What are we looking for?
Canadian dividend stocks with a record of growth. We like dividends but we’re even fonder of stocks that show the ability to keep increasing their dividends without breaking the bank to do so.
How we did it
We used our Bloomberg terminal to shop for stocks listed on the Toronto Stock Exchange that met three criteria:
They have dividend yields of 1.5 per cent or more.
They have grown their dividends over the past five years by a net 20 per cent or more.
Their payout ratio – the amount of their earnings they’re paying out as dividends – is 50 per cent or less.
Our goal was to identify companies that have both a record of increasing their dividends as well as the financial room to continue to do so.
What we found
Only 10 stocks met our criteria. Many – no surprise – are high-profile household names that benefit from steady, recurring sales to customers.
Tim Hortons Inc., for instance, is exactly the type of company we would expect to show steady dividend growth as it pours ever-increasing amounts of coffee and Timbits into the maws of a seemingly insatiable crowd of customers.
Cable companies also do well on our list, with both Rogers Communications Inc. and Cogeco’s various corporate entities featuring prominently. And, of course, there’s also Potash Corp. of Saskatchewan Inc., purveyor of fertilizer to the world.
But how about Dorel Industries Inc., maker of baby strollers, bicycles and high chairs? You may not have heard of it, but it offers a tempting 3.54 per cent yield.
Similarly, Glentel Inc., which designs and installs wireless networks, and Enghouse Systems Ltd., which develops software products for automated mapping, are unlikely to come up in conversation around the dinner table, but offer decent dividends with a record of growth.
As always, you should do your own research before buying any of these stocks. But our list suggests that there good deals to be had for dividend hunters in companies that are not household names.
Canadian dividend stocks with a history of hiking their payouts
|Company||Ticker||Div. yield %||Div. payout|
|Canada Bread Co.||CBY-T||4.55||47.3|
|Potash Corp. Sask.||POT-T||1.98||23.0|
|Tim Hortons Inc.||THI-T||1.64||30.2|
|Company||Ticker||Div. yield %||Div. payout||Net 5-yr. div. growth %||Market cap. ($ mil.)||Recent price $||P/E|
|Canada Bread Co.||CBY-T||4.55||47.3||42.3||1,118.3||44.00||12.6|
|Potash Corp. Sask.||POT-T||1.98||23.0||35.7||35,625.4||41.46||13.6|
|Tim Hortons Inc.||THI-T||1.64||30.2||23.4||7,929.5||51.18||20.1|