What are we looking for?
Best returns among dividend-focused Canadian investment funds.
We ranked the top 15 performers in the Canadian dividend and income equity category this year to Dec. 11. Funds in this group can also choose to invest up to 30 per cent in foreign stocks. U.S. dollar, segregated and duplicate versions of funds were excluded.
What did we find?
A dividend fund shunning REITs at the top of the heap.
Trimark Canadian Plus Dividend Class led the pack with a 16.8-per-cent gain. It outpaced the 12.1-per-cent gain by its nearest rival, PowerShares Canadian Dividend exchange-traded fund. Both are sold by Invesco Canada Ltd.
Unlike many peers, Trimark Canadian Plus takes a different approach to making money. It currently owns no real estate investment trusts, and has limited exposure to bank and utility stocks. It also invests up to 30 per cent in foreign stocks.
“REITs are the flavour of the day,” says Rory Ronan, lead manager on the fund, which sold its last REIT earlier this year. “I think the expected returns are going to be modest. They have been bid up to full valuation. … The risk-return [tradeoff] is a lot more attractive in other companies.”
His fund’s biggest winner among Canadian securities this year was its holding in Progress Energy Resources Corp. It was acquired for $6-billlion recently by Malaysian state-owned energy firm Petronas. Other gains came from names such as West Fraser Timber Co. Ltd. and Brookfield Asset Management Inc. Among the foreign holdings, consumer staples giant Unilever NV and U.S. cable giant Comcast Corp. also contributed to performance.
“When it comes to the dividend space, we use a total-return approach, and look for a combination of income plus long-term capital appreciation,” said Mr. Ronan, a value-oriented manager. In contrast, the fund’s in-house ETF rival, the No. 2-ranked Powershares ETF, is only invested in Canadian securities, and tracks an index comprising companies with stable or rising dividend payments for five or more years. It has 66 per cent of its holdings in financials, including five banks in the top 10 names.
The lesson is that not all dividend funds are alike. Investors need do their homework to get the exposure they want.
Top performing Canadian dividend and income equity income funds this year to Dec. 11
|FUND NAME||ETF SYMBOL||MER||Assets ($-mil)|
|Trimark Cdn Plus Dividend Class A||2.58||88.6|
|PowerShares Canadian Dividend ETF||PDC-T||N/A||8.2|
|Dynamic Dividend Advantage Fund||1.59||302.1|
|Leith Wheeler Canadian Dividend||1.57||1.9|
|PowerShares Canadian Dividend Index Cl A||1.82||148.3|
|Sentry Canadian Income||2.7||2,087.00|
|Ark StoneCastle Stable Income Class||2.49||3|
|PH&N Canadian Income-D||1.22||80.9|
|RBC Canadian Dividend||1.78||13,690.00|
|Fidelity Dividend Plus-B||2.12||359|
|FUND NAME||ETF SYMBOL||MER||Assets ($-mil)||YTD % rtn (Dec. 11)||YTD % rtn (Nov. 30)||2011 % rtn||2010 % rtn||2009 % rtn||2008 % rtn|
|Trimark Cdn Plus Dividend Class A||2.58||88.6||16.80%||14.70%||1.40%||9.90%||26.70%||-25.80%|
|PowerShares Canadian Dividend ETF||PDC-T||N/A||8.2||12.10%||11.60%|
|Dynamic Dividend Advantage Fund||1.59||302.1||12.00%||11.80%||-12.40%||14.20%||26.40%||-31.00%|
|Leith Wheeler Canadian Dividend||1.57||1.9||12.00%||10.80%||1.10%|
|PowerShares Canadian Dividend Index Cl A||1.82||148.3||10.70%||10.30%||0.30%||10.00%|
|Sentry Canadian Income||2.7||2,087.00||10.20%||9.50%||6.10%||18.60%||33.00%||-22.80%|
|Ark StoneCastle Stable Income Class||2.49||3||10.20%||10.90%||-1.90%|
|PH&N Canadian Income-D||1.22||80.9||10.00%||9.50%||-2.90%||18.80%||42.40%||-38.80%|
|RBC Canadian Dividend||1.78||13,690.00||8.90%||8.10%||-2.50%||11.90%||27.30%||-27.00%|
|Fidelity Dividend Plus-B||2.12||359||8.80%||7.70%||3.10%||19.80%||45.90%||-22.10%|
|Sentry Growth & Income||2.76||430.9||8.60%||7.70%||5.20%||19.50%||26.10%|
|CI Signature Dividend||1.88||745.3||8.40%||7.70%||-0.90%||9.40%||32.10%||-23.00%|
|TD Dividend Growth||2.03||5,054.70||8.30%||7.70%||-1.50%||9.20%||32.80%||-29.90%|
|NEI Northwest Canadian Dividend A||2.53||108.9||8.20%||7.90%||1.20%||9.90%||16.40%||-21.50%|
|iShares Dow Jones Canada Select Value Index||XCV-T||0.55||50.2||8.10%||7.60%||-5.00%||16.00%||43.70%||-34.00%|
|S&P/TSX Total Return||5.60%||5.10%||-8.70%||17.60%||35.10%||-33.00%|