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What are we looking for?

Sustainable dividends from companies well able to weather strike action.

The screen

November’s short but damaging workers’ strike may or may not have dented Canadian National Railway Co.’s investment appeal. Still, the stock’s dividends are made of tougher stuff. We’re looking for more companies that are vulnerable to industrial action, yet have the financial strength to overcome those hiccups and keep paying sustainable dividends.

Usually, those firms also play a key role in the economy, making it more likely, if necessary, that the warring sides will draw government support to settle a strike.

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Our search started with dividend-payers vulnerable to labour action, but with the assets and managerial acumen to resolve issues. From there, we applied our TSI Dividend Sustainability Rating System, awarding points to a stock based on key factors:

  • One point for five years of continuous dividend payments – two points for over five;
  • Two points if it has raised the payment in the past five years;
  • One point for management’s commitment to dividends;
  • One point for operating in non-cyclical industries;
  • One point for limited exposure to foreign currency 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 it’s an industry leader.

Companies with 10 to 12 points have the most secure dividends, or the highest sustainability. 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 Best ETFs for Canadian Investors is the latest. TSI Network is also affiliated with Successful Investor Wealth Management.

What we found

Our TSI Dividend Sustainability Rating System generated seven stocks. CN just settled a train operators’ strike, restoring shipments of fuel and grain. Canadian Pacific Railway Ltd. reached a deal with workers in 2018 just hours after a strike began. Both BCE Inc. and Telus Corp. are heavily unionized and at the same time face expanding competitive pressures to keep wages low. With their big, mostly unionized work forces, air carriers – including Delta Air Lines Inc. – are particularly vulnerable to strikes. Last month, after a costly six weeks, General Motors Co. settled with striking United Auto Worker members. Ford Motor Co. is also prone to periodic labour strife.

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

Select companies vulnerable to labour action that offer sustainable dividends 

Ranking*CompanyTickerDividend Sustainability RatingPointsDiv. Yld. (%)Mkt. Cap. ($ Bil.)**Recent price ($)**1Y Ttl. Rtn. (%)
1BCE Inc.BCE-THighest115.057.563.6711.8
2Telus Corp.T-THighest114.730.150.105.3
3Canadian National RailwayCNR-THighest101.887.6122.8610.2
4Canadian Pacific RailwayCP-THighest101.143.5316.9218.3
5Ford Motor Co.F-NAbove Average86.635.79.10-2.0
6General Motors Co.GM-NAbove Average84.251.336.14-1.5
7Delta Air Lines Inc.DAL-NAbove Average82.837.257.07-2.1

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. ** Figures shown in native currency. 

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

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