To understand what an ETF is, you have go back to why is was created in the first place.
See, 30 years ago the norm for every small investor was to rely on his bank for investment advise. The bank understood this need and it created a pool of funds constituted from the money brought by investors. Then it handed this capital to a fund a manager. The bank called this product a ‘Mutual fund’. A Bank charged for the services of these managers an MER (management expense ratio) which is basically a fee. The fee ranged from 1.5% to 5% of the managed funds.
Mutual funds were very popular at that time because they provided two key elements: Professional management of your money and diversification. The manager is supposed to generate the ‘Alpha’ a better return that the index by selecting a bunch of winning stocks.
With time investors grew unhappy with the performance of most fund managers. They started looking closely at their performance vis-à-vis the performance of popular indexes such as S&P500 or in Canada the TSX. Something didn’t add up, the majority of fund managers who were supposed to pick the best stocks were unable to exceed the return of the market index. Mutual fund managers argued that yes for most they can’t beat the index, but taking in consideration the low volatility of their mutual fund versus the index they actually delivered on their promise.
Obviously, this explanation didn’t go well with investors especially with the high fees that Mutual funds carry. The idea then came about to create a product with no need for a ‘portfolio manager expertise’. The product will simply try to buy most of the stocks that make up the index to achieve a similar return. Also, this product will be easy to sell and buy because it will be listed in a stock exchange. They called this product an ‘Exchange Traded Fund’.
Since their launch, the ETFs were a hit with their low MERs and easy to understand objective, investors bought them in great numbers. This pushed issuers to diversify the offering for ETFs.
ETFs are so popular to the point where there is on for each taste:
Index ETFs: tracks a major index like the TSX or the S&P500 or the NASDAQ…etc
Fixed income ETFs: tracks an index but for fixed income (bonds, treasury bills…etc)
Commodity ETFs: they track the price of a commodity Oil, Gas, Gold, Silver…etc
Sector driven ETFs: they invest in a specific sector/industry for instance Blockchain, Retail, Energy…etc
Multi asset ETF: they are a hybrid, they will invest for example 50% in Stock index and 50% in Bond index
You get the idea! You can constitute now a well diversified portfolio just by using ETFs. That’s why several companies are now offering ‘Robo advisor’ which is basically a portfolio of ETFs that fit your risk tolerance. They charge a small fee for this service.
How can I buy an ETF?
It’s the same process as buying a stock. You need simply to access the online website of your broker and place the order using the ticker/symbol of the ETF
Who are the main issues of ETFs in Canada?
BMO Asset Management
Claymore Investments
BlackRock Inc
Horizons ETFs Management
Vanguard Investments Canada Inc.
Why should I consider buying an ETF?
The quick answer is diversification. Assume you have 5,000 $, you can’t buy a lot of stocks with that amount (may be 4 or 5). Also, you will incur fees to trade them. Your portfolio will be certainly too dependent on a performance of 1, 2 …or even 5 sectors that your stocks are in. If you buy with that 5,000 $ an ETF that tracks let’s say the TSX/S&P 60, it basically means you just bought share in 60 of the largest companies that are trading in the stock exchange in Canada. It’s clearly a powerful tool to diversify your portfolio with a small amount of money.
ETFs offer a wide variety of choices, you can basically decide the allocation yourself based on your risk tolerance or rely on Robo advisers services (such as Questrade or Wealth simple).
What are the risks?
An ETF trades like a stock. So it’s volatile. You have to accept the fact the value can go up or down like any stock. There is no question that an ETF covering let’s say the TSX is for most of the time less volatile than holding 1 stock. Because the TSX ETF is a bundle of over 100 stocks not just one. It’s diversified by nature so it’s less volatile.
Where do I start?
You have to assess your risk tolerance and pick an ETFs based on that.
A financial crisis is usually associated with a recession, which marks a period of declining economic performance across the economy. Investing in such circumstances involves risk as market volatility is high. In this post, we will discuss four of the best dividend stocks in 2022. These stocks are known for their brand power and excellent fundamentals. We will also present key aspects of investing during a recession.
Key Aspects of Investing in a Recession
Diversification
“Don’t put all the eggs in one basket,” the saying goes. A diversified portfolio will reduce specific risk thereby minimizing total risk.
Depending on the investor’s risk appetite, part of the portfolio may consist of relatively low-risk investments (stocks with strong dividends, government bonds, precious metals and cash), while the rest of the money can be allocated to riskier assets (growth stocks and commodities).
Investing regularly vs timing the market
Investing regularly (also called dollar cost averaging strategy) is the best approach to investing for risk-averse investors. Breaking your investment into smaller pieces reduces volatility risk.
On the other hand, the notion of timing the market consists of buying low and selling high. Though, this strategy is simple to understand, it’s quite difficult to apply. You can be lucky once in a while, but beating systematically the market is simply non realistic.
Don’t let fear control your emotions
Investing during a recession is definitely going to be extremely upsetting for some investors – just imagine your portfolio losing 10% of its value in a single day. Some market players are unable to weather such an environment, although markets could potentially rebound somewhere in the near future. Therefore, one must be aware that crisis investing always requires patience.
Economic contractions have investors worried about the future of many companies. Uncertainty contributes to panic, which actually has potential benefits for investors because it creates opportunities in stock markets. Some point out that investing during a recession is like trying to catch a falling knife, which is true because the risk of a double-dip recession or another sell-off is always present. However, by investing in quality stocks, investors can achieve postive returns, especially if they apply a long-term approach.
