Skip to main content

What are we looking for?

Sustainable dividends with limited direct exposure to Sino-U.S. tariffs.

The screen

Economists are quick to point out just how bad the U.S.-China trade war is for everybody. But those ill effects will likely take longer to reach established firms with little direct exposure to China.

How soon a breakthrough will come in talks between the world’s two largest economies is uncertain. Meanwhile, stocks little affected by the tariff war – and offering sustainable dividends – are a plus for your portfolio.

Story continues below advertisement

We searched for companies with limited direct tariff exposure. We then applied our TSI Dividend Sustainability Rating System. It awards 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 six stocks: U.S. discount retailer TJX Cos., parent of Winners, HomeSense and Marshalls, sources roughly just 10 per cent of its products from China, while rival Kohl’s Corp. gets only 8 per cent. Both are well positioned to compete against retailers with considerably more tariff cost pressures. Newmont Goldcorp Corp. is the world’s leading gold producer – but with no mines in China. In 2016, Yum Brands Inc. split off its KFC, Pizza Hut and Taco Bell banners in China as Yum China. Wendy’s Co. also has no restaurants in China, unlike McDonald’s Corp. Networking giant Cisco Systems Inc. has used its global supply chain to reduce its Chinese-made components and is also pursuing international market share now held by Huawei Technologies Co. Ltd.

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

Select U.S.-listed dividend equities less exposed to tariff war

Ranking*CompanyTickerDiv. Sustainability RatingPointsDiv. Yield %Mkt. Cap. ($ Bil.)Recent Price (US$)1Y Ttl. Rtn. %
1Cisco Systems Inc.CSCO-QAbove Average92.7225.252.3419.9
2Wendy's Co.WEN-QAbove Average82.04.219.5814.3
3Yum Brands Inc.YUM-NAbove Average81.535.5116.2642.5
4Kohl's Corp. KSS-NAbove Average75.38.250.56-31.3
5TJX Cos. TJX-NAbove Average71.863.552.175.9
6Newmont GoldcorpNEM-NAbove Average71.531.139.3510.3

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.

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

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

Report an error Editorial code of conduct
Tickers mentioned in this story
Unchecking box will stop auto data updates
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

Cannabis pro newsletter