News

What are we looking for?
Good dividend stocks. CIBC World Markets economists Avery Shenfeld, and Peter Buchanan yesterday recommended investors start moving more money out of money market funds and even out of bonds, and into dividend stocks.

“The spread between TSX dividend yields and those on corporate bonds is now near the tightest in decades,” they said in a report. “In that sense, investors don't give up much for going into stocks rather than bonds, and unlike bonds with a fixed coupon, can benefit from increases in dividends per share down the road. Both dividend-paying equities and corporate bonds will benefit from an exodus of investor dollars from essentially zero-yielding money market instruments, reflecting the huge pick-up in dividend yields vs. those on three-month T-bills.”

In addition, they point out how dividend stocks have provided investors with lower volatility and stronger long-term returns.

“Someone who invested $100 in the TSX back in 1975 would today have a portfolio worth roughly $1,200,” they said. “But throw in the dividends accumulated over that period, and the portfolio would be approaching $3,500.”

Even this year, the S&P/TSX dividend aristocrats index has returned 46 per cent, versus 32 per cent for the S&P/TSX composite, as of Nov. 23. With that in mind, let's today look at the dividend aristocrats index.

What is a dividend artistocrat?
S&P defines a dividend aristocrat for Canada as a security that has increased cash dividends for five consecutive years. They can either be stocks or trusts, but must have a minimum market capitalization of $300-million. The index is weighted by indicated annual dividend. Major rebalances take place in December.

More about today's screen
We sorted the members of the aristocrats index by current yield, but keep in mind that the index is about to be rebalanced. That means stocks or trusts that have cut or held their dividends over the past year will be eliminated soon.

So before you blindly buy a stock from this list, check the dividend history and do more research. Yellow Pages Income Fund, for instance, cut its distributions this year.