What are we looking for?
We're delving into the world of Canada's blue-chip stocks to find out how they stack up when it comes to paying out increasing dividends over time.
How the screen works
To limit ourselves to the bluest of blue-chip stock, the universe we're looking at here comprises the S&P/TSX 60.
George Vasic, strategist at UBS Securities Canada Inc., has been doing the heavy lifting when it comes to analyzing the dividend payers in the index for years now and we're looking at the results of his latest research today.
What Mr. Vasic has been keeping a particularly close eye on are the names in the group that have managed to rack up five or more years of dividend growth.
Yesterday, we took a look at the financials and what Mr. Vasic calls the non-financials. Today, we are going to turn our eye to a couple other subgroups that he also tracks: the energy stocks and high-yield plays.
If you put the list here together with the names featured in Monday's Number Cruncher, you can see all 29 names Mr. Vasic has highlighted as the S&P/TSX 60's dividend growers.
What did we find?
Two years ago, Mr. Vasic introduced a new group of stocks to his dividend growers list by breaking out the energy companies so that he could better track their performance.
The record to date? Four out of the five energy names that have made the cut for the list managed to raise their dividend. Even better than the higher payouts, however, has been the better performance the group has seen relative to the peer group since it was created. The S&P/TSX energy index is off 23 per cent over the past two years versus a narrower 17 per cent decline for the large-capitalization dividend growers here. However, over the past year, that lead has narrowed, with the energy index up 8.5 per cent compared with a more modest 2.5 per cent gain from Mr. Vasic's dividend growers.
Turning our eye to the higher-yielding stocks Mr. Vasic tracks in the S&P/TSX 60, it is actually a group that tends to contrast with some of the more consistently strong dividend growers and underperform such names.
Over the past year, however, strong dividend growth from BCE and Fortis, and share price gains from Telus, helped push the group higher by 17 per cent - an uncharacteristic pop Mr. Vasic noted in his research report, adding that the relatively high payout ratios limit the likelihood that this sort of run will continue.