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What are we looking for?

Canadian companies – with sustainable dividends – set to prosper from the Trump presidency.

The screen

Many Canadian companies with operations in the United States should gain from President Donald Trump's policy objectives: to loosen bank regulations, increase infrastructure and defence spending, expand pipelines, and, yes, apply heavier tariffs. Our hunt was for those Canadian stocks most likely to receive a boost, but they must also have highly sustainable dividends.

We started with our extensive list of dividend-paying Canadian companies, and identified those with substantial operations in the United States. We pinpointed those set to profit from Mr. Trump's policies over the next few years.

Using our TSI Dividend Sustainability Rating System, we focused on durability – not just dividend yields. Our formula awards points to a stock based on eight factors:

  • One point for a long-term (at least five years) record of dividends – two points for more than five years of continuous payments;
  • Two points if the company has raised the payment at least once in the past five years;
  • One point for management’s public commitment to maintain dividends;
  • One point for operating in a non-cyclical industry. Profits at businesses in cyclical industries, such as oil and mining, tend to move up and down with the economy. Sharply lower earnings could prompt a company to cut its dividend to conserve cash;
  • One point for limited exposure to foreign currency exchange rates and freedom from political interference;
  • Two points for a strong balance sheet, including manageable debt and adequate cash;
  • Two points for a long-term record of positive earnings and cash flow sufficient to cover dividend payments;
  • One point if the company is a leader in its industry.

Companies with 10 to 12 points have the most secure dividends, or the highest sustainability rating. Those with seven to nine points have above average sustainability; average sustainability, four to six points; and below average sustainability, one to three points.

More about TSI Network

TSI Network is the online home of The Successful Investor Inc. – the group of widely followed Canadian investment newsletters by editor and publisher Pat McKeough. They include our award-winning flagship newsletter, The Successful Investor. The TSI Dividend Advisor is the latest addition to the family. TSI Network is also affiliated with Successful Investor Wealth Management.

What we found

Applying our TSI Dividend Sustainability Rating System generated eight stocks best positioned to provide growth and income for Canadians seeking superior returns. On the list, for example, is Russel Metals Inc. It's poised to gain from any new tariffs on low-cost Chinese steel. Montreal-based CAE Inc. – a leading maker of flight simulators – should also benefit from any expansion in U.S. defence spending. The top eight stocks are listed in the accompanying table.

We advise investors to do additional research on any investments we identify here.

Scott Clayton, MBA, is senior analyst for TSI Network and associate editor of TSI Dividend Advisor.

Eight Canadian dividend stocks for the Trump era

Rank *CompanyTickerMkt Cap ($Bil)Dividend Yield Points (out of 12)TSI Dividend Sustainability Rating
1TransCanada Corp.TRP-T53.53.611Highest
2EnbridgeENB-T53.34.111Highest
3TD Bank TD-T123.73.310Highest
4CAECAE-T5.01.79Above Average
5Suncor SU-T70.22.79Above Average
6SNC-LavalinSNC-T8.51.88Above Average
7Imperial OilIMO-T37.51.48Above Average
8Russel MetalsRUS-T1.65.67Above Average

Source: Dividend Advisor

*Ranking is determined by TSI Dividend Sustainability Score. Where overall points are the same, analysts considered P/E, dividend yield and industry outlook to decide final placements.

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