Many rational investors prefer to focus on safe stocks to invest in during a recession. How to identify stocks that are doing well in a recession? It would be reasonable to invest in high-quality companies with good fundamentals, including strong balance sheets and low leverage. Other than that, stocks for a recession should be marked by stable and predictable cash flows. These counter-cyclical companies are often found among industries that historically do well during tough times. Below, we present some industries, which can be considered relatively recession-proof:
Healthcare – modern healthcare is essential all year round in developed economies. Demand for healthcare services is expected to remain relatively stable even during a recession.
Basic consumer goods – food and drink, household items, personal care products or tobacco are considered non-cyclical, meaning they are always in demand. A rapid market sell-off could be an opportunity to buy well-established consumer staples.
Utilities – the supply of electricity, gas or water to communities is absolutely crucial. Therefore, some investors may view utility companies as the best stocks to buy in a recession.
Dividend aristocrats vs S&P500
Overall, smart investing during a recession could also be associated with dividend-paying stocks, as these companies are generally considered well-established and market-leading companies. The best dividend paying stocks in the US market are dividend aristocrats. These are stocks with over 25 years of consecutive dividend increases.
Below, it’s a comparison between the total return of the S&P500 and the S&P Dividend aristocrats. We can see that since 2001, dividend aristocrats have offered better overall return than investing in the S&P500.
Kimberly-Clark Corporation manufactures and markets personal care and consumer tissue products worldwide. It operates through three segments: Personal Care, Consumer Tissue, and K-C Professional.
+ Market leader (top spot or second position) in over 80 countries.
+ KMB enjoys brand power. Its products are known around the world. Some of the big names consumers will be familiar with include Huggies, Cottonelle, and Scott.
– Supply chain disruptions, inflation, and strengthening dollar effects are very likely to continue putting pressure on margins
– Kimberly-Clark delivered mixed results for its full-year 2021 and also Q1 2022 earnings, mixing some organic growth but also margin pressure
KMB Presentation to investors
Altria (MO)
Market Cap
76B
Beta (5Y Monthly)
0.63
PE Ratio (TTM)
25.64
EPS (TTM)
1.65
Earnings Date
Jul 28, 2022
Forward Div & Yield
3.60 (8.58%)
Yahoo finance July 12th
Altria Group sells the Marlboro cigarette brand in the U.S. and a number of other non-smokeable brands, including Skoal and Copenhagen.
+The flagship brand continues to be Marlboro, which commands over 40% retail market share in the U.S. Marlboro alone commands about 40% of the U.S. cigarette market. Other popular products are: chewing tobacco (55% market share) and cigars (26% market share).
+ Sales of tobacco are not impacted by the economic environement. In fact, customers are extremely brand loyal and sales grew in the last recession. Loyalty allows the company to raise its prices every year, which compensate for the lower volumes being sold.
+ Offers an attractive dividend. The dividend is relatively safe considering the company’s dividend payout ratio;
+ Altria is a dividend king with over 50 years of dividend increases;
+ The company has 10% stake in global beer giant Anheuser-Busch InBev
– Growth opportunities are limited for Altria (highly regulated industry);
– The FDA decided recently a total ban on Juul electronic cigarettes. This caused Altria’s shares to drop.
The Coca-Cola Company manufactures, markets, and sells various nonalcoholic beverages worldwide. The company provides sparkling soft drinks; flavored and enhanced water, and sports drinks; juice, dairy, and plant based beverages; tea and coffee; and energy drinks..
+ Coca-Cola has paid dividends for 60 straight years (Dividend King);
+ Coca-Cola has increased its dividend for more than 25 straight years. KO offers growing dividends which is always welcome to neutralize the impact of inflation;
+ Brand power: The company owns 21 brands that generate over $1 billion in sales including: Coke, Powerade, Dasani water, and Simply and Minute Maid juices.
+ Focus on healthier drinks is driving growth. Sales of teas, juices, and water continue to grow strongly in both developed and emerging economies.
+ On February 17, 2022, KO raised their dividend again to $0.44 from the previous $0.42 an almost 5% increase.
+ Restructuring plan: KO executives expect its operating margin and free cash flow margin to rise to 34% and 27%, respectively.
+ Coca-Cola is Berkshire Hathaway’s third-largest investment.
Source: Coca-Cola Presentation – Best dividend stocks 2022
Source: Coca-Cola Presentation – Best dividend stocks 2022
Johnson & Johnson (JNJ)
Market Cap
462B
Beta (5Y Monthly)
0.63
PE Ratio (TTM)
23.70
EPS (TTM)
7.42
Earnings Date
Jul 19, 2022
Forward Dividend & Yield
4.52 (2.53%)
Yahoo finance July 12th
JNJ is the largest global medical conglomerate with over 250 subsidiaries operating across more than 60 countries.
+ Johnson & Johnson has managed to raise its dividend each year for more than half a century, demonstrating its ability to endure many different economic environments.
+ J&J has continuously show ability to innovate. Over 20% of sales are also from new products
+ The company operates in three different segments. This diversification strengthens the company’s resilience to economic cycles.
+ Strong credit rating which makes this stock trustworthy even during a recession.
+ The pharmaceuticals segment saw a 14% rise in 2021 sales while the medical devices segment sales were up 18%. Analysts expect this strong performance to continue.
Presentation to investors – Sales by segment
Procter & Gamble (PG)
Market Cap
347B
Beta (5Y Monthly)
0.39
PE Ratio (TTM)
25.31
EPS (TTM)
5.72
Earnings Date
Jul 29, 2022
Forward Dividend & Yield
3.65 (2.52%)
Yahoo finance July 12th
Procter & Gamble is one of the world’s largest consumer staples companies, selling 65 products in over 180 countries.
+ Following a recent restructuring, P&G was able to reduce costs by $7 billion. The firm’s executives believe they can cut costs further by introducing more factory automation and refocusing their advertising strategy.
