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Fifteen powerhouse Canadian dividend stocks

What are we looking for?

A diversified mix of the highest dividend payers in Canada.

The screen

For many investors, dividends make up an important part of their income. For equity markets, dividends have also been responsible for a significant portion of equity returns over all. Over the past 10 years ended May 31, 2017, for example, the S&P/TSX composite index has increased by 9.2 per cent (0.88 per cent annualized). Including reinvested dividends, the S&P/TSX composite total return index has posted a gain of 46.4 per cent (3.88 per cent annualized). Going back to Jan. 31, 1956, the earliest month-end available for the index, the S&P/TSX composite has since risen 2,820 per cent (5.65 per cent annualized) compared with 20,260 per cent (9.05 per cent annualized) when including reinvested dividends.

For this week's screen, my colleague Lawrence Ullman and I used Morningstar CPMS to find the top 15 Canadian companies based on the total dollar amount in dividends expected to be paid over the coming year, with no more than three companies per sector allowed. Additionally, we restricted selections by the following criteria:

  • Payout ratio based on earnings less than 90 per cent;
  • Payout ratio based on cash flow less than 80 per cent;
  • Consensus earnings-per-share estimate revision over the past three months no worse than minus 10 per cent.

More about the Ullman Group

The Ullman Group is a provider of strategic private capital management services to high-net-worth individuals, corporations, endowments, charities and foundations.

Craig McGee, CFA, is a portfolio manager and Lawrence Ullman, MBA, is a director, wealth management and portfolio manager with the Ullman Group at Richardson GMP in Toronto.

What we found

Using CPMS, we performed a back-test starting May 31, 2007, selecting an equally weighted portfolio of the top 15 companies. The portfolio was reselected and rebalanced quarterly.

Over the entire period, this strategy would have generated an annualized total return of 8.2 per cent compared with 4.6 per cent for the S&P/TSX composite total return index. Over the past year, these high-dividend payers would have gained 15.4 per cent versus 12.3 per cent for the index.

The opinions expressed in this report are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Richardson GMP Ltd. or its affiliates. Investors should contact a professional or do their own research before investing in any of the stocks shown here.

Craig McGee, CFA, is a portfolio manager and Lawrence Ullman, MBA, is a director, wealth management and portfolio manager with the Ullman Group at Richardson GMP in Toronto.

Richardson GMP Ltd. is a member of the Canadian Investor Protection Fund. Richardson is a trademark of James Richardson & Sons Ltd. GMP is a registered trademark of GMP Securities LP. Both used under licence by Richardson GMP Ltd.

Canadian dividend darlings

RankCompanyTickerMarket Cap ($Bil)Total Dividends ($Mil)EPS Payout (%)CF Payout (%)3M EPS Revision (%)Dividend Yield (%)
1Royal Bank of CanadaRY-T135.7 5,070.6 45.838.02.93.7
2Toronto-Dominion BankTD-T118.8 4,433.3 44.928.21.83.7
3Bank of Nova ScotiaBNS-T92.1 3,654.1 46.730.20.84.0
4BCE Inc.BCE-T54.3 2,581.7 84.935.9-3.74.8
5TransCanada Corp.TRP-T54.7 2,167.5 87.442.40.74.0
6Suncor Energy Inc.SU-T68.7 2,135.7 65.823.311.03.1
7Cdn National RailwayCNR-T79.9 1,249.4 32.423.02.21.6
8Telus Corp.T-T26.6 1,163.6 71.429.70.04.4
9Rogers CommunicationsRCI.B-T32.3 988.4 57.524.34.43.1
10Fortis Inc.FTS-T18.8 664.9 64.825.1-1.23.5
11Agrium Inc. AGU-T17.0 651.4 69.234.2-4.13.8
12Magna Intl. Inc. MG-T23.6 564.2 19.012.54.32.4
13Hydro One Ltd.H-T14.1 523.6 74.933.1-3.33.7
14Potash Corp. of Sask. POT-T18.4 453.2 64.027.825.02.5
15Emera Inc.EMA-T10.3 441.2 79.028.1-0.24.3

Morningstar Canada

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