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What are we looking for?

My associate Allan Meyer and I thought we would take a closer look at Canadian dividend growers using our investment philosophy focused on safety and value.

The screen

We screened for dividend growth by looking at Canadian-listed equities with a five-year compound annual dividend growth rate of 15 per cent or better. The list is sorted from highest to lowest on this metric.

We narrowed the list down further by limiting it to companies with a market capitalization of $1-billion or more. We view market capitalization as a safety factor as larger companies tend to offer investors more stability and liquidity.

We also looked at debt-to-equity as a safety factor. A lower ratio is preferred and a number of 100 or less implies a company has enough equity to pay off its debts. As Allan and I like to tell clients: “It’s difficult to go bankrupt when you have little or no debt obligations.”

Then, we looked at dividend yield, the projected annualized dividend divided by the share price. All companies on the list are expected to pay a dividend over the next year. Allan and I are value investors (or maybe we’re just “cheap”); we’re always scouring the investment world for a “deal” or “bargain.” The price-to-earnings ratio is the share price divided by the projected earnings per share. It is a valuation metric, the lower the number, the better the value.

Earnings momentum is the change in annualized earnings over the last quarter. A higher number is better. Positive earnings momentum over the long term should translate to share price appreciation and dividend growth.

Lastly, we included the 52-week total return as a performance tracking measure.

What we found

Canadian Tire Corp. and Canadian Natural Resources Ltd. score well across the board for safety and value. Suncor Energy Inc. also looks interesting but it’s a little more expensive than the two names above. Enbridge Inc. is the highest yielding name on the list and looks good on most measures, but the debt levels are a tad on the high side. Debt-to-equity on Dollarama Inc. is “n/a” because the value of equity (assets minus liabilities) is negative.

Investors should contact an investment professional or conduct further research before buying any of the securities listed here.

CompanySymbolRecent Price ($)Mkt. Cap. ($ Bil.)Div. Yield (%)5Y Div. Growth (%)Debt/Equity (%)P/EEarns. Momentum (%)52W Total Rtn. (%)
Restaurant Brands Int'l Inc.QSR-T76.5535.72.992.2544.521.313.22.0
Intertape Polymer Group Inc.ITP-T19.201.13.847.6112.612.8-7.7-15.4
Cott Corp.BCB-T20.702.91.532.0260.044.8125.48.8
CCL Industries Inc.CCL-B-T64.4611.40.824.1108.022.94.5-1.0
Canadian Tire Corp. Ltd.CTC-A-T166.2811.22.223.699.614.71.213.3
Maple Leaf Foods Inc.MFI-T30.853.91.722.40.519.1-2.6-11.7
Cdn. Natural Resources Ltd.CNQ-T43.6653.
Stella-Jones Inc.SJ-T47.853.31.020.840.820.0-2.08.5
Suncor Energy Inc.SU-T52.7386.22.720.734.317.35.732.6
Enghouse Systems Ltd.ENGH-T75.
Metro Inc.MRU-T42.7110.91.717.650.015.1-3.4-4.8
WestJet Airlines Ltd.WJA-T19.902.32.817.590.711.3-9.3-11.8
Canadian Nat'l Railway Co.CNR-T107.8879.51.717.165.019.8-3.01.8
MTY Food Group Inc.MTY-T48.821.
Enbridge Inc.ENB-T40.5569.16.616.4112.116.212.8-16.9
Quebecor Inc.QBR-B-T25.335.90.916.0787.514.26.624.9
Onex Corp.ONEX-T94.199.50.415.8776.8157.52.3-6.9
Dollarama Inc.DOL-T151.1916.50.315.4n/a27.62.215.5

Sean Pugliese, CFA, is an investment portfolio manager at Wickham Investment Counsel, helping individuals, families and other investors.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 22/05/24 4:00pm EDT.

SymbolName% changeLast
Restaurant Brands International Inc
Ccl Industries Inc Cl B NV
Canadian Tire Corp Cl A NV
Maple Leaf Foods
Canadian Natural Resources Ltd.
Stella Jones Inc
Suncor Energy Inc
Enghouse Systems Ltd
Metro Inc
Canadian National Railway Co.
Mty Food Group Inc
Enbridge Inc
Quebecor Inc Cl B Sv
Onex Corp
Dollarama Inc

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