“Together with Microsoft, P&G intends to make manufacturing smarter by enabling scalable predictive quality, predictive maintenance, controlled release, touchless operations and manufacturing sustainability optimization — which has not been done at this scale in the manufacturing space to date,” said P&G CIO Vittorio Cretella, in a joint Microsoft and P&G press release announcing the relationship.
+ The company continues to focus on its most profitable brands which is appreciated by shareholders
+ P&G has increased its dividend for 66 consecutive years (Dividend King)
Source: Procter & Gamble Presentation – Best dividend stocks 2022
Source: Procter & Gamble Presentation – Best dividend stocks 2022
Defensive stocks are back in force in the market. Indeed, the biggest names in the consumer staples sector have performed well in recent months. In addition, these same securities are recognized for the quality of their dividends and are sometimes even ‘Dividend Kings‘ or ‘Dividend Aristocrats’. In this article, we will present the best dividend paying stocks in the consumer staples sector based on several criteria.
Methodology
Excellent performance in the past year
High dividend yield
Low Payout Ratio
Large cap (Minimum of 10 Billion dollars market cap)
High dividend growth in the past 5 years
What’s a good Price to cashflow ratio?
The price-to-cash-flow ratio (also known as the price-to-cash-flow or P/CF ratio), is a ratio used to compare a company’s market value to its cash flow.
For example, lets assume two stocks that operate in the same industry XYZ and ABC:
ABC has cash flow of $10 per share (P/CF ratio 100/10=10)
XYZ has cash flow cash flow of $5 per share (P/CF ratio 100/5=20
As you can see above, XYZ has a higher P/CF ratio. This indicates that the stock is trading at a high price but not generating enough cash flow to support the multiple. ABC with its smaller P/CF is preferred (all other things being equal).
The dividend payout ratio is the amount of dividend distributed by a company divided by the total earnings. For example, a company makes a profit of $ 100 and pays $ 40 in dividends. Its payout ratio is 40%.
If the ratio is high, the company pays almost all of its profits in dividends. There will be little money left in the coffers to innovate or expand to new markets;
It is preferable to invest in a company where the dividend payout ratio is low or medium. The reasoning is that these companies will have money set aside to invest in new projects and thus create growth;
Another variation of payout ratio (Trailing div / Earnings) is the payout ratio to cash (Div / Free cash flows). Earnings can be easily manipulated, so analysts use the payout ratio to cash to assess the safety of dividends better. The website ‘Marketbeat‘ provides the payout ratio to cash for Canadian stocks.
Best Dividend Paying Stocks – Consumer Staples sector
Name
Market Cap, $B
Div Yield
Div (a)
KO -Coca-Cola
278
2.75%
1.76
PEP -Pepsico
235
2.51%
4.3
GIS -General Mills
43
2.84%
2.04
K -Kellogg
24
3.18%
2.32
As of May 11th, Source: Barchart – Best Dividend Paying Stocks
Symbol
Price/Cash Flow
5Y* Div%
Div Payout%
52W %Chg
KO
23.99
20.00%
70.20%
18.57%
PEP
19.92
43.58%
67.56%
18.40%
GIS
14.78
13.48%
53.88%
15.25%
K
13.14
13.24%
55.33%
10.48%
As of May 11th, Source: Barchart *5 years dividend growth – Best Dividend Paying Stocks
General Mills, Inc. is an American manufacturer and marketer of branded consumer foods sold through retail stores.
Continues to generate strong cashflows;
GIS is a market leader in its segment and analysts expect the company to continue holding this position;
General Mill’s dividend grew 13.48% in the past 5 years;
Kellogg Company
Kellogg Company, together with its subsidiaries, manufactures and markets snacks and convenience foods.
Stellar dividend track record
Stable and reliable cashflows
17 years of consecutive dividend increases
Strang brand and pricing power which comes in handy in an inflationary environment
General Mill’s dividend grew 13.24% in the past 5 years
The North American stock markets remain marked by great volatility. From the precipitous market decline at the start of the pandemic to recent highs in 2021, the market has certainly tested the nerves of investors. But when looking for the best stocks, investors should consider long-term performance, not short-term volatility. To help you, we have compiled 3 lists of the best North American stocks:
the best Mega-cap stocks in terms of performance over the last 52 weeks. Mega cap means the company must be worth more than $200 billion in the market;
the best Canadian large cap stocks (Large cap) in terms of performance over the last 52 weeks. Large cap means the company must be worth more than $10 billion in the market;
the best Canadian mid-cap stocks in terms of performance over the last 52 weeks. Midcap means that the company must have a market value of more than $2 billion and be less than $10 billion;
the best performing Canadian small cap stocks over the past 52 weeks. Smallcap means that the company must have a value greater than 300 Million dollars
Source: Barchart 18 April 2022, Midcap means that the company must have a market value of more than $2 billion and be less than $10 billion
Top 10 Best Performing Stocks 2022: Small cap
Titre
Name
1M %Chg
52W %Chg
EMO.VN
Emerita Res
-21.85%
+825.49%
IPO
Inplay Oil
+36.47%
+780.39%
ASE.CN
Asante Gold
+36.02%
+776.00%
IBAT.CN
International Battery Metals Ltd
+20.20%
+704.05%
NPK
Verde Agritech
+20.00%
+688.43%
NGEX.VN
Ngex Minerals
+70.94%
+614.29%
OBE
Obsidian Energy
+23.96%
+614.11%
JOY
Journey Energy
+13.50%
+611.54%
PNE
Pine Cliff Energy
+68.75%
+535.29%
GMG.VN
Graphene Manufacturing Gr
+43.83%
+453.75%
Source: Barchart 18 April 2022, Smallcap means that the company must have a value greater than 300 Million dollars
Dividend Contenders Stocks are U.S companies that have paid and raised their dividends each year for at least 10 years. Once a Dividend Contender Stocks exceeds 25 years of consecutive dividend increases, it becomes ‘Dividend Aristocrats’. High Dividend Stocks are very popular with investors. they are perceived as the best tools to build a passive income from dividends and benefit from the potential growth of these bluechip stocks.
