Top 10 Canadian Dividend Stocks – June 2019

Top 10 Canadian Dividend StocksWhile we know that the stock market will grow over time, on a day-to-day or even month-to-month basis, the stock market is always changing value due to the daily fluctuation of all the stocks.

The opportunities will vary every month and that’s why it’s important to have a systematic approach to understanding which dividend stocks are an opportunity. An opportunity can be for a stock you already own or simply for a new addition to your portfolio. It is important to note that the rankings below do not assess the viability of the business. Some of the companies are strong blue chip stocks while others are smaller companies with growth or just simply beaten down.

Top 10 Canadian Dividend Stocks

Here are the top 10 Canadian dividend stocks for this month, see below for the details. This is obviously a snapshot in time at the time of writing, many factors could change the rankings.

Here is a quick excerpt on the top 10 dividend growth stocks opportunities identified through the Canadian Dividend Performance List.

Stay on top of your next investment decision with the Dividend Snapshot Canadian Dividend Performance List. Review the Chowder Rule along with the 3, 5, and 10 year ratios for dividend growth, EPS growth and the payout ratio to pick a solid investment for your portfolio.

The monthly top 10 rarely have the same top 10 stocks. Be sure to come back, or better yet, follow the top 10 with the Canadian Dividend Performance List.

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Methanex Corp

MX - Methanex CorpMethanex is the largest producer and supplier of methanol in the world. The company operates through a huge network of 6 production facilities (with an annual production capacity of 9.4 million tonnes), 11 global offices, and 17 distribution terminals and storage facilities. It also owns the world's largest fleet of methanol ocean tankers, barge, rail, truck and pipeline. Methanex has access to low cost natural gas feedstock and enters into long-term natural gas contracts which grant it enough cash flow visibility. The company has an extensive international reach and serves large, global chemical and China MTO companies. Its low cost structure and large scale of operations are huge competitive advantages. Methanex benefits from being the only supplier of methanol with a well-established global market presence and production base.

Investment Data

Exco Technologies

Exco Technologies LimitedExco Technologies engages in the designing, development and manufacturing of dies, moulds, components, and consumable equipment for the die-cast, extrusion and automotive industries. The company has operations in 15 strategic manufacturing locations in seven countries, and functions through three business groups: Automotive Solutions, Extrusion Tooling Solutions and Die Cast Solutions. Exco Technologies has a wide geographic footprint extending to the US (52% of sales), Canada (4%), Mexico (9%), Europe (30%) and others (4%). Exco’s customers are leading automotive and industrial players throughout the world. The company is the world’s leading provider of storage and other convenient solutions to the automotive markets, as well as the largest producer of extrusion tools in North America. The company’s innovative product portfolio continues to expand across more vehicles. Exco is in a good position to benefit from the growing automobile sales in the future.

Investment Data

Canadian Natural Resources

CNQ - Canadian Natural ResourcesCanadian Natural Resources is a large natural gas and crude oil exploration and production company in Canada. The company operates a diversified portfolio of assets (comprising of mix of natural gas, light crude oil, heavy crude oil, bitumen and synthetic crude oil) in North America, the UK North Sea and Offshore Africa. Canadian Natural’s business can be broadly classified into - North America E&P, international, marketing & midstream. The company holds some of the best oil sands assets in North America, particularly thermal in situ properties, having significant growth potential. Canadian Natural completed its transition to a long life, low decline asset base in 2017, which ensures a growing base of sustainable cash flows especially in low commodity price environments.

Investment Data

CIBC

CIBC or Canadian Imperial Bank of Commerce is a leading North American financial institution, formed as a result of the merger between the Canadian Bank of Commerce and the Imperial Bank of Canada in 1961. The bank operates through its four strategic business units Canadian Personal and Small Business Banking (48% of latest net income), Canadian Commercial Banking and Wealth Management (24%), U.S. Commercial Banking and Wealth Management (13%), and Capital Markets (15%). The bank caters to 11 million individual, small business, commercial, corporate and institutional clients in Canada, the U.S. and around the world. CIBC has a strong client focused culture and operational efficiencies which drive shareholder value and aid growth across different platforms. CIBC’s investment in technology and digital platforms should also meet the evolving needs of its clients. The bank caters to 11 million individual, small business, commercial, corporate and institutional clients in Canada, the U.S. and around the world.

Investment Data

Suncor

SU - Suncor EnergySuncor Energy is one of the largest independent energy companies in the world engaging in oil sands operations, offshore oil and gas production, petroleum refining and marketing. It is the largest oil producer in Canada. The company has operations across the entire value chain, including resource extraction, upgrading, refining and marketing, and midstream logistics. In addition, Suncor is involved in energy trading and operates a renewable energy business. Suncor owns offshore assets in key strategic geographic locations like the U.K. North Sea, Canada’s east coast and Norway. The company operates four refineries, an ethanol plant, wind farms, and over 1700 retail sites in North America and owns 940 mbpd oil production, 550 mbpd upgrading, and 460 mbpd refining capacities. Suncor’s long-life, low-decline reserve base with a proven life of more than 30 years, sets it apart from peers.

