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NUMBER CRUNCHER

Canadian stocks with the highest investment-grade credit rating Add to ...

What we’re looking for

The credit markets have a lot to say about corporate debt – which can provide useful signals about our confidence in investing in the stocks of those corporations, too. Today, we take a closer look at Canadian companies with healthy credit profiles, with the help of Jamie Hynes, sales director with S&P Capital IQ.

More Related to this Story

How we did it

Mr. Hynes devised a stock screen combining Standard and Poor’s Entity Credit Ratings with S&P Capital IQ financial data. He screened the Capital IQ database for TSX-listed stocks with “investment grade” S&P credit ratings. Under S&P’s credit rating system, these are the grades considered investment quality:

AAA – Extremely strong capacity to meet financial commitments (this is the highest possible rating);

AA – Very strong capacity to meet financial commitments;

A – Strong capacity to meet financial commitments, but somewhat susceptible to adverse economic conditions and changes in circumstances;

BBB – Adequate capacity to meet financial commitments, but more subject to adverse economic conditions;

BBB-[minus] – Considered the lowest investment grade by market participants.

 

More about S&P Capital IQ

S&P Capital IQ offers a comprehensive set of tools for fundamental analysis of global securities as well as idea generation and workflow management. Its Web- and Excel-based platform provides access to both real-time and historical information on companies, markets, transactions and people around the world.

What we found

Some 80 TSX-listed companies have an S&P 500 investment grade credit rating; Mr. Hynes has provided us with the 20 highest-rated companies on the accompanying chart. He noted that all 20 firms pay a dividend; only two of these companies have failed to raise their dividends over the past five years.

Seventeen of the 20 have generated positive returns (both on a price basis and a total-return basis) so far this year. The average year-to-date total return is 12.7 per cent – handily beating the 5.1-per-cent total return for the S&P/TSX composite index.

As always, you should do your own research before buying any of the stocks listed here.

 

Editor's note: Atco Ltd.’s five-year average annual dividend growth rate is +8.7 per cent. An incorrect figure appeared in an earlier version of the table.

 

Canadian stocks with the highest 'investment grade' credit rating

Company Name Ticker $ Price (Nov. 30) Market Cap ($-mil)
Imperial Oil Ltd. IMO-T 42.35 35,896
Royal Bank of Canada RY-T 58.9 85,128
The Bank Of Nova Scotia BNS-T 56 66,336
The Toronto-Dominion Bank TD-T 82.98 76,195
Bank of Montreal BMO-T 59.67 38,829
Canadian Imperial Bank of Commerce CM-T 80.2 32,441
Great-West Lifeco Inc. GWO-T 23.52 22,342
IGM Financial Inc. IGM-T 40.6 10,259
Industrial Alliance Insur. & Fin. Svcs., Inc. IAG-T 28.99 2,627
Power Financial Corp. PWF-T 26.51 18,774

* Long term local currency rating; Source: S&P Capital IQ

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  • IMO-T
  • RY-T
  • BNS-T
  • TD-T
  • BMO-T
  • CM-T
  • GWO-T
  • IGM-T
  • IAG-T
  • PWF-T
  • ACO.X-T
  • CU-T
  • ELF-T
  • NA-T
  • POW-T
  • SLF-T
  • CNR-T
  • ENB-T
  • FTS-T
  • POT-T
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