There is no doubt, that lists such as ‘Dividend kings‘, ‘Dividend Aristocrats‘ and ‘Dividend Contenders’ are an excellent starting point to our research. The purpose is focusing on high-quality companies with a track record of paying and increasing dividends every year.
There are 335 companies on the Dividend Contenders list. In this post, we chose to focus on high dividend stocks that have a least a 4% yield. The data is organized by sector to allow you to take into consideration diversification when choosing your stocks.
Below are the criteria used to construct the list list:
offer a minimum dividend yield of 4%;
Minimum of 10 consecutive years of dividend increases.
Pertinent ratios provided:
5 years Dividend Growth
Dividend growth is a feature highly sought after by investors. It is a sign of the good financial health of a company and of its capacity to grow its performance in a sustained manner. It’s also a great way to reduce the effect of inflation on your investment portfolio.
Payout ratio
The dividend payout ratio is the amount of dividend distributed by a company divided by the total earnings. For example, a company makes a profit of $ 100 and pays $ 40 in dividends. Its payout ratio is 40%. If the ratio is high, the company pays almost all of its profits in dividends. There will be little money left in the coffers to innovate or expand to new markets.
It is preferable to invest in a company where the dividend payout ratio is low or medium. The reasoning is that these companies will have money set aside to invest in new projects and thus create growth.
Beta
Beta is a historical measure of volatility which indicates the relationship between fluctuations in the value of the security and fluctuations in the market. If company ABC has a beta of 0.7 and its index (NYSE) drops by 10% on a trading day, then the stock will only fall by 7%. On the other hand, if the company has a beta of 1.5, then it is more sensitive to market fluctuations and if the market loses 10%, it will lose 15%.
Basic Materials
Number of consecutive years of dividend increases, Yield and Growth
Ticker
Name
Track** Record
Div Yield
5-Yrs Div Growth*
NP
Neenah Inc
11
4,78%
5,12%
LYB
LyondellBasell Industries NV
11
4,24%
4,66%
ODC
Oil-Dri Corp. Of America
19
4,05%
4,18%
As of April 22nd 2022, *the 5 year Dividend Growth is annualized; **number of consecutive years that a company has increased its recurring dividend payment
Ticker
Market Cap ($M)
Payout Ratio
Beta
NP
654
N/A
0,79
LYB
34,943
26,6%
0,77
ODC
138
146,8%
0,40
Communication Services
Number of consecutive years of dividend increases, Yield and Growth
Ticker
Name
Track** Record
Div Yield
5-Yrs Div Growth*
CCOI
Cogent Communications
10
4,99%
14,21%
VZ
Verizon Communications
17
4,93%
2,08%
AQN
Algonquin Power & Utilities
13
4,45%
1,38%
PNW
Pinnacle West Capital
10
4,42%
5,35%
As of April 22nd 2022, *the 5 year Dividend Growth is annualized; **number of consecutive years that a company has increased its recurring dividend payment
Ticker
Market Cap ($M)
Payout Ratio
Beta
CCOI
3,087
311,9%
0,74
VZ
217,909
58,8%
0,24
AQN
10,287
N/A
0,40
PNW
8,736
60,3%
0,25
High Dividend Stocks (Dividend Contenders)
Consumer Cyclical
Number of consecutive years of dividend increases, Yield and Growth
Ticker
Name
Track** Record
Div Yield
5-Yrs Div Growth*
CULP
Culp
11
5,79%
WHR
Whirlpool
11
4,03%
9,73%
As of April 22nd 2022, *the 5 year Dividend Growth is annualized; **number of consecutive years that a company has increased its recurring dividend payment
Number of consecutive years of dividend increases, Yield and Growth
Ticker
Name
Price
Div Yield
5-Yrs Div Growth
MO
Altria Group
13
6,48%
8,09%
PM
Philip Morris International
14
4,87%
3,75%
As of April 22nd 2022, *the 5 year Dividend Growth is annualized; **number of consecutive years that a company has increased its recurring dividend payment
Ticker
Market Cap ($M)
Payout Ratio
Beta
MO
100,659
258,8%
0,24
PM
159,177
83,3%
0,36
High Dividend Stocks (Dividend Contenders)
Energy
Number of consecutive years of dividend increases, Yield and Growth
Ticker
Name
Track** record
Div Yield
5-Yrs Div Growth
MMP
Magellan Midstream Partners L.P.
21
8,12%
3,52%
SGU
Star Group L.P.
