the normalized yield will mitigate that.
The top of the list is a life insurance company and it showed up once I updated my formula. I mentioned back in November that I was a little bullish on the life insurance this year.
TickerCompanyQuote52 Week RatioP/EMarket CapDividendYieldPayout RatioValue Metric
IAG.TOIndustrial Alliance$26.6511.00%9.112.40$0.253.68%33.56%5.42
WAG** Walgreen$34.2323.20%11.6229.90$0.182.04%23.73%5.28
LB.TOLaurentian Bank$45.5540.17%9.481.09$0.453.95%37.42%5.18
COS.TOCanadian Oil Sand$24.8242.17%9.8412.03$0.304.83%47.62%5.13
TCL.A* Transcontinental Inc$12.7138.35%10.411.03$0.144.41%45.90%5.08
SJR.B* Shaw Communications$19.6717.01%12.188.64$0.084.68%56.79%4.96
BNS.TO* Scotia Bank$52.3134.72%11.3356.97$0.523.98%45.02%4.96
POW.TOPower Corporation$24.2338.72%11.69.96$0.294.79%55.50%4.80
CPBCampbell Soup$31.4429.31%13.0610.02$0.283.56%46.47%4.74
HASHasbro Inc.$35.0621.69%12.064.52$0.252.85%34.36%4.69
BMO.TOBank of Montreal$59.2250.63%11.2637.85$0.704.73%53.23%4.63
CWB.TO* Canadian Western Bank$26.4631.74%12.462.00$0.142.12%26.42%4.60
TD.TO* TD Bank$77.1548.26%12.0369.52$0.683.53%42.43%4.58
RY.TORoyal Bank$52.3349.53%11.7775.35$0.544.13%48.54%4.55
The double star (**) highlights a US Dividend Aristocrat and the single star (*) indicates a Canadian Dividend Aristocrat.

Top 20 Dividend Stocks – Dividend Yield

This list is purely sorted by the yield. See anything you like? Income trusts are definitely surfacing and many of the other companies were also income trusts before the Canadian rule change on income trusts.

TickerCompanyQuote52 Week RatioP/EMarket CapDividendYieldPayout RatioValue Metric
JE.TOJust Energy$11.7436.57%7.221.63$0.1010.56%76.07%2.77
WRK.UNWhite Rock Real Estate$16.0498.21%10.940.55$0.1410.49%114.49%1.41
ERF.TOEnerplus Corp$23.636.63%9.054.27$0.189.14%82.76%3.00
KEG.UNThe Keg Royalty Income Fund$13.2080.08%12.110.15$0.087.27%88.07%1.64
SLF.TOSun Life Financial$20.1213.36%16.4111.73$0.367.16%117.07%2.41
AX.UNArtis REIT$15.1495.50%4.861.27$0.097.13%34.73%3.09
DH.TODavis + Henderson$17.8342.78%11.381.06$0.316.95%78.98%2.24
AGF.B* AGF Management$15.6927.02%13.321.50$0.276.88%91.53%2.59
BA.TOBell Alliant$27.8265.58%#N/A6.34$0.486.83%-52.63%#N/A
PBH.TOPremium Brands Holding Corp$17.0080.43%22.730.34$0.296.82%154.67%1.05
LIQ.TOLiquor Store Income Fund$15.8595.68%12.830.36$0.096.81%87.10%1.26
RSI.TORogers Sugar$5.4983.74%13.510.49$0.096.19%82.93%1.44
CPG.TOCrescent Point Energy$45.4876.11%51.1613.00$0.236.07%310.11%0.77
PPL.TOPembina Pipeline$26.5055.76%25.724.45$0.135.89%151.46%2.94
GWO.TOGreat West Life$21.9632.30%11.1620.85$0.315.65%62.94%4.11
ENF.TO* Enbridge Income Fund$21.5393.09%23.130.86$0.105.57%129.03%2.18
IPL.UNInter Pipeline$17.3270.00%17.214.54$0.085.54%95.05%2.86


I am quite pleased with my changes. When I initially started with my technical screening, I had a focus on higher yields but at the end of the day, if you can get stock appreciation plus good yield plus dividend growth, you are golden.

For a list of my holdings, see the Dividend Income section where I list my dividend holdings monthly with the dividends earned.

Readers: Any of the companies on your watch list?

Disclaimer: Please note that this blog post represents my opinion and not an advice/recommendation. I am not a financial adviser, I am not qualified to give financial advice. Before you buy any stocks/funds consult with a qualified financial planner. Make your decision at your own risk – see my full disclaimer for more details.

Image: jannoon028 /

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