There are many stocks in the Canadian stock markets that have high dividend yields and/or dividend growth rates. The goal of this post is to identify those Canadian stocks that consistently raised dividends year over year and trade as interlisted stocks in the US. In order to accomplish this goal, we shall use the S&P TSX Canadian Dividend Aristocrats Index as the base.
Note: Kindly note that the title is spelled incorrectly. Canadian stocks trading in the US are not ADRs. They are called as “Interlisted” stocks.
S&P TSX Canadian Dividend Aristocrats Index:
This index has a total of 37 companies. It includes companies which have followed a managed-dividend policy of increasing dividends every year for at least 7 years.
S&P created this index because dividends have played a major role in the returns of the S&P/TSE Composite Index. Since 1956 dividends alone have accounted for 30% of the total returns of the TSE Composite Index. So dividends account for almost 1/3rd of returns. The past 5 year return of the Dividend Aristocrats is 18.31% (using Canadian dollars).
Canadian Dividend Aristocrats Index – Components as interlisted stocks in the US:
Out of the 37 stocks in the index, 11 of them trade as interlisted stocks in the NYSE. Hence an investor looking to add some Canadian dividend stocks can easily add them to their diversified portfolio. The following is a listing of those 11 stocks:
1. Bank of Montreal – BMO
Dividend Yield – 6.13%
2. Bank of Nova Scotia Halifax – BNS
Dividend Yield – 4.11%
3. Brookfield Properties Corp – BPO
Dividend Yield – 2.80%
4. Canadian National Railways – CNI
Dividend Yield – 1.75%
5.Canadian Natural Resources Limited – CNQ
Dividend Yield – 0.44%
6.Enbrdige Inc – ENB
Dividend Yield – 2.98%
7.Imperial Oil Ltd – IMO
Dividend Yield – 0.73%
8.Manulife Financial Corp – MFC
Dividend Yield – 2.83%
9.Royal Bank of Canada – RY
Dividend Yield – 4.41%
10.Sun Life Financial Serv Canada – SLF
Dividend Yield – 3.63%
11.Toronto-Dominion Bank – TD
Dividend Yield – 3.97%
Note: The above yield info. is as of Aug 29, 2008.
David,
That’s a nice list of quality dividend aristocrats out there. Do you think however that these canadian dividend stocks have adequate payout ratios to justify the above average dividend yields?
Do you own any of them?
Best Regards,
Dividend Growth Investor
Hi Dividend Growth Investor
Thanks for the comment. I can say that the big five banks and CNI have adequate payout ratios since I watch them closely.Yes the high payout ratios justify such above average dividend yields.I have seen that Canadian banks like Scotia bank, BMO always maintain their yields within their target payout ratio for the year. Most of them seem to be in the 45-50% range. You can say that Canadian banks are cash cows that make profit year over year. Recently though BMO and CM have not been doing well but yields have not been reduced.
I own all the five banks and Canadian National.
Is there a maximum amount of stocks a person can buy on a share listed on the TSX? I was told only $500k per year, per company, is that true?
Thanks
Hi Miller
I am not aware of any rule such as the one you mention.I don’t think its true. In fact it can’t be true as well since an exchange cannot have such rules in a free market system and besides $500K is a small amount. There are lots of rich folks who invest millions in a single company. If there is a rule like this for individuals, then you can always skip it by registering a company like a hedge fund and invest thru that. 🙂
-David