10
6,42%
6,75%
PSX
Phillips 66
10
4,40%
5,62%
As of April 22nd 2022, *the 5 year Dividend Growth is annualized; **number of consecutive years that a company has increased its recurring dividend payment
Ticker
Market Cap ($M)
Payout Ratio
Beta
MMP
10859
89,6%
0,48
SGU
412
N/A
0,41
PSX
40228
120,5%
0,63
Financial Services
Number of consecutive years of dividend increases, Yield and Growth
Ticker
Name
Track** record
Div Yield
5-Yrs Div Growth
MAIN
Main Street Capital
12
6,12%
0,96%
NWBI
Northwest Bancshares
12
6,03%
4,56%
HBAN
Huntington Bancshares
11
4,51%
14,14%
WASH
Washington Trust Bancorp
11
4,35%
7,28%
FNF
Fidelity National Financial
10
4,31%
11,97%
PRU
Prudential Financial
13
4,14%
9,86%
As of April 22nd 2022, *the 5 year Dividend Growth is annualized; **number of consecutive years that a company has increased its recurring dividend payment
Ticker
Market Cap ($M)
Payout Ratio
Beta
MAIN
3,024
50,9%
0,76
NWBI
1,679
64,7%
0,50
HBAN
19,880
67,1%
1,16
WASH
861
47,6%
0,65
FNF
11,578
19,2%
0,98
UNB
140
N/A
PRU
43,552
23,5%
1,00
Healthcare
Number of consecutive years of dividend increases, Yield and Growth
Ticker
Name
Track** record
Div Yield
5-Yrs Div Growth
PETS
Petmed Express
13
4,97%
8,45%
HCSG
Healthcare Services Gr
19
4,30%
2,41%
As of April 22nd 2022, *the 5 year Dividend Growth is annualized; **number of consecutive years that a company has increased its recurring dividend payment
Ticker
Market Cap ($M)
Payout Ratio
Beta
PETS
506
109,3%
0,51
HCSG
1,417
134,5%
0,62
Industrials
Number of consecutive years of dividend increases, Yield and Growth
Ticker
Name
Track** Record
Div Yield
5-Yrs Div Growth
HY
Hyster-Yale Materials Handling
10
4,00%
1,29%
As of April 22nd 2022, *the 5 year Dividend Growth is annualized; **number of consecutive years that a company has increased its recurring dividend payment
Ticker
Market Cap ($M)
Payout Ratio
Beta
HY
417,7462
N/A
1,21
Real Estate
Number of consecutive years of dividend increases, Yield and Growth
As of April 22nd 2022, *the 5 year Dividend Growth is annualized; **number of consecutive years that a company has increased its recurring dividend payment
Ticker
Market Cap ($M)
Payout Ratio
Beta
ABR
2,758
68,0%
0,78
GTY
1,325
114,4%
0,63
HTA
7,191
291,7%
0,50
Utilities
Number of consecutive years of dividend increases, Yield and Growth
Ticker
Name
Track** record
Div Yield
5-Yrs Div Growth*
AQN
Algonquin Power & Utilities
13
4,45%
1,38%
PNW
Pinnacle West Capital
10
4,42%
5,35%
ALE
Allete
13
4,11%
3,97%
NWE
Northwestern
17
3,98%
3,71%
As of April 22nd 2022, *the 5 year Dividend Growth is annualized; **number of consecutive years that a company has increased its recurring dividend payment
In this post, we will go over Canadian dividend stocks that had the highest dividend growth in the past five years. For each stock, we will discuss the dividend yield, analysts’ recommendations, outlook, and performance.
Please always consult a financial advisor before making any investment decision.
Methodology
Below are the criteria used to select the best Canadian dividend stocks that exhibit growth characteristics:
Have a minimum capitalization of 1 billion dollars;
have recorded revenue growth of at least 10% over the past five years;
offer a minimum dividend yield of 2%;
have recorded a great performance over the past three years.
Dividend growth is a feature highly sought after by investors. It is a sign of the good financial health of a company and of its capacity to grow its performance in a sustained manner. It’s also a great way to reduce the effect of inflation on your investment portfolio.
It is recommended in a dividend portfolio to have a mix of:
– large Canadian dividend stocks with stable dividends and low to moderate growth. Dividend aristocrats are a great place to start. Please click link for full list of Canadian dividend stocks who have earned the title of Dividend Aristocrats; – small and medium-sized businesses that are starting to build a reputation in their industries. These businesses can both generate growth and grow their dividends at attractive rates;
Summary: Canadian dividend stocks for growth
Symbol
Name
Div Yield
5Y Div%
LIF
Labrador Iron Ore Royalty
13.38%
43.10%
GSY
Goeasy
2.89%
39.48%
AEM
Agnico Eagle Mines
2.47%
31.21%
SIS
Savaria
3.12%
17.76%
CNQ
Canadian Natural Resources
3.61%
16.27%
CG
Centerra Gold
2.13%
15.77%
CTC-A
Canadian Tire Corp Cl A NV
2.67%
15.37%
CAS
Cascades
3.82%
14.87%
Source: Barchart as of April 14th – Dividend yield and Dividend Growth in the past 5 years
Labrador Iron Ore Royalty Corporation, through its subsidiary Hollinger-Hanna Limited, owns a 15.10% interest in Iron Ore Company of Canada (IOC) which produces and processes iron ore in Labrador City, Newfoundland -and Labrador. IOC produces iron ore pellets transported by sea; and sells standard and low silica acid, flux and direct reduction pellets, as well as iron ore concentrate.
Labrador Iron is a great company, but analysts believe the stock is currently overvalued. Also, keep in mind that Labrador iron ore is a very cyclical stock, so it is subject to significant ups and downs.
Revenues grew by 19.46% in the past five years which is indicative of the growth potential of LIF.
Symbol
LIF.TO
Name
Labrador Iron Ore Royalty Corp
Last
41.1
Market Cap
2B
Div Yield
13.38%
5Y Rev%
19.46%
5Y Div%
43.10%
52W %Chg
9.08%
3Y %Chg
29.37%
GSY -Goeasy Ltd
goeasy Ltd. provides non-prime leasing and lending services to consumers in Canada. Their consumers typically were rejected by the big banks for low credit rating. The company operates through two segments:
– Easyfinancial: provides unsecured and real estate secured installment loans; personal, home equity, and auto loans…etc
– Easyhome: leases household furniture, appliances, electronics and computers to retail consumers.
Goeasy Ltd business model has benefited from the pandemic for two reasons:
demand for their services increased;
governement subsidies which have skyrocketed during the pandemic reduced the risk of loan losses.
