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(Jacob Wackerhausen/Getty Images/iStockphoto)
(Jacob Wackerhausen/Getty Images/iStockphoto)

NUMBER CRUNCHER

20 stocks that satisfy hunger for dividend yield, taste for growth Add to ...

What are we looking for?

Dividend stocks that can grow their bottom lines.

In this age of paltry returns from bonds, stocks with attractive yields have been selling like proverbial hotcakes. But dividend-paying stocks with a leavening of growth potential may be tastier yet, at least to discerning investors.

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How we did it

Our friend Craig McGee, senior consultant at CPMS Morningstar Canada, took us on a tour of the Morningstar Canada Dividend Target 30 Index, which reflects the performance of 30 dividend-paying, Canada-based equities.

To build the index, CPMS uses proprietary rules to screen for stocks with above-average yields, strong returns on equity, high cash flows relative to debt and growing earnings and expectations.

To qualify for inclusion in the dividend index, a stock must be one of the 100 Canadian stocks with the highest 12-month average trading volume and have an expected dividend yield greater than 1 per cent. The index is made up of the top 30 issuers that meet the screening requirements; the holdings are equally weighted and rebalanced quarterly.

The table shows the 20 top-ranking securities in the index that have had no worse than a negative 5 per cent change in consensus earnings estimates over the past 90 days.

More about Morningstar

Morningstar Inc. provides independent investment research in North America, Europe, Australia and Asia. Its investment research tool, Morningstar CPMS, provides quantitative North American equity research and portfolio analysis to institutional clients and financial advisers. CPMS data cover more than 95 per cent of the investable North American stock market.

What we found

Over the past year, the 30-stock strategy posted a return of 12.2 per cent versus 9.6 per cent for the S&P/TSX Total Return index. For the past five years, the strategy’s annualized return was 4.5 per cent compared with the index’s minus 0.9 per cent.

Investors who want to implement the strategy can do so through the First Asset Morningstar Canada Dividend Target 30 ETF. Remember, though, that past performance is no guarantee of future results.

Follow on Twitter: @IanMcGugan

 

Morningstar Canada Dividend Target 30 Index (Top 20)

Rank Company Symbol Expected
Yield
1 Canadian Oil Sands Ltd. COS-T 7.10%
2 Crescent Point Energy CPG-T 7.69%
3 Magna Int'l Inc. MG-T 1.85%
4 Bank of Montreal BMO-T 4.92%
5 Rogers Communications RCI.B-T 3.84%
6 CIBC CM-T 4.98%
7 Royal Bank of Canada RY-T 4.20%
8 BCE Inc. BCE-T 5.28%
9 Potash Corp. of Sask. POT-T 3.49%
10 Tim Hortons Inc. THI-T 1.94%

* n/c = non calculable due to no long-term debt. Grades relative to 100 stocks with highest average volume and greater than 1% yield (A = good; E = poor). Source: Morningstar Canada

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  • COS-T
  • CPG-T
  • MG-T
  • BMO-T
  • RCI.B-T
  • CM-T
  • RY-T
  • BCE-T
  • POT-T
  • THI-T
  • GWO-T
  • BNS-T
  • SC-T
  • PWF-T
  • IGM-T
  • HE-T
  • SJR.B-T
  • ARX-T
  • T-T
  • PPL-T
  • DXM-T
Live Discussion of COS on StockTwits
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Live Discussion of CPG on StockTwits
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Live Discussion of MG on StockTwits
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Live Discussion of BMO on StockTwits
More Discussion on BMO-T
Live Discussion of RCI.B on StockTwits
More Discussion on RCI.B-T
Live Discussion of CM on StockTwits
More Discussion on CM-T
Live Discussion of RY on StockTwits
More Discussion on RY-T
Live Discussion of BCE on StockTwits
More Discussion on BCE-T
Live Discussion of POT on StockTwits
More Discussion on POT-T
Live Discussion of THI on StockTwits
More Discussion on THI-T
Live Discussion of GWO on StockTwits
More Discussion on GWO-T
Live Discussion of BNS on StockTwits
More Discussion on BNS-T
Live Discussion of SC on StockTwits
More Discussion on SC-T
Live Discussion of PWF on StockTwits
More Discussion on PWF-T
Live Discussion of IGM on StockTwits
More Discussion on IGM-T
Live Discussion of HE on StockTwits
More Discussion on HE-T
Live Discussion of SJR.B on StockTwits
More Discussion on SJR.B-T
Live Discussion of ARX on StockTwits
More Discussion on ARX-T
Live Discussion of T on StockTwits
More Discussion on T-T
Live Discussion of PPL on StockTwits
More Discussion on PPL-T
Live Discussion of DXM on StockTwits
More Discussion on DXM-T

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