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What are we looking for?

Dividend stocks with the capacity to grow their payments.

A string of promising U.S. economic results led to heightened speculation about the timing for rate hikes, but Janet Yellen's promise to be patient reassured markets on Wednesday.

Given persistent U.S. unemployment and low inflation, the U.S. Federal Reserve chair said the central bank would take a measured and gradual approach to normalizing monetary policy.

Market watchers are still parsing the Fed's wording but with rates unlikely to rise any time soon, dividend stocks will remain well positioned at least through the first half of 2015.

So we went looking for Canadian stocks with decent yields and potential dividend growth.

How did we do it?

We first screened for stocks listed on the Toronto Stock Exchange with indicated yields of at least 3 per cent.

Then we looked for companies with a good history of growing dividends. Eligible stocks needed to have a five-year dividend growth rate of greater than 5 per cent.

We also wanted companies that do not appear under any strain to maintain dividends, so we excluded stocks with dividend payout ratios of greater than 65 per cent.

Lastly, to help identify companies with a history of profitability in different economic conditions, we set a minimum five-year average return on equity at 8 per cent.

What did we find?

The 17 Canadian stocks that met our criteria all represent dividend strength – past, present and future.

The financial sector is the best represented, and four of the Big Six banks made the list (plus Laurentian Bank of Canada). Neither Canadian Imperial Bank of Commerce nor Bank of Montreal had sufficient dividend growth.

Both the telecommunications and information technology sectors had just one dividend champion on the list: Telus Corp. , and Evertz Technologies Ltd. , which supplies audio and video hardware and software to broadcasters.

Suncor Energy Inc. was the only large integrated energy company to meet all the conditions, and while the stock has declined sharply amid the oil selloff, Suncor distributes less than half of its profits as dividends.

Canadian stocks that represent dividend strength