GSY dividend yield is 2.89% at the writing of this post. Their dividend grew by 39.48% in the past five years.
Revenues grew by 18.93% in the past five years which is indicative of the growth potential of Goeasy.
Symbol
GSY.TO
Name
Goeasy Ltd
Last
126
Market Cap
2B
Div Yield
2.89%
5Y Rev%
18.93%
5Y Div%
39.48%
52W %Chg
-8.78%
3Y %Chg
173.20%
Source Bachart as of April 14th
AEM Stock – Agnico Eagle Mines
Agnico Eagle Mines Limited engages in the exploration, development, and production of mineral properties in Canada, Mexico, and Finland.
Summary
Recent merger with Kirkland will improve operational efficiency and result in savings
Recent share repurchases and dividend increases are in favor of shareholders
AEM dividend yield is 2.47% at the writing of this post. Their dividend grew by 31.21% in the past five years.
Symbol
AEM.TO
Name
Agnico Eagle Mines Ltd
Last
83.01
Market Cap
37B
Div Yield
2.47%
5Y Rev%
12.33%
5Y Div%
31.21%
52W %Chg
9.04%
3Y %Chg
53.55%
Source Bachart as of April 14th
SIS – Savaria Corp
Savaria Corporation provides accessibility solutions for the elderly and physically disabled in Canada, the United States, Europe and abroad. The company operates in three segments: accessibility, adapted vehicles and patient care. Savaria Corporation was founded in 1979 and is headquartered in Laval, Canada.
Savaria Copr is a growing company that benefits from several factors:
SIS dividend yield is 3.12% at the writing of this post. Their dividend grew by 17.76% in the past five years.
Revenues grew by 40.73% in the past five years which is indicative of the growth potential of Savaria.
Symbol
SIS.TO
Name
Savaria Corp
Last
16.02
Market Cap
1B
Div Yield
3.12%
5Y Rev%
40.73%
5Y Div%
17.76%
52W %Chg
-8.82%
3Y %Chg
22.57%
Source Bachart as of April 14th
CNQ Stock – Canadian Natural Resources
Canadian Natural Resources Limited acquires, explores for, develops, produces, markets, and sells crude oil, natural gas, and natural gas liquids (NGLs).
Summary
Large energy holding company
Well managed company
Solid balance sheet
Recent buyback and dividend increases favor shareholders
Should continue to benefit for increased demand for its products
CNQ dividend yield is 3.61% at the writing of this post. Their dividend grew by 16.27% in the past five years.
Revenues grew by 22.31% in the past five years which is indicative of the growth potential of CNQ.
Symbol
CNQ.TO
Name
Canadian Natural Resources Ltd.
Last
83
Market Cap
96B
Div Yield
3.61%
5Y Rev%
22.31%
5Y Div%
16.27%
52W %Chg
111.41%
3Y %Chg
97.90%
Source Bachart as of April 14th
CG Stock – Centerra Gold
Centerra Gold Inc., a gold mining company, engages in the acquisition, exploration, development, and operation of gold and copper properties in North America, Turkey, and internationally.
Summary
The company probably trades at a discount due to its geographic location
CG dividend yield is 2.13% at the writing of this post. Their dividend grew by 31.21% in the past five years.
Symbol
CG.TO
Name
Centerra Gold Inc
Last
13.14
Market Cap
3B
Div Yield
2.13%
5Y Rev%
3.50%
5Y Div%
15.77%
52W %Chg
17.11%
3Y %Chg
86.65%
Source Bachart as of April 14th
CTC-A Stock – Canadian Tire Corp Cl A NV
Canadian Tire Corporation, Limited provides a range of retail goods and services in Canada. It operates in three segments: Retail, CT REIT, and Financial Services.
Summary
Did well during the pandemic (outdoor furniture)
Great job with supply chain management
Loyalty program allowed them to increase their cross-selling
Dividends were raised (shareholders friendly)
Weather was in their favor this past winter
CTC-A dividend yield is 2.67% at the writing of this post. Their dividend grew by 15.37% in the past five years.
Symbol
CTC-A.TO
Name
Canadian Tire Corp Cl A NV
Last
185.5
Market Cap
11B
Div Yield
2.67%
5Y Rev%
5.14%
5Y Div%
15.37%
52W %Chg
-2.17%
3Y %Chg
24.04%
Source Bachart as of April 14th
CAS Stock – Cascades
Cascades Inc. produces, converts, and markets packaging and tissue products in Canada and the United States.
Summary
Management is committed to strengthening the balance sheet
Shifting to cleaning tissues was a wise decision by management
Tight margins
CAS dividend yield is 3.82% at the writing of this post. Their dividend grew by 14.87% in the past five years.
Symbol
CAS.TO
Name
Cascades Inc
Last
12.57
Market Cap
1B
Div Yield
3.82%
5Y Rev%
5.96%
5Y Div%
14.87%
52W %Chg
-12.59%
3Y %Chg
58.71%
Source Bachart as of April 14th
Archive:
Manulife Fin
Manulife Financial Corporation, together with its subsidiaries, provides financial products and services in Asia, Canada, the United States and abroad. The company operates through wealth and asset management businesses; Insurance and annuity products; And the Business and Other segments. Manulife Financial Corporation was incorporated in 1887 and is headquartered in Toronto, Canada.
MFC offers a 4.37% dividend yield with 11% growth over the past 5 years. The company’s Asian business segment is doing well and it should also benefit from upcoming interest rate hikes.
Quebecor Inc Cl.B Sv
Quebecor Inc. operates in telecommunications (primarily television distribution, Internet access, business solutions, wired and mobile telephony) and media (over-the-air television networks).
