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Number Cruncher

Stock screens for investment ideas from professional investors. Exclusive to subscribers of Globe Unlimited.

Number Cruncher

Non-financial stocks hold up during recession, credit crisis Add to ...

What are we looking for?

How the bluest of Canada's blue chips have been doing when it comes to dividend growth.

How the screen works

We're focusing in on the S&P/TSX 60 here and relying on some ongoing research by George Vasic, strategist at UBS Securities Canada Inc.

Mr. Vasic has been tracking the performance of the dividend paying stocks in the index and keeping a particularly close eye on any names that manage to notch up five years or more of dividend growth.

What did we find?

Despite the relative proximity of the recent recession and the credit crisis, Canada's dividend growers have held up very well.

Mr. Vasic's research shows that over the last year, seven S&P/TSX 60 stocks cut their dividend, while 28 managed to post an increase - a marked improvement over the prior year when 14 companies cut back on their payouts.

As one would expect, Canada's financials figure prominently on Mr. Vasic's list of dividend growth stocks but are notable this time around for having taken a bit of a pause in terms of hiking their dividends. The group's payout ratios had been hovering above historical norms and combined with all the uncertainty out there around capital requirements, the financials took a break from their traditional dividend increases.

While financial dividend growers are still the strongest group on Mr. Vasic's list when it comes to their long-term track record, the decision to hold off on any increases now did lead them to lag some of the other names that made the grade.

Non-financials in fact turned in a very strong performance over the last year, up almost 19 per cent compared to just a 3 per cent return for the financials.

The non-financials were also the only group to see a new member make the grade for Mr. Vasic, as he added Tim Hortons to his list.

One thing to keep in mind when looking at the non-financial stocks is that, as Mr. Vasic notes, yields, payout ratios and histories of dividend growth vary much more widely.

Tomorrow, we're going to take a look at the energy companies and higher yielding stocks that also made Mr. Vasic's list and look a bit more deeply at the relative performance of the various groups he is tracking.


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