Skip to main content

The Globe and Mail

Canadian stocks with the highest investment-grade credit rating

Getty Images/iStockphoto

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.

How we did it

Story continues below advertisement

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

Story continues below advertisement

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.

Story continues below advertisement

Report an error Editorial code of conduct Licensing Options
As of December 20, 2017, we have temporarily removed commenting from our articles. We hope to have this resolved by the end of January 2018. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.