The company has limited expansion plans outside of Quebec, which could affect its long-term growth. Quebecor Inc. was incorporated in 1965 and its head office is located in Montreal, Canada. Its dividend yield is 3.77% and the stock has a very low volatility at 0.32 (Beta over 5 years). Quebecor’s dividends have increased 65% over the past five years, according to Barchart.com.
Restaurant Brands International Inc
Restaurant Brands International Inc. owns, operates and franchises quick service restaurants under the Tim Hortons (TH), Burger King (BK) and Popeyes (PLK) brands. The company was founded in 1954 and is headquartered in Toronto, Canada.
Catering companies were able to survive during the pandemic thanks to delivery services such as Uber-Eats. It can be assumed that lifting all restrictions related to the pandemic can only benefit the QSR title and will increase its profitability in the short term.
ZZZ – Sleep Country Canada
Sleep Country Canada Holdings Inc is engaged in the retail sale of mattresses and bedding products in Canada. As of June 11, 2021, it operated 285 stores. It also sells its products through an e-commerce platform. The company was founded in 1994 and is headquartered in Brampton, Canada.
ZZZ’s revenues have grown by 10% over the past 5 years. During the same period, the company increased its dividends by 24.5%!
The stock has performed well since the start of the year for two reasons:
– excellent financial results despite the pandemic; – the dynamism of the real estate market also seems to have favored mattress sales.
However, some analysts think, at the current price level, the stock is over-priced. Thus they advise waiting for a good buy opportunity. ZZZ specializes in only one segment, which makes it a risky choice.
EFN – Element Fleet Management Corp
Element Fleet Management Corp. operates as a fleet management company in Canada, United States, Mexico, Australia and New Zealand. The company offers fleet management services including vehicle acquisition, financing, program management and several other services.
EFN is a North American leader in fleet management with a capitalization of over $ 5 billion. Its dividend yield rate is 2.50%.
The company offers these customers assistance in managing their vehicle fleets. The experience acquired by the company through its existence allows it to formulate attractive offers in terms of subcontracting thanks to scale savings. Over the past five years, the company’s revenues have grown by 27%. And dividends have increased by 51%.
POW – Power Corp of Canada
Power Corporation of Canada operates as an international management and holding company in North America, Europe and Asia. It operates through three segments: Lifeco, IGM Financial and GBL. The company was incorporated in 1925 and is headquartered in Montreal, Canada. Power Corporation of Canada is a subsidiary of Pansolo Holding Inc.
Power Corp is in good financial shape. Its dividend yield is 4.9% and the 5-year dividend growth was 12%. The insurance segment (through its subsidiary: Great West) should benefit from the upcoming interest hikes.
In this post we will review the 10 best performing ETFs in Canada in 2022 and the Top 10 worst performers. We limited ourselves to ETFs that have asset under management (AUM) above 100 millions dollars. ETFs with low AUM tend to be less liquid and cost more when trading because of the spread (the difference between the bid and ask price) is often high.
Source barchart as of April 18th 2022 – worst performing ETFs in Canada
In this post, we will be presenting 5 high dividend stocks. These stocks offer a very attractive yield while having an acceptable level of debt and growing revenues. The purpose here is to select businesses that are likely to continue paying dividends in the near and medium future.
Please do your own research or consult with a tax professional or investment advisor before making any financial decisions.
Methodology
–Growing revenues: Growth in revenues is necessary to keep any a business a float. It’s even more important for businesses that are expected to pay dividends;
–Low Price/Cash Flow: This ratio is the relationship between the price and the cash available per share. A low ratio indicates the company has enough cash flow to justify its current prices. A ratio below 15 is considered low.
–High dividend yield;
–Low Debt to Equity ratio: This ratio is a measure of how much debt the company contracted versus its own equity. Viable dividend stocks should always have a low level of debt.
–High interest coverage: This ratio measures how much a company is paying to service its debt versus its earnings. A business that spends most of its earnings on paying interests in loans is not a good choice for dividend investors.
–Low Dividend Payout Ratio: This ratio is the relationship between dividends and earnings. Companies that offer safe dividends usually have a low ratio.
MPLX LP owns and operates midstream energy infrastructure and logistics assets primarily in the United States.
Segments: Logistics and Storage (crude oil and refined petroleum products) and Gathering and Processing (natural gas and natural gas liquids).
+ MPLX offers an attractive yield (over 8%);
+ Over the past year, the stock rose 31.52%. It’s important to check for historical performance, often, high dividend yield is caused by depression in the stock price;
+ Low Price/Cash Flow ratio is a good sign!
– The debt ratio (1.51) is bit high but the Interest coverage ratio is acceptable at 4.97;
+ The company continue to grow its revenues through organic growth and acquisitions;
– Strong balance sheet.
Symbol
MPLX
Name
Mplx LP
Market Cap, $B
33
Div Yield
8.61%
Div Payout%
111.19%
5Y Rev%
287.14%
Price/Cash Flow
7.53
Debt/Equity
1.51
Int Cov
4.97
52W %Chg
31.14%
As of March 24th, Source: Barchart / High Dividend Stocks
Magellan Midstream Partners LP (MMP)
Magellan Midstream Partners is a Master Limited Partnership, or MLP. The company has the longest pipeline system of refined products.
+ MMP has a fee-based model (90% of its revenues). The stock price movement is not related to commodity prices;
+ MMP offers an attractive yield at 8%;
+ The dividend payout ratio is low at 87.04%. The company pays dividends and has room to invest in its growth;
+ High debt ratio at 2.67; the interest coverage ratio is at 5.13 which is acceptable;
+ Revenues have grown in the past 5 years by 23.93%.
