12 Canadian Dividend Stocks

One of the Dividend Indices in the family of Dow Jones Stoxx Dividend Indices is the "Dow Jones STOXX® Americas Select Dividend 40 Index". The objective of this index is "to measure the performance of the highest dividend-paying stocks relative to their home markets."

Some of the unique features of these STOXX Dividend indices are:

• Stocks are screened by defined historical non-negative dividend-per-share growth rates and dividend to earnings-per-share ratios.
• Index components are weighted by their indicated annual net dividend yield, i.e. the largest dividend-yielding companies have the highest weight in the index.
• Fixed component numbers and cap factors guarantee index diversification

As of June 30, 2009 the dividend yield of this index was 3.97%.

In this post, let's take a look at the 12 Canadian components in the Dow Jones STOXX® Americas Select Dividend 40 Index. The Canadian companies represented in this index are:

• Bank of Montreal (BMO)
• Great-West Lifeco Inc (GWLOF.PK)
• Power Financial Corp (POFNF.PK)
• CIBC Group (CM)
• IGM Finanacial Inc (IGIFF.PK)
• Power Corp. of Canada
• Bank of Nova Scotia (BNS)
• TD Banking Group (TD)
• National Bank of Canada
• Royal Bank of Canada (RY)
• Transcanada Corp (TRP)
• Enbridge Inc (ENB)

Of the twelve companies, the five major banks are included and two energy companies are listed on the US exchanges as inter-listed stocks. All the Canadian banks have weathered the credit crunch well and have rebounded strong from the March lows. The most profitable bank in Canada, Royal Bank (RY), has a 3.86% yield now and has more than doubled from recent lows. The stock has been a consistent performer over many years. Scotia Bank (BNS) has a significant presence in Mexico and the Caribbean. BMO currently pays a 5.18% dividend. TD and Canadian Imperial Bank (CM) have also come back strong. The five banks are solid long-term investment plays.

Enbridge Inc (ENB) operates in the crude oil and natural gas industry while TransCanada (TRP) operates pipelines and also in the energy area. TRP has a 4.96% yield. Enbridge recently announced that it's on target to achieve 20%+ growth this year and 10%+ thru 2013.

Comments

[Uncle Pie:]

Odd, isn't it, that the list does not include any of Canada's energy producers (Transcanada and Enbridge are pipelines, not producers).
What about Encana, ECA, the largest producer of natural gas in North America, with a 3.2% yield? Or Crescent Point Corp, the biggest player in the Bakken trend, CSCTF, yielding about 8%?
Or Vermilion Energy Trust, VETMF, yielding about 7.8%? The writer owns shares of all the above.

Aug 04 08:41 AM

[Michael D.:]

Keep in mind that PWF and IGM are parts of the conglomerate POW, so you can choose market mixes and yields as you desire (financial, insurance, and industrial congromerate).

Aug 04 08:52 AM

[Uncle Pie:]

there is a superb article on Power Corp. on the Bloomberg website, including an interesting comparison to Berkshire Hathaway (Power shareholders did better). You can find it at .bloomberg.com/apps/ne... or by doing a search for "desmarais".
the writer owns shares in Power Corp.

Aug 04 09:53 AM

[MichaelAK:]

Good start to the discussion but need to address the Canadian Trust from a dividend perspective and the impact of the tax changes. With some trust yielding much higher yields they need to be included in this article or mentioned for investment consideration.

Aug 04 11:42 AM

[Michael D.:]

There are no income trusts above. I'd keep them as a separate category until the tax laws change and the trusts revert to their corporate structure. There will be winners, losers; but mostly losers IMHO.

The REIT structures (real estate income trusts) will be maintained, however.

Aug 04 12:02 PM

[coldcall:]

They've missed out some of the nice div paying telecoms as well.

Telus (T.TO) pays around 6%
Bell Canada (BCE.TO) 6%
Bell Aliant (BA.UN) 11%? or something crazy like that last time i checked.

Also some of the Utilities pays decent divs FTS.TO and CU.TO

All above (except perhaps BA.UN) appear safe for the forseeable future.

Aug 05 12:19 PM

[Rayon:]

Hi David!
Great article.
Valuable comments from your readers as well. I write from Canada and I have positions in CSR.UN.TO, EIT.UN.TO and SCI.UN.TO, amongst others for income and positions in CDZ for growth, though the dividends are great.
I was wondering if you guys had ever considered Claymore ETF (CDZ.TO) even though the volume is fairly low (ca 22,000)? It is currently paying 6.29% dividends paid as roughly 60% dividends and 40% ROC in FY07 and FY08. Non-Canadian residents would probably get 15% of the dividends withheld, which still makes a fair payback, let alone any NAV increase over time.

This ETF aims at replicating the performance of the S&P/TSX Canadian Dividend Aristocrats, which include solid Income Trusts.

Regards to all and good investing.

Ray
www.claymoreinvestment...
Some brokers can handle the DRIP offered by Claymore. My Broker (Desjardins Disnat) can not yet.

Aug 24 09:34 AM