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Dividend growth is on sale this summer.

Dividend stocks of all types – high yielding companies and dividend growth stars – have not avoided the market decline of the past few months. If you had any ideas that dividend stocks were safe, your reality check has arrived. In a recent column, I talked about how to avoid the dividend stocks that don't seem to be attractive buys after the market sell-off. Now, let's look at how to potentially find the gems.

Here's our prospecting strategy – cross-reference the blue-chip dividend payers in the S&P/TSX 60 index that have the best five-year dividend growth record with 60 index stocks that have fallen hardest in 2015. Two other factors: The annualized five-year dividend growth rate must be above the 1.8-per-cent average inflation rate over that period, and the year-to-date share price decline must be in double digits.

Here are stocks I came up with through this screening process:

- Potash Corp (POT): Five-year annualized dividend growth of 62.7 per cent, and a year-to-July 30 share price decline of 14.4 per cent

- Saputo (SAP): Five-year dividend growth of 12.4 per cent, year to date fall of 15.5 per cent.

- Shaw Communications (SJR.B): Five-year dividend growth of 6.1 per cent, share price decline of 12.5 per cent.

- TransCanada Corp. (TRP): Dividend growth of 5.3 per cent and a YTD share price decline of 11.8 per cent.

- Canadian Natural Resources (CNQ): Dividend growth of 25.1 per cent, and a down 11.8 per cent this year

- Bank of Montreal (BMO): Five-year dividend growth of 3.2 per cent and a YTD share price decline of 11.2 per cent.

While dividend stocks as a broad category have not been spared in the market decline this summer, dividend growth stocks as sub-group have been resilient. In the S&P/TSX 60 index, five of the Top 10 dividend growers over the past five years were higher on July 30 than they were at the beginning of 2015. Those five are Agrium (AGU), Magna International (MG), Canadian Tire Corp. (CTC.A), Canadian National Railway (CNR), Enbridge (ENB) and Metro Inc. (MRU).

Note: Goldcorp (G) was on an early draft of this list, but was dropped after announcing a 60-per-cent dividend cut. Watch those dividend-paying commodity stocks.

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