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What are we looking for?

Sustainable dividends made all the more secure by Ottawa’s move to extend pandemic benefits for Canadians.

The screen

This week, the House of Commons voted unanimously to authorize new benefits for workers left jobless or underemployed by the COVID-19 pandemic, which now appears to be in its second wave. In place of the Canada Emergency Response Benefit, workers can access an expanded employment insurance program or, for those who would not traditionally qualify for EI, the new Canada Recovery Benefit.

This renewed help is not just a boon to Canadians in need, but also for the sales and profits – and share prices – of companies providing essential goods and services.

Our search started with Canadian dividend-payers that stand to gain from everyday spending by Canadians able to tap continuing government supports. From there, we applied our TSI Dividend Sustainability Rating System, awarding points to a dividend payer based on key factors:

  • One point for five years of continuous dividend payments – two points for more than 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 the company is 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 10 stocks. Loblaw Cos. Ltd., Metro Inc., Dollarama Inc. and Canadian Tire Corp. Ltd. all stand out for their success in supplying Canadians with essential goods despite COVID-19. Meanwhile, profitable cheese and dairy firm Saputo Inc., juice-maker Lassonde Industries Inc. and fresh and prepared meat producer Maple Leaf Foods Inc. continue to satisfy consumer needs. Transport stalwarts Canadian National Railway Co. and Canadian Pacific Railway Ltd., as well as trucker TFI International Inc., all keep those goods moving efficiently.

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

Select dividend-paying Canadian companies providing essential goods and/or services

Ranking*CompanyTickerDiv. Sustain. RatingPointsDiv. Yld. (%)Mkt. Cap. ($ Bil.)1Y Ttl. Rtn. (%)Recent price ($)
1Canadian Tire Corp.CTC-A-THighest103.48.5-9.8134.12
2Loblaw Cos. Ltd.L-THighest101.825.1-7.669.73
3Cdn. National RailwayCNR-T Highest101.6101.219.2141.81
4Metro Inc.MRU-THighest101.416.29.563.89
5Cdn. Pacific RailwayCP-THighest100.955.237.6405.05
6Saputo Inc.SAP-TAbove Average92.113.8-18.033.40
7Dollarama Inc.DOL-TAbove Average90.315.97.651.04
8Maple Leaf Foods Inc.MFI-TAbove Average82.43.4-8.727.15
9TFI International Inc.TFII-TAbove Average81.95.337.355.68
10Lassonde IndustriesLAS-A-TAbove Average81.81.0-20.3144.51

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.

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

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