Investment Data

Toromont Industries

Toromont is a heavy equipment dealer that mainly sells Caterpillar trucks and equipment. The company has operations in more than 140 locations across Canada and the U.S. About 70% of Toromont’s revenues are from CAT dealership which represents a predictable source of income. It operates through an extensive network of dealers, fleet of service vehicles, and logistics and technology capabilities. New and used equipment accounts for 50% of revenues, followed by product support (39%), and rental (11%). Toromont delivers specialized capital equipment to a diverse range of customers and industries. It operates through two business groups: Equipment group (Toromont CAT, Battlefield, Sitech) and CIMCO. Toromont CAT is one of the world’s largest Caterpillar dealerships, Battlefield is an industry leading rental operation; and CIMCO is a market leader in the design, engineering and after-sale support of refrigeration systems in industrial and recreational markets. Toromont’s huge network of distribution channels, leading product lines and strong relationships with suppliers and business partners are its key competitive advantages.

Investment Data

Enbridge

ENB - EnbridgeEnbridge Inc. is the largest energy infrastructure company in North America. It is Canada’s largest natural gas distributor engaging in the collection, transportation, processing and storage of oil and gas. Enbridge caters to 3.7 million customers in Ontario, Quebec, New Brunswick, and New York. It owns an extensive network of about 192,000 miles of natural gas and NGL pipelines across North America and the Gulf of Mexico. Its crude oil and liquids transportation systems are huge comprising of more than 17,000 miles of active pipelines. The company is known for its high quality liquids and natural gas infrastructure assets. In addition, Enbridge has 3.1 Bcf/d of processing capacity and 438 Bcf of net natural gas storage capacity. It also owns interests in nearly 3,000 MW of renewable generation capacity. Enbridge operates through five reporting segments - Liquids Pipelines (52% of 2018 earnings), Gas transmission and midstream (22%), Gas Distribution (17%), Green Power and Transmission (4%), and Energy Services (5%).

Investment Data

Magna International

MG - Magna International

Magna International is a leading automotive supplier and one of largest auto parts manufacturers in the world.

The company operates through a large network of 339 manufacturing and 89 product development, engineering and sales centers in 28 countries. North America is the largest market for Magna International, accounting for nearly half  of the company’s sales; Europe and Asia are the other major markets. Magna International’s key operating segments are Body Exteriors & Structures (~8% EBIT margin), Power & Vision (~10%), Seating Systems (~8%) and Complete Vehicles (~2%).

Magna is one of the largest and most respected automotive parts suppliers in the world. With over six decades of experience in the auto industry, Magna has become a popular brand today with its products found on most vehicles today.

Investment Data

AltaGas

ALA - AltaGasAltaGas is a North American diversified energy infrastructure company. It engages in delivering affordable natural gas through regulated natural gas distribution utilities and transact more than 1.5 Bcf/d of natural gas. In addition, AltaGas provides storage facilities, interstate natural gas transportation, energy efficiency contracting and retail power marketing services. The company operates through midstream, utilities and power segments. It serves 1.6 million customers in the utilities and owns infrastructure assets worth more than $21 billion in some of the fastest growing energy markets in North America. AltaGas’ assets include a good mix of gas, power, and utility assets. Its midstream business serves customers primarily in the Western Canada Sedimentary Basin. AltaGas is known for its premier energy solutions, the strength of its assets and expertise along the energy value chain. The company benefits from the ownership of steady utility business and high growth midstream assets.

Investment Data

Scotia Bank

BNS - SmallScotiabank is a leading international bank in Canada and a leading financial services provider in the Americas. The bank has a presence in personal and commercial, corporate and investment banking, wealth management and capital markets, and serves 25 million customers worldwide. With a rich history of 185 years, the bank has developed an extensive network of over 960 branches and more than 3,600 automated banking machines in Canada, and 1,800 international branches. Scotiabank has a wide geographic presence in attractive markets in Latin America (71% of revenues), Caribbean & Central America (25%) and Asia (4%). It operates through Canadian banking (49% of earnings), international banking (36%) and global banking and markets (15%) business lines. Scotiabank is highly diversified by products, customers and geographies, which reduces risk and volatility. The bank generates nearly 80% of its earnings from high quality and stable businesses which gives stability to cash flows.

Investment Data
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Opportunity Score Formula

The top 10 stocks identified above are based on a score calculated using a number of financial data points from the companies. In the end, the score is generated from following five key indicators:

  • 52-Week Range: Trend over the past 52 weeks. Is the stock pulling back from a 52 week high?
  • P/E Ratio: Is the stock price running away from its earnings?
  • Dividend Yield: Is the yield attractive? Usually could identify a pullback if the yield starts to go up or major trouble if it goes too high.
  • Dividend Growth: Uses dividend growth and the Chowder Rule. Is the company capable of growing the dividend consistently?
  • Dividend Payout Ratio: Uses historical averages to put today’s ratio in perspective. Is the company able to grow the dividend at the same rate it increases its earnings?

The generated score is meant to assess an entry point opportunity based on historical and today’s numbers. It completely ignores the business quality, the quality of the company is for every investor to assess. My stock selection process breaks down the quantitative and qualitative assessments investors should establish to pull the trigger before buying.

If you are interested in more details, the Canadian Dividend Performance List provides many more data points to help make your investment decision.

Dividend growth investing works and you can generate a healthy retirement income but you have to buy individual stocks. If you are not comfortable with holding individual stocks, you can always buy dividend ETFs or consider different passive income ideas to generate a retirement income.

DISCLOSURE: Please note that I may have a position in one or many of the holdings listed. For a complete list of my holdings, please see my Dividend Portfolio.

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 investment decisions at your own risk – see my full disclaimer for more details.
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