For dividend lovers, a trip down memory lane

WHAT WE'RE LOOKING AT

Call it a dividend nostalgia trip - the top dividend-growth stocks of the 1990s.

OUR SCREEN

Morningstar CPMS, an equity research and portfolio analysis firm, has created a list of the 20 TSX-listed companies that increased their dividends the most between the end of 1989 and Dec. 31, 1999.

WHAT WE FOUND

There are some companies here such as Rothmans and Teleglobe that are no longer listed on the TSX, and there are some such as Bombardier that aren't in the dividend-growth club any more. But there are also companies on the list that are still pumping out dividend increases today, some on a regular basis and some not.

Investors Group (now IGM Financial), Power Financial and Great-West Lifeco used to be dividend growth powerhouses, but not since the financial crisis. Melcor Developments is an Alberta real estate company was a quiet dividend star, then cut its payout in 2009. It's now back on the dividend-growth track.

There are also some companies on this list that were big on dividend growth back in the 1990s and still are today. Wednesday's Number Cruncher (read it here: http://tgam.ca/CcUF) listed top dividend-growth stocks since 2001. The stocks common to that list and this one are SNC-Lavalin and Toromont Industries.

Note how the '90s were a dismal decade for dividends. While the companies on our list all increased their dividends by no less than 11 per cent a year, the payout level for the S&P/TSX composite actually fell a bit on an annualized basis. Also, the yield for the index at the end of the decade was just 1.3 per cent. CPMS senior consultant Jamie Hynes said this is mainly due to the dominant weight of Nortel Networks in the index. Nortel accounted for 16.3 per cent of the index at Dec. 31, 1999, and its dividend yield was just 0.15 per cent.

Mr. Hynes offered this final note that speaks to the benefit of dividend-growth investing: "The median stock on this list was up 16.7 per cent per year for this 10-year period before dividends. The TSX was up 10.6 per cent annualized including dividends."