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Number Cruncher

Some little guys do dish out the dividends Add to ...

What are we looking for?

Dividend growers outside of the TSX 60 - in other words, reliable payouts from smaller companies.

UBS strategist George Vasic put together a list of companies with a record of consistent payouts, to complement an earlier report on dividend growers within the larger-capitalization world (that report was covered in Rob Carrick's Portfolio Strategy column on Saturday).

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What we found

Mr. Vasic said there's an important reason to consider these stocks: Dividend growers outside the TSX 60 have "uniformly outperformed their large-cap peers within the 60, and with a better reward/risk ratio."

Canadian Western Bank was a new addition to his list this year, thanks to its 10th consecutive dividend hike. "CWB sports an impeccable track record - very strong growth in dividends over the entire period and hikes every year, although payout ratios have ballooned due to the financial crisis."

On the consumer side, he refers to his "eclectic group of eight" that have paid a dividend every year since 1995. All but one, Reitmans, raised their dividend in the past year.

"There are no deletions this year, but we have added two new stocks, [energy services provider]ShawCor and Transcontinental, which have also paid a dividend since 1995, and increased them for the last five and eight consecutive years, respectively."

His up-and-comer category contains companies that have been steadily building a record of payouts, but tend to have lower yields and payout ratios.

"It is clear that changing business conditions affect the consistency of their dividend payments. Accordingly, this makes the dividend discount framework less applicable (ie. they do not trade like yield stocks), but could become more applicable if their yields rose well above 2 per cent."

 

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