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Number Cruncher

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

Sherry Cooper (Hand-Out/CNW Group)
Sherry Cooper (Hand-Out/CNW Group)

Number Cruncher

Dividend firms that fit Sherry Cooper's profile Add to ...


We'll continue to search for good dividend stocks today and tomorrow, carrying over our work on dividends from last week. A couple of times per year we run the dividend screen from Sherry Cooper's book, The New Retirement: How It will Change Our Future.


In her book, Ms. Cooper's dividend screen requires a company to have a dividend yield of more than 2.5 per cent and a five-year dividend growth rate of more than 10 per cent. To emphasize dividend safety and to reduce risk, the payout ratio (dividends divided by earnings) had to be less than 60 per cent and the beta (a measure of a stock's volatility in relation to the market) had to be less than 1. Companies also must have a positive 10-year trend in pre-tax profit margins.

The last time we ran her screen, eight stocks qualified. This time, only five stocks qualified: National Bank, Rogers, Toronto-Dominion, Fairfax and Methanex.

However, Ms. Cooper doesn't believe the screen fits today's markets. For instance, a bank stock might have a beta of more than 1.0 but that is only because it recovered so strongly over the past year. Similarly, higher payout ratios might be temporary because of the recession and might not reflect the likelihood of a dividend cut.

As a result, she raised the beta limit to 1.2 and the payout ratio to 70 per cent.

Read more about dividend stocks:

  • Dividends rise and shine amid recession
  • Payout ratio: A key tool for dividend sleuthing
  • That sweet spot: Reliable returns, just a little risk
  • Related contentFive fixes for yield-starved investors


By increasing beta and the payout ratio, a dozen names now make the list, including the big Canadian banks with the exception of Canadian Imperial Bank of Commerce.

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