Skip to main content

Nastco/Getty Images/iStockphoto

What are we looking for?

Dividend-paying stocks that appear to be in a good position to raise their payouts.

To identify these firms, we looked for Canadian companies that are paying out a lot in dividends and that have recently hiked their payouts, but still have sufficient earnings and cash flow to further expand their yield.

Story continues below advertisement

How we did it

Craig McGee, senior consultant at CPMS Morningstar Canada, filtered the Canadian CPMS database for S&P/TSX composite stocks that met three criteria.

First, the total of each stock's expected regular dividends on common stock for the next four quarters had to be greater than $100-million.

Second, each stock's expected yield had to be greater than 2 per cent.

Finally, the change in expected versus trailing dividends for each stock had to be greater than 1 per cent.

Mr. McGee looked for the 20 companies with the lowest payout ratios based upon both their expected earnings per share (EPS) and their cash flow per share (CFPS). A low payout ratio indicates a firm is dishing out a relatively small amount of its earnings or cash flow as dividends.

He calculated expected dividends by taking the most recently announced dividend and multiplying by the number of payment periods in a year.

Story continues below advertisement

More about CPMS

CPMS, a division of Morningstar Canada, provides quantitative North American equity research and portfolio analysis to primarily institutional clients. It covers more than 700 Canadian and 2,200 U.S. stocks, and spends a lot of time adjusting for unusual accounting items in each company's quarterly results to make sure screens can perform correctly.

What we found

The 20 companies listed here would seem to be in a good position to raise dividends. Remember, though, that earnings and cash flow can vary from year to year so payout ratios should be treated only as a guide, not as an inflexible number. Do your own research before buying any of the stocks listed here.

Report an error Licensing Options
About the Author

Ian McGugan is a reporter with The Globe and Mail's Report on Business and has been writing about investing, economics and business for more than 20 years. He joined the Globe and Mail in 2010. He has been executive editor of Canadian Business magazine and founding editor of MoneySense magazine. More


The Globe invites you to share your views. Please stay on topic and be respectful to everyone. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

We’ve made some technical updates to our commenting software. If you are experiencing any issues posting comments, simply log out and log back in.

Discussion loading… ✨