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Number Cruncher

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


Number Cruncher

Stocks with fat yields, strong fundamentals Add to ...

What are we looking for?

In this era of skinny interest rates, the fatter yields of dividend-paying stocks have never looked more attractive. The trick is in finding companies that are not only doling out cash to shareholders, but are also fundamentally strong.

Today’s cruncher aims to do just that by screening for income-producing Canadian stocks that score high grades on the 12 guru-based investing strategies developed by Validea Canada. The premium Canadian stock screen service, which has a distribution agreement with The Globe and Mail, bases its screens on the investing approaches of some of history’s most successful stock pickers.

More on our screen

To make the cut, each stock had to score 80 per cent or higher in at least two of Validea’s computerized models. The gurus on whom these models are based include both growth and value investors, including Warren Buffett, Benjamin Graham, Peter Lynch, David Dreman, Kenneth Fisher, Martin Zweig, Joel Greenblatt, James O’Shaughnessy, Joseph Piotroski and John Neff. There’s also a strategy based on a small-cap growth approach developed by the founders of the Motley Fool website, and one that’s based on a momentum strategy.

Each of the strategies use explicit criteria to find attractive stocks. The Peter Lynch strategy, for example, requires a price/earnings to growth (PEG) ratio of under 1.0 and a debt-to-equity ratio no greater than 80 per cent for non-financials, among other criteria.

What we found

A short list of companies from a variety of sectors. Two well-known financials made the screen: Bank of Montreal and National Bank of Canada. But it was a much smaller cap stock, Airboss of America Corp., that scored 80 per cent or higher in the most models.

Its business – manufacturing rubber-based products – doesn’t exactly cry out for investors’ attention. But it may be a stock worth further investigating given its yield of over 4 per cent. It’s trading on the low end of its 52-week trading range of $4.20 to $6.30.

Automodular Corp., also another smaller capitalization stock, features the highest yield of the group, at 11.7 per cent. This automotive parts company did well on the Lynch and Fisher models and is also well off its highs of the year. Be warned though that, in general, investing risks tend to increase when yields get to those heady levels.

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Top Canadian dividend stocks

Company Ticker Top Guru Model(s) (scores 80% or higher) Price Market cap Div. Yield ROE P/E EPS growth
AutoCanada Inc. ACQ-T Greenblatt, Fisher $13.38 266 4.5 34.2 6.8 50.5
Automodular Corp. AM-T Lynch, Fisher $2.05 42 11.7 35.7 3.3 36.8
Bank of Montreal BMO-T O'Shaughnessy, Lynch $57.12 36749 4.9 14.6 9.9 5.9
Airboss of America Corp. BOS-T Lynch, Fisher, Graham, Greenblatt $4.75 111 4.2 16.3 8.6 24.3
Cogeco Inc. CGO-T Piotroski, Greenblatt, Neff $31.98 535 2.3 7.3 6.4 12.6
Canadian Helicopters Group Inc. CHL.A-T Lynch, Greenblatt $29.81 390 3.7 24.1 7.8 25.5
Canadian Oil Sands Ltd. COS-T O'Shaughnessy, Lynch $21.19 10267 6.6 26.5 9.0 3.0
Home Capital Group Inc. HCG-T Buffett, Lynch, Motley Fool $50.10 1741 1.8 24.9 8.7 20.9
MacDonald Dettwiler and Associates Ltd. MDA-T Lynch, Greenblatt $58.37 1857 2.2 44.8 19.0 26.7
National Bank of Canada NA-T O'Shaughnessy, Buffett, Lynch $74.41 12039 4.3 20.3 8.4 13.5

Source: Validea Canada


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