5 Large Cap Canadians Paying Substantial Dividends

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 |  Includes: BMO, BNS, CM, RCI, RY
by: Efsinvestment

As the credit ranking of the United States has been decreased to AA+, it might be a good idea to look for highly profitable markets outside the States. Canada, the country which offers a safe and profitable environment, is in the focus of this article. I have listed five large-cap Canadian companies with substantial dividends, and priced with low P/E ratios. All of the companies offer a minimum 4% dividend yield. I have added my O-Metrix Grading System where possible. Here is a fundamental analysis on the top five large-cap Canadian companies (Data obtained from Finviz/Morningstar and is current as of Aug 10):

Bank of Montreal (NYSE:BMO): Bank of Montreal just announced 1st Art! Awards, the only Canadian graduating artist competition. The Toronto, Canada-based bank has a market cap of $35.5 billion, a P/E ratio of 10.8, and a forward P/E ratio of 9.4, as of Aug 10. Estimated annual EPS growth for the next 5 years is 5.5%. With a profit margin of 23.62%, and a dividend yield of 5.03%, Bank of Montreal is a charming stock for dividend lovers.

The company had an EPS growth of 52.46% this year. Target price is $66.92, indicating a 16.9% increase potential. SMA20 and SMA50 ratios are -7.52% and -5.15%, respectively. ROA is 0.71%, and ROE is 15.22%. It is currently trading 12.40% lower than its 52-week high. Institutions own 51.35% of the stock. The company returned -4.8% in a year, and it has an O-Metrix score of 5.21. Debts and assets are unstable, while the company is paying substantial dividends. Bank of Montreal just multiple topped, and it is fairly-priced. I would wait for a pullback below fair value. Following is the recent dividend history of BMO:

07/29/11

$0.739

04/28/11

$0.70

01/28/11

$0.70

10/28/10

$0.70

Click to enlarge

The Bank of Nova Scotia (NYSE:BNS): Troy Wright has recently been appointed as the Executive Vice-President of BNS. As of Aug 10, Scotiabank owns a market cap of $54.9 billion. While forward P/E ratio is 10.4, P/E ratio is 11.2. Analysts expect the company to have an annualized EPS growth of 6.50% in the next 5 years, which sounds reasonable given the 3.70% EPS growth of past 5 years. Profit margin (28.3%) is above the industry average (21.4%), and dividend yield is satisfactory (4.03%).

Earnings increased by 30.54% this year, and 33.36% this quarter. The stock is trading 15.53% lower than its 52-week high, while target price indicates a 23.9% upside movement potential. It returned 5.7% in a year, and debts are far from being a threat. The company has an O-Metrix score of 4.87. Average analyst recommendation for Scotiabank is 1.70 (1=Buy, 5=Sell). Yields and assets are OK. BNS has a joyful momentum since its dip in Mar, 2009. I believe this upward trend will continue for a while. Recent dividend history is as follows:

09/30/11

$0.52

06/30/11

$0.52

04/01/11

$0.52

12/30/10

$0.49

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Canadian Imperial Bank of Commerce (NYSE:CM): CM will acquire a 41% stake in American Century Investments for $848 Million. The Toronto-based CM has a market capitalization of $27.7 billion. It shows a trailing P/E ratio of 10.6, and a forward P/E ratio of 8.8, as of the Aug 10 close. Estimated annualized EPS growth for the next five years is 5.5%, which sounds truly conservative when its 169.36% EPS growth of last 5 years is considered. With a profit margin of 20.3%, shareholders enjoyed a 4.95% dividend last year. The stock is trading 18.61% lower than its 52-week high, and debts are decreasing for the last three years. Target price is $89.66, which indicates an about 25.5% upside movement potential. Earnings increased by 119.47% this year, whereas institutions hold 70.99% of the stock. Its O-Metrix score is 5.38, and the company returned 4.1% in a year. CM has had solid momentum since Feb, 2009. I believe this momentum will continue for a while. Analysts give a 2.60 recommendation for CM (1=Buy, 5=Sell). Here are the recent dividend payments of the company per share:

06/24/11

$0.87

03/24/11

$0.87

12/27/10

$0.87

09/24/10

$0.84

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Royal Bank of Canada (NYSE:RY): Royal Bank of Canada recently sold five-year notes worth C$350 million ($372 million). The bank has a market cap of $69.4 billion, a P/E ratio of 12.3, and a forward P/E ratio of 9.6, as of Aug 10. Analysts expect the company to have an annualized EPS growth of 5.0% in the next five years, which sounds reasonable given the 4.12% EPS growth of past 5 years. Profit margin in 2010 was 19.2%, while it paid a 4.57% dividend. The company has an O-Metrix score of 4.16, and it returned -3.8% in a year. Royal Bank of Canada had a 28.38% EPS growth this year, and 10.81% this quarter. Target price indicates an about 29.5% increase potential, while the stock is currently trading -20.95% lower than its 52-week high. Institutions own 54.22% of RY. If you want a safe profit-maker, then this is your stock. Its O-Metrix score is also within the fair-value range. Recent dividend history of the stock per share is as follows:

07/22/11 $0.54
04/21/11 $0.50
01/24/11 $0.50
10/22/10 $0.49
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Rogers Communications Inc. (NYSE:RCI): Rogers Communications recently announced its Q2 results. RCI has a market cap of $19.2 billion, a P/E ratio of 13.5, and a forward P/E ratio of 10.2, as of the Aug 10 close. Analysts estimate a 17.4% annual EPS growth for the next five years. With a profit margin of 11.7%, Rogers Communications offered a 4.10% dividend in 2010. The stock returned 0.6% in the last twelve months. It is trading -12.88% lower than its 52-week high, while target price implies an 11.9% upside movement potential. Operating margin and gross margin are 23.1% and 86.5%, respectively. Debt-to assets ratio is nearly stable for the last three years. ROE is 35.70%, and it has a remarkable O-Metrix score of 9.07. Although it has been a rough year for Rogers Comm., I believe it can beat the market in the future. The market underestimates the power of Roger’s substantial dividend payment policy. Here is the recent dividend history of Rogers:

06/13/11 $0.35
03/16/11 $0.35
11/16/10 $0.32
09/07/10 $0.32
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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.