You supposedly can't have it all as a dividend investor.
Dividend growth and a high yield, that is. Higher yielding stocks are generally those that are out of favour because, among other things, they lack the financial muscle to keep dividend increases clipping along from year to year. But in today's stock market, there are some high yielding stocks that have delivered consistent growth in their quarterly cash payouts. To find some examples, let's start with the S&P/TSX 60 index of big blue chips and then drill down for stocks with both a dividend yield above 4 per cent and a five-year dividend growth rate of 5 per cent or greater. Here are some stocks that made it through this screening process:
- Potash Corp. (POT-T): Potash is the poster stock for this exercise with its 6.9 per cent yield and bigtime five-year annualized dividend growth rate of 62.7 per cent. Note that prices for potash, the commodity, have been falling – that helps explains the fall in the price of Potash stock. Still, Globeinvestor's data base shows the company has a dividend payout ratio of 50 per cent.
- National Bank of Canada (NA-T): Highest yield of the big banks at 4.8 per cent, and the highest five-year dividend growth at 10.9 per cent. Toronto-Dominion Bank, with a yield of 3.8 per cent, has grown its dividend at a 10.8 per cent rate.
- TransCanada Corp. (TRP-T): A 4.6-per-cent yield and a five-year dividend growth rate of 5.4 per cent. TRP shares are down about 13 per cent in the past year on a total return basis.
- Shaw Communications (SJR.B-T): Dividend yield of 4.5 per cent, five-year dividend growth rate of 6 per cent. The stock has basically been flat in the past 12 months.
- BCE Inc. (BCE-T): A 4.4 per cent yield and a growth rate of 7.3 per cent. BCE shares have been a powerhouse in recent years, mostly recently posting a 12-month total return of 27 per cent.
- Canadian Imperial Bank of Commerce (CM-T): The yield is 4.4 per cent and the dividend growth rate is 5.2 per cent.
- Royal Bank of Canada (RY-T): Yield 4.2 per cent, growth rate 9.6 per cent.
High yields and solid dividend growth? The do go together sometimes.