Over the years, I have become fond of the dividend aristocrats. The US Dividend Aristocrats have the requirements of 25 years of consecutive dividend increases while the Canadian Dividend Aristocrats have 5 years with some other rules as outlined below. 5 years is not much compared with 25 years but it's a start.
When investing, it can be overwhelming to pick your first stock. Where do you start when there are thousands of stocks? The dividend aristocrats list give you a start by saying these companies have consistency over the others that pay dividends. If you wish to go further, you can look at stocks with 10 years of dividend growth or any number that matters to you. I have settled on 10 years and you can get the list by subscribing to the mailing list.
My hypothesis on the 5-year requirements is that you need a certain number of stocks to generate an index, which is what the dividend aristocrat list becomes. It is managed by the Standard & Poor's and ETFs are setup to follow it. In order to have an index, you need a certain number of stocks as ETFs will start buying shares of the companies listed. If you raise the requirements to 10 years, the amount of stocks in the list is cut by over 65% and the amount of exposure to each stock in the index becomes greater. Not only that, the sector representation becomes ineffective. In fact, back in 2009, the requirements changed to allow one year of no increase to retain the banks in the list.
Canadian Dividend Aristocrats Requirements
- The company's security is a common stock or income trust listed on the Toronto Stock Exchange and a constituent of the S&P Canada BMI.
- The security has increased ordinary cash dividends every year for five years, but can maintain the same dividend for a maximum of two consecutive years within that 5-year period.
- The float-adjusted market capitalization of the security, at the time of the review, must be at least C$ 300 million.
- For index additions, the company must have increased dividend in the first year of the prior five years of review for dividend growth. This rule does not apply for current index constituents.
For more details on the index, see the S&P Dow Jones Indices by McGraw Hill Financial.
Canadian Dividend Aristocrats Performance
IF you are not yet ready to buy individual stocks, you can buy into the index ETF tracking the Canadian dividend aristocrats. CDZ is the ETF ticker representing the iShares S&P/TSX Canadian Dividend Aristocrats Index ETF (a.k.a Claymore S&P/TSX Canadian Dividend ETF). It's a good pick for a RESP investment as well since it's hard to grow that account really fast.
If you like ETFs, you should know that Questrade offers free ETF transactions. That's perfect for investing a small amount at a time when you get started.
Canadian Dividend Aristocrats List
Below is the list for 2016 sorted by market capitalization - data taken from the January 9, 2016 update. While I try to keep it updated, the Canadian dividend aristocrats list is subject to change during the year and goes through monthly updates.
By the sector, the list looks as follows.
|Ticker||Company||Sector||Market Cap||Annual Yield||Trend|
|TD||TD Bank||Financial Services||94.76||4.00%||Trend|
|BNS||Scotia Bank||Financial Services||65.64||5.13%||Trend|
|CNR||Canadian National Railway||Industrials||57.48||1.72%||Trend|
|TRI||Thomson Reuters||Consumer Cyclical||38.63||3.78%||Trend|
|CNQ||Canadian Natural Resources||Energy||29.88||3.37%||Trend|
|ATD.B||Alimentation Couche Tard||Consumer Defensive||25.01||0.45%|
|CP||Canadian Pacific Railway||Industrials||24.39||0.88%||Trend|
|MG||Magna International Inc||Consumer Cyclical||20.24||2.49%||Trend|
|NA||National Bank||Financial Services||13.07||5.57%||Trend|
|IFC||Intact Financial||Financial Services||11.44||2.44%||Trend|
|SJR.B||Shaw Communications||Communication Services||11.24||5.08%|
|FNV||Franco-Nevada Corp.||Basic Materials||10.85||1.72%||Trend|
|QSR||Restaurants Brands International||Consumer Cyclical||9.12||1.53%|
|CTC.A||Canadian Tire Corporation, Limited||Consumer Cyclical||8.55||2.09%|
|IGM||IGM Financial||Financial Services||8.31||6.65%||Trend|
|CIX||CI Financial||Financial Services||8.18||4.49%||Trend|
|CCL.B||CCL Industries Inc.||Consumer Cyclical||7.80||0.67%|
|IPL||Inter Pipeline Ltd.||Energy||7.12||7.37%||Trend|
|EMP.A||Empire Co. Ltd A Nvtg||Consumer Defensive||6.84||1.59%|
|SNC||SNC - LAVALIN GROUP INC.||Industrials||5.84||2.57%||Trend|
|HR.UN||H&R REIT||Real Estate||5.42||6.96%|
|MX||Methanex Corp.||Basic Materials||3.54||3.96%||Trend|
|SJ||Stella-Jones Inc.||Basic Materials||3.40||0.65%||Trend|
|PJC.A||Jean Coutu Group Inc.||Consumer Defensive||3.32||2.49%|
|RBA||Ritchie Bros Auctioneers Inc.||Industrials||3.32||2.07%||Trend|
|FTT||Finning Intl Inc.||Industrials||3.01||4.10%||Trend|
|REF.UN||Canadian REITs||Real Estate||2.97||4.42%|
|CGX||Cineplex Galaxy Fund||Consumer Cyclical||2.93||3.22%||Trend|
|MIC||Genworth MI Canada Inc.||Financial Services||2.77||6.82%||Trend|
|ENF||Enbridge Income Fund||Energy||2.64||6.25%||Trend|
|WJA||WestJet Airlines Ltd.||Industrials||2.39||2.90%||Trend|
|CCA||Cogeco Cable Inc.||Communication Services||2.05||2.56%||Trend|
|ESL||Enghouse Systems Limited||Technology||1.82||0.70%||Trend|
|CG||Centerra Gold Inc.||Basic Materials||1.78||2.13%||Trend|
|HCG||Home Capital Group Inc.||Financial Services||1.75||3.53%||Trend|
|CWB||Canadian Western Bank||Financial Services||1.74||4.27%||Trend|
|PSI||Pason Systems Inc.||Energy||1.51||3.77%||Trend|
|LB||Laurentian Bank||Financial Services||1.37||4.94%||Trend|
|TCL.A||Transcontinental Inc.||Consumer Cyclical||1.29||4.11%|
|MTL||Mullen Group Ltd.||Energy||1.25||8.83%||Trend|
|BYD.UN||Boyd Group Income Fund||Consumer Cyclical||1.11||0.81%|
|ESI||Ensign Energy Services||Energy||1.01||7.27%||Trend|
|CJR.B||Corus Entertainment||Consumer Cyclical||0.90||10.54%|
|AD||Alaris Royalty Corp.||Financial Services||0.84||6.96%||Trend|
|EIF||Exchange Income Fund||Industrials||0.71||7.49%||Trend|
|CMG||Computer Modelling Group Ltd.||Technology||0.70||4.52%||Trend|
|GS||Gluskin Sheff + Associates||Financial Services||0.61||5.19%||Trend|
|NVU.UN||Northview Apartment REIT||Real Estate||0.53||9.63%|
|BDT||Bird Construction Inc.||Industrials||0.52||6.23%||Trend|
|DII.B||Dorel Industries B||Consumer Cyclical||0.34||6.43%|
|WIN||Wi LAN Inc.||Technology||0.18||3.33%||Trend|
Disclaimer: I do own some of the companies listed in the list. See my Dividend Income for my list of holdings.
Disclosure: View my holdings here.
Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.