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Table: Dividend growth stocks to fight inflation Add to ...

Fight inflation with dividend growth stocks

Here's how mixing the shares of companies that regularly raise their dividend payments with bonds and guaranteed investment certificates can help retirees keep up with an average annual inflation rate of 2.5 per cent, which is a reasonable estimate for future cost of living increases.

Assumption: Over a five-year period, you invest $30,000 in dividend growth stocks and $70,000 in bonds and GICs with stable interest payments

Your
upfront
invest.
Initial
Yield
5-yr
Compnd
annual
increase
in your
flow of
dividends
and
interest
income
Actual
income
flow from
divs &
bond/GIC
interest
YEAR 1
Actual
income
flow from
divs &
bond/GIC
interest
YEAR 5
Dividend growth stocks$30,0003.5%5.6%$1,050$1,379
Bonds and GICs$70,0002.0%0.0%$1,400$1,400
Entire portfolio$100,0002.5%2.5%$2,450$2,779


These dividend stocks kill inflation

Each of these stocks has delivered a five-year annualized dividend growth rate of more than 2.5 per cent. The stocks were drawn from the S&P/TSX 60 index of large, blue-chip corporations.

CompanyTickerRecent
Price
($)
Yield
(%)
5-yr
Div.
Gwth
(%)
5-yr
Total
Rtn
(%)
Potash Corp. POT-T39.38 3.9%60.02.7
Suncor EnergySU-T43.40 2.1%35.75.5
Cdn Natural Res.CNQ-T44.24 2.0%33.88.3
Magna Int'lMG-T106.15 1.6%33.438.5
Yamana GoldYRI-T8.03 2.1%30.3-2.9
Goldcorp Inc.G-T27.54 2.4%27.2-3.4
Tim HortonsTHI-T59.68 2.1%26.216.2
Cdn. Oil SandsCOS-T22.64 6.2%18.50.7
Metro Inc.MRU-T67.25 1.8%16.915.2
Canadian TireCTC.A-T107.29 1.6%15.817.4
Cdn. Nat'l RailwayCNR-T63.17 1.6%14.621.5
Enbridge Inc.ENB-T52.99 2.6%13.624.9
Cameco Corp.CCO-T22.20 1.8%10.8-4.2
BCE Inc.BCE-T48.50 5.1%9.917.6
SNC-LavalinSNC-T50.58 1.9%9.97.1
TD BankTD-T51.90 3.6%9.018.0
Telus Corp.T-T39.01 3.7%8.723.9
Saputo Inc.SAP-T58.75 1.4%8.522.4
Nat'l Bank of CdaNA-T45.41 4.1%8.216.8
Royal Bank of CdaRY-T73.00 3.9%7.313.4
Cdn Pacific RailwayCP-T169.79 0.8%7.231.0
Shaw Commun.SJR.B-T26.89 4.1%5.510.5
Bank of Nova ScotiaBNS-T66.44 3.9%5.515.6
Imperial OilIMO-T53.79 1.0%5.45.7
TransCda Corp.TRP-T51.04 3.8%4.814.0
Fortis Inc.FTS-T32.45 3.9%4.211.0
Thomson ReutersTRI-T38.46 3.8%3.34.2
Loblaw CompaniesL-T47.43 2.1%3.17.9
Brookfield Asset Mgt.BAM.A-T45.59 1.4%2.920.2
George WestonWN-T81.86 2.0%2.98.9

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