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What are we looking for?

Sustainable dividends from companies hit by controversy – but poised for recovery.

The screen

Despite short-term scandals, strike threats and shareholder controversy, top firms will continue to offer both growth and sustainable dividends.

These are companies with the proven size, resources and management strength to overcome adversity and come back even stronger – whether that’s a social-media stumble or fractious worker contract negotiations.

Our search started with a list of corporations that have recently experienced high-profile setbacks, but with the organizational strength to recover quickly.

We then applied our TSI Dividend Sustainability Rating System. It awards points to a stock 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 a leader in its industry.

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 is four to six points; and below average sustainability is 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 five stocks. While the outcome of a contract vote by 3,000 Canadian Pacific Railway Ltd. workers is uncertain, demand for its services remains robust. WestJet Airlines Ltd. pilots are threatening their own walkout, but the airline continues to fly record numbers of passengers. Symantec Corp. shares have started to climb back after a 30-per-cent drop on news of an internal audit, while Starbucks Corp. has regained ground after the controversial arrest of two African-Americans at a Philadelphia location that led to the company issuing an apology. Starbucks used this incident to improve customer service and address worker racial bias. Ontario’s Hydro One Ltd. is under pressure to cut executive and board compensation, but it has also raised dividends and its outlook remains strong.

Dividend stocks set to rebound

Ranking*CompanyTickerDividend Sustainability RatingPointsMarket Cap ($ bil)**Recent Price ($)**1Yr Total Return (%) Div. Yield (%)
1Hydro OneH-THighest1011.518.93-18.14.9
3Canadian Pacific RailwayCP-THighest1034.0234.969.71.1
4WestJet AirlinesWJA-TAbove Average82.319.90-11.02.8
5Symantec Corp.SYMC-QAverage513.922.35-28.61.3

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. **Share price and market cap are in native currency.

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

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

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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 29/05/24 4:00pm EDT.

SymbolName% changeLast
Hydro One Ltd
Starbucks Corp
Canadian Pacific Kansas City Ltd

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