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Many Canadian investors hold a couple of truths to be self-evident. One is that big banks rule. The other is that only stocks with big dividend yields deserve to be considered as potential investments.

The accompanying charts demonstrate both bedrock beliefs deserve to be questioned. The charts show the total return of the different sectors of the S&P/TSX Composite over the past 20 years, and then over each of the decades in that 20-year stretch.

The first thing that may surprise you is that financial companies aren’t at the top of the performance list. The financials sector, which spans banks, asset managers and insurers, has done fine since 1999, mind you. But its performance hasn’t been exceptional.

It ranks third out of 11 sectors, losing out barely to the communications-services group (think: big telecom companies) and finishing only slightly ahead of the industrials sector (think: airlines, railways and manufacturers).

The big winner for Canadian investors has been the consumer staples sector, a group that encompasses grocers such as Loblaw Cos. Ltd. and Metro Inc., as well as food producers such as Maple Leaf Foods Inc. and Saputo Inc. The sector also includes Alimentation Couche-Tard Inc., the convenience-store operator that has grown at lightning speed over the past two decades.

Remember: These sectoral rankings are based on total returns – that is, both dividends as well as gains in share prices. Many people may be surprised at how the share price gains among consumer-staples companies have managed to outweigh the generally modest dividends in this sector.

At least over the past two decades, an investor who avoided big dividends and financial companies, and focused instead on riding the wave in consumer-staples companies, would have achieved superior returns.

Is this a temporary phenomenon? Maybe, but consumer staples companies have been surprisingly reliable bets over both the 1999 to 2009 period and the 2009 to 2019 stretch.

In the earlier decade, the consumer-staples sector lagged behind only the red-hot energy and materials sectors. In the latter decade, consumer-staples stocks ruled the roost.

There are many ways to interpret this record of achievement, but at the very least, it suggests that investors who want steady returns may want to look at grocers and convenience-store operators as well as banks. A dollop of utilities, telecoms and industrial companies wouldn’t hurt either.

Just to be clear: This does not mean you should shun Canadian banks. Over the past 20 years, their total returns have been solidly above average. But when you look at individual companies, instead of sectors, the returns of the Big Five banks don’t look that outstanding. They are strong performers but so are many companies in other sectors.

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While many investors are in love with banks’ big dividends, those payouts should not be the only factor in determining what is in your portfolio. Someone selecting stocks purely on the basis of their dividend yields would have missed out on most of the big gains in the consumer staples sector over the past two decades.

Maybe the biggest benefit of a dividend-focused strategy over the past 20 years is that it would have steered you away from many of the Toronto exchange’s worst-performing sectors, such as the information technology, health care and materials groups.

These industries don’t tend to pay big dividends, so dividend hunters have largely ignored them. And that has worked out well.

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