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Investors looking for consistent, long-term dividend payouts have a diminishing pool of Canadian public companies to choose from.

According to 2001 year-end numbers compiled by the Toronto Stock Exchange, only 57 Canadian stocks have paid dividends non-stop for the past 25 years.

And the club has become more and more exclusive in recent years. Twenty years ago, there were about 100 companies with a record of paying dividends for more than a quarter century; 10 years ago, that number had fallen to about 80. At the end of 2000 there were 60, and now the ranks have diminished by another three.

The most consistent long-term dividend payers are the big banks, all of which have been sending cheques to shareholders without fail for well over a century.

Bank of Montreal tops the list, with an astonishing unbroken dividend record that started in 1829, 173 years ago.

Bank of Nova Scotia is close behind. The bank has paid a dividend regularly for 169 years, starting in 1833.

BCE Inc. is the only non-bank on the 100-year-plus list.

National Bank of Canada would be in that exclusive group -- its predecessor companies having paid dividends since 1890 -- except that it temporarily suspended its payout in 1982.

One market watcher who has been keeping an eye on dividends longer than most is 75-year-old George Frazer, an investment manager at Toronto-based Leon Frazer Black and Associates Ltd., who has run the Co-operators Canadian Conservative Focused Equity Fund since 1964.

Mr. Frazer's fund is heavy on long-term, dividend-paying stocks, which he admits fell out of favour among many investors when high-growth stocks were creating huge capital gains in the late 1990s.

Now, however, with investors harbouring doubts about some companies' accounting practices, dividend-paying stocks may be back in the spotlight, he said.

"If a company is willing to pay the shareholders a dividend, then they must actually have the cash in the till," Mr. Frazer said. "You can trust the balance sheet, you can trust the earnings statements, and you've got the cash."

Mr. Frazer said he thinks many investors focus far too much on potential gains in stock price, instead of looking at the dividend yield. "The news media and mutual fund managers don't care about dividends. All they consider is capital gain."

Those investors who do want solid long-term cash payments have fewer choices now, however. In the past decade, many high-profile, dividend-paying companies have either stopped making payouts, or have been absorbed by other companies.

Among them are CT Financial Services Inc., parent of Canada Trust, which in one incarnation or another paid dividends from 1865 until it was taken over by Toronto-Dominion Bank two years ago.

Royal Trustco Inc. paid regular dividends from 1900 until most of its assets were sold to Royal Bank of Canada in 1993.

Imasco Ltd., Placer Dome Inc., John Labatt Ltd., Inco Ltd., Dofasco Inc., Southam Inc. and Seagram Co. Ltd. -- all of which had paid dividends for at least 50 years -- also fell off the list over the past decade after they suspended their payments or were taken over.

In the past year, Nortel Networks Corp. and Moore Corp. Ltd. dropped out of the ranks of long-time dividend payers, because they suspended dividends in 2001. Nortel had been paying continuously for 27 years, Moore for 67 years.

Others who dropped off the list in 2001 include Canadian Pacific Ltd. (after 57 years) when it was broken up into smaller public companies, and Schneider Corp. (32 years) when it was taken over by Smithfield Foods Inc. Leather producer Tanbridge Corp. dropped its dividend in midyear after 26 years of payments.

The only new companies added to the 25-year club are Canada Bread Co. Ltd. and MDS Inc., both of which started paying dividends in 1976.

Bill Procter, vice-president of investments at Mackenzie Financial Corp. and manager of the Industrial Dividend Growth Fund, said there has been greater incentive in recent years for management to trim dividends, because stock options are such an important part of their personal compensation.

"[Executives]are better off owning options if [they]don't pay out dividends," he said, because the cash is retained and is reflected in the stock price.

In addition, the tax treatment of dividends, while more favourable than that of interest income, is now less attractive than the tax treatment of capital gains. That puts some pressure on companies to shift the emphasis from paying dividends to generating capital gains, he said.

Still, Mr. Procter said, a company that has paid consistent dividends still gets "a premium in the marketplace."

He said he looks for companies that will generate a dividend yield of 2 to 3 per cent, combined with double-digit earnings growth.

Like Mr. Frazer, Mr. Procter expects people to return to solid dividend-paying stocks after being burned by volatile markets.

Mr. Frazer's advice to those new to the market is to focus much more on dividends than on other factors. "Forget about the capital gain or loss. Over the years, if [a company]can continue to pay the dividend and increase it, it's one hell of a good company, and the value is going to increase automatically." Long-term dividend payments
Dividend-paying companies are in the spotlight as investors seek long-term consistency. 100 years or more

Dividend since
Current yield
Bank of Montreal                         1829         3.2%
Bank of Nova Scoita                      1933         2.9
Toronto-Dominion Bank                    1857         2.7
Canadian Imperial Bank of Commerce       1868         2.8
Royal Bank of Canada                     1870         3.0
Laurentian Bank                          1871         3.2
BCE                                      1881         3.4

50 years or more

Telus Corp.                              1916         2.8%
Imperial Oil                             1922         2.0
Economic Investment Trust                1927         3.5
Third Canadian General Investment Trust  1929         2.1
Noranda                                  1930         5.1
George Weston                            1930         0.8
Canadian General Investments             1931         2.6
Maple Leaf Foods                         1935         1.4
Hudson's Bay                             1938         2.4
Corby Distilleries A                     1938         3.3
Corby Distilleries B                     1939         3.5
Alcan                                    1939         1.5
United Corporations                      1939         1.9
Dover Industries                         1940         3.7
Molson A                                 1940         1.4
Hollinger                                1942         5.3
Canadian Tire common                     1944         1.0
Fortis                                   1949         4.0
Molson B                                 1950         1.4
Reitmans common                          1951         3.1

25 years or more

Enbridge                                 1952         3.5%
TransAlta                                1956         4.7
Canadian Utilities B                     1957         3.8
PanCanadian Energy                       1960         0.8
Canadian Tire A                          1960         1.6
Reitmans A                               1960         3.1
Sears Canada                             1961         1.2
Nova Chemicals                           1962         1.2
Shell Canada                             1962         1.7
Central Fund A                           1962         0.1
TransCanada PipeLines                    1964         4.8
Brascan A                                1965         3.4
Westcoast Energy                         1967         2.2
E-L Financial                            1969         0.2
Chum B                                   1970         0.1
Torstar B                                1970         2.7
Power Corp.                              1972         1.8
Harris Steel Group A                     1972         1.0
McGraw-Hill Ryerson                      1973         2.0
CHUM common                              1973         0.3
CAE                                      1973         1.2
Toromont Industries                      1973         1.6
Andrés Wines A                           1974         4.0
Logistec A                               1974         2.6
Rothmans                                 1974         3.9
Atco I                                   1974         2.2
Atco II                                  1974         2.2
Shawcor A                                1975         0.5
Canada Bread                             1976         1.2
MDS                                      1976         0.3

-*** -*** Clarification and Correction
Special dividends paid by some investment trusts generated higher dividend yields than those that appeared in a table in yesterday's paper. Including 2001 special dividends, Canadian General Investments stock yielded 5.3 per cent, and Third Canadian General Investment Trust, 3.2 per cent. (Tuesday, February 12, 2002, Page B2)

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