What are we looking for?
A further study of dividend trends in the S&P/TSX 60.
More about today's screen
On Wednesday we looked a dividend growth trends in Canada's blue chip index and zeroed in on financial services companies. Today, we'll look at three other groups of high-yield dividend growth stocks.
Research from UBS strategist George Vasic suggests financials have the best long-term performance, but that the non-financials and high-yield stocks have been better performers over the last two years.
Today's table shows stocks that have dividend track records for at least five years, separated into non-financials, energy and high-yield utilities/telecom stocks. (While Mr. Vasic highlighted five dividend growth stocks in the energy category, we included only the two with yields above 1.5 per cent.)
What did we find out?
Mr. Vasic points out that all the stocks in the non-financials group increased their dividend last year and that Shoppers Drug Mart is a new edition to the list.
"While many investors overlook the non-financial dividend growers, there are an increasing number with solid dividend growth records, and this group is an important source of sector diversification," Mr. Vasic said in a report last month. "While several have also raised their dividends for at least 10 years, they are more of a mixed bag, with a wider range of yields and payouts. Indeed, all raised their dividend in the last year, which helped this group of non-financials to outperform the S&P/TSX 60 by 450 basis points."
The full energy group of dividend growers offers low yields and underperformed the S&P/TSX energy index considerably, but the high-yield telecom/utilities group offered investors much more. But Mr. Vasic cautions investors to not get too carried away with them.
"The telecoms now appear to occupy the role that the banks have traditionally played – with their low beta, (recently) solid dividend growth, relative insulation from global macro risks and high yields being particularly attractive in the current environment," he said. "Nonetheless, the relatively high payout ratios mean dividend growth will be limited to earnings, and doesn't leave much buffer in the event of future disappointments."
Scott Adams