Five Highest-Dividend Canadian Stocks

Includes: BCE, BMO, CM, ERF, SLF
by: Efsinvestment

Since the United States is suffering from the credit rating crisis, it might be a good idea to look outside of the U.S. for stocks with enjoyable dividends. Therefore, I have made a list of five highest-yielding Canadian companies that are priced with admirably low P/E ratios. All of the companies offer a minimum 5% dividend yield. I have added my O-Metrix grading system where applicable. Here is a fundamental analysis on the top five Canadian companies. (Data obtained from Finviz/Morningstar, and is current as of Aug. 19):

Bank of Montreal (NYSE:BMO): Bank of Montreal has announced that shareholders will receive their monthly cash distributions on Sept. 9. The company was trading at a P/E ratio of 10.9, and a forward P/E ratio of 9.7, as of the Aug. 19 close. Analysts estimate a 5.5% annual EPS growth for the next five years. Profit margin in 2010 was 22.4%, while shareholders enjoyed a 5.07% dividend.

The company has a 5.13 O-Metrix score, and it returned 3.1% in the last 12 months. Target price is $66.86, which implies a 15.5% upside movement potential. ROE is 15.22%, whereas earnings increased by 52.46% this year. Debts and assets are unstable. Ten out of 17 analysts recommend holding. P/S is 2.6, slightly better than the industry average of 2.7. The stock is currently trading 11.39% lower than its 52-week high. Waiting for a pullback should do all right. Here are the recent dividend payments of Bank of Montreal per share:

Jul 29, 2011


Apr 28, 2011


Jan 28, 2011


Oct 28, 2010


BCE Inc. (NYSE:BCE): BCE has increased its earnings by 11.4% and its consolidated revenue by 11.6% from the year-ago quarter. Verdun (Quebec), Canada-based BCE, as of Aug. 19, shows a trailing P/E ratio of 14.0, and a forward P/E ratio of 11.8. Estimated annualized EPS growth for the next five years is 7.0%, which is reasonable given the 4.32% EPS growth of last five years. It offered a 5.44% dividend, while the profit margin was 10.5% last year.

O-Metrix score of the company is 4.82, whereas it is trading only 4.00% off its 52-week high. Debt-to-equity ratio is 1.2, far better than the industry average of 3.3. Target price implies a 0.5% upside potential, and it returned 21.3% in the last 12 months. Debt-to-assets ratio is slightly decreasing since 2006; yields seem alright. The company has a joyful momentum since its dip in December 2008; I believe it will continue for awhile. However, you should wait for a pullback. Recent dividend history is as follows:

Jun 13, 2011


Mar 11, 2011


Dec 13, 2010


Sep 13, 2010


Canadian Imperial Bank of Commerce (NYSE:CM): Canadian Imperial operated about 4,000 automated bank machines and 1,100 branches in Canada, as of June 2011. It was trading at a P/E ratio of 10.4, and a forward P/E ratio of 8.6, as of the Friday close. Analysts expect the company to have an annual EPS growth of 5.5% in the next five years, which is truly conservative given the outstanding EPS growth of 169.36% of past five years. With a profit margin of 20.3%, and a dividend yield of 5.04%, Canadian Imperial Bank is an attractive stock for dividend lovers.

The company returned 8.3% in a year, while it is currently trading 20.09% lower than its 52-week high. Earnings increased by 119.47% this year, and it has an O-Metrix score of 5.54. Institutions own 71.67% of the stock. Target price is $88.60, indicating an about 26.3% increase potential. Debts are decreasing for the last three years. P/S is 2.3, better than the industry average of 2.7; moreover, the company has a four-star rating from Morningstar. Canadian Imperial can enter portfolios as a long-term investment. Recent dividend payments are as follows:

Jun 24, 2011


Mar 24, 2011


Dec 27, 2010


Sep 24, 2010


Sun Life Financial (NYSE:SLF): Sun Life will yield $0.36 per share on Aug. 24. The Toronto-based Sun Life, as of Aug. 19, has a P/E ratio of 7.1 and a forward P/E ratio of 8.4. Five-year annualized growth forecast is 9.1%. Profit margin in 2010 was 9.2%, while it offered a 5.71% dividend yield.

Earnings increased by 437.82% this quarter, and institutions own 54.65% of the stock. Target price indicates a 23.8% upside movement potential, while it has a remarkable O-Metrix score of 9.55. The company returned 6.9% in a year. Debts are going down for the last three years, while assets are increasing. Operating margin is 12.1%, above the industry average of 8.9. P/B and P/S are 1.0 and 0.7, respectively. I would not ignore this stock. Following are the recent dividend payments of Sun Life per share.

Aug. 22, 2011


May 23, 2011


Feb 28, 2011


Nov 22, 2010


Enerplus Corp. (ERF): Along with western Canada, Enerplus operates in North Dakota, Montana, Maryland, and Delaware in the U.S. The oil and gas producer shows a trailing P/E ratio of 9.1, as of the Aug. 19 close. With the highest dividend yield of this list (8.02%), and a net profit margin of 42.6%, Enerplus is an outstanding stock for dividend lovers. Note that the industry average of profit margin is 10.3%.

The company had a gorgeous EPS growth of 245.82% this quarter. Institutions hold 28.31% of Enerplus, and it is currently trading 15.19% lower than its 52-week high. Target price is $32.51, which indicates an about 19.6% increase potential. The company returned approximately 20.0% in the last 12 months. Debt-to-assets ratio is around 15% for the last five quarters. Debt-to-equity ratio is 0.1, far better than the industry average of 1.0. Gross margin and operating margin are 58.2% and 44.5%, respectively. Moreover, it has a 4-star rating from Morningstar. What is creditable for this company is that it yielded seven dividends just from the beginning of 2011. Recent dividend history is:

Aug. 8, 2011


Jul 6, 2011


Jun 8, 2011


May 6, 2011


Read more information on O-Metrix Grading System here.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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