Symbol
MMP
Name
Magellan Midstream Partners LP
Market Cap, $B
10,5
Div Yield
8.53%
Div Payout%
87.04%
5Y Rev%
23.93%
Price/Cash Flow
8.05
Debt/Equity
2.67
Int Cov
5.13
52W %Chg
16.33%
As of March 24th, Source: Barchart / High Dividend Stocks
Enterprise Products Partners LP (EPD)
Enterprise Products Partners L.P. provides midstream energy services to producers and consumers of natural gas, natural gas liquids (NGLs), crude oil, petrochemicals, and refined products.
+ Recent acquisition of Navitas Midstream for $3.25B in January. (additional 1,750 miles of pipelines to their existing portfolio);
+ EPD offers an attractive yield at 7.58%;
+ The dividend payout ratio is low at 81.19%. The company pays dividends and has room to invest in its growth;
+ A low price to Cash Flow ratio
+ Low debt ratio at 1.08; the interest coverage ratio is at 4.76 which is acceptable;
+ Revenues have grown in the past 5 years by 77% thanks to both organic growth and acquisitions.
Symbol
EPD
Name
Enterprise Products Partners LP
Market Cap, $BK
54,3
Div Yield
7.58%
Div Payout%
81.19%
5Y Rev%
77.25%
Price/Cash Flow
7.64
Debt/Equity
1.08
Int Cov
4.76
52W %Chg
11.11%
As of March 24th, Source: Barchart / High Dividend Stocks
Altria Group (MO)
Altria Group sells the Marlboro cigarette brand in the U.S. and a number of other non-smokeable brands, including Skoal and Copenhagen.
+The flagship brand continues to be Marlboro, which commands over 40% retail market share in the U.S.
+ Offers an attractive dividend at 6.75%. The dividend is relatively safe considering the company’s dividend payout ratio is 75.97%;
– Growth opportunities are limited for Altria (highly regulated industry);
+ Altria is a dividend king with over 50 years of dividend increases;
+ Company continues its expansion with a large stake in Juul (Vaping products manufacturer). In addition, the company has 10% stake in global beer giant Anheuser-Busch InBev
Symbol
MO
Name
Altria Group
Market Cap, $B
96,7
Div Yield
6.75%
Div Payout%
75.97%
5Y Rev%
1.04%
Price/Cash Flow
11.19
Debt/Equity
N/A
Int Cov
4.29
52W %Chg
5.38%
As of March 24th, Source: Barchart / High Dividend Stocks
Ares Capital Corp (ARCC)
Ares Capital Corporation is a business development company. The company specializes in acquisition, recapitalization, mezzanine debt, restructurings, rescue financing, and leveraged buyout transactions of middle market companies.
+ Healthy and diversified portfolio of investments;
+ High dividend yield at 8%;
+ Dividend payout ratio at 83.65%;
+ Revenues have grown in the past 5 years by 79% thanks to both organic growth and acquisitions.
– The interest coverage is low which poses a risk for dividend payments;
Symbol
ARCC
Name
Ares Capital Corp
Market Cap, $B
10
Div Yield
8.08%
Div Payout%
83.65%
5Y Rev%
79.84%
Price/Cash Flow
12.41
Debt/Equity
1.17
Int Cov
3.07
52W %Chg
13.14%
As of March 24th, Source: Barchart / High Dividend Stocks
In this post, we will be comparing major Canadian Banks. The comparison will include historical performance, Growth metrics, and Valuation. Then, we will pick the TOP 3 Best Canadian Bank Dividend Stocks! Our top 3 includes National Bank, TD, and Royal Bank.
Please consult a financial advisor before making any financial decision.
Historical performance
Name
YTD %Chg
52W %Chg
3Y %Chg
National Bank (NA)
+3.81%
+21.92%
+63.33%
Cibc (CM)
+8.40%
+31.87%
+43.26%
Royal Bank (RY)
+3.58%
+26.69%
+33.79%
Bank of Montreal (BMO)
+8.45%
+37.63%
+43.58%
Toronto-Dominion (TD)
+1.30%
+24.48%
+35.63%
BNS (BNS)
+4.77%
+21.88%
+28.98%
Barchart.com as of March 3rd – Best Canadian Bank Dividend Stocks
Growth metrics
Symbol
5Y Div%
5Y Earn%
5Y Rev%
NA.TO
5.43%
22.19%
8.14%
CM.TO
4.22%
5.42%
6.69%
RY.TO
5.92%
10.28%
5.67%
BMO.TO
4.51%
10.85%
5.14%
TD.TO
7.91%
10.58%
4.45%
BNS.TO
4.56%
5.94%
3.50%
Barchart.com as of March 3rd – Best Canadian Bank Dividend Stocks
Valuation and Dividends
Symbol
ROE%
P/E (ttm)
Div yld
NA.TO
19.91%
10.64
3.46
CM.TO
16.07%
11.12
4.02
RY.TO
18.28%
12.44
3.49
BMO.TO
14.20%
12.75
3.60
TD.TO
15.27%
13.15
3.51
BNS.TO
14.72%
12.10
4.29
Barchart.com as of March 3rd – Best Canadian Bank Dividend Stocks
– Cross-border diversification. TD continues to expand in the US market. The latest trend is the announcement of a merger agreement that will unite TD and First Horizon. The deal will still need to obtain approval from US regulators. Following this merger, TD will be the sixth-largest bank in the US!
– Cost synergies expected from TD and Fisrt Horizon merger;
– Gorwth opportunities in the US retail market;
– 10 consecutive years of dividend increases.
Weaknesses:
– TD’s premium leisure and travel-oriented credit card business has been weak during the pandemic;
– The pandemic negatively impacted the growth in both personal and business lowns segments;
– Competition from both large banks and fintech companies.
