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Top 16 Canadian Dividend Growth Stocks for 2015

Dividend investing is a popular strategy these days, especially with low interest rates and not a lot of other options to obtain income from your hard earned savings. If you’ve been following Million Dollar Journey for a while, you’ll know that I’m a fan of dividend growth investing because it provides dependable stream of increasing income. For those of you interested in this strategy as well, you can see an example through my leveraged dividend portfolio.  In fact, growing a passive dividend income stream is my strategy for achieving financial freedom.

A question that I often get is “what are my favorite dividend stocks?”.  As a dividend growth investor, I like to invest in dividend paying companies that have a history of increasing their dividends. Unfortunately, the TSX has a limited number of stocks that have a long dividend growth history.

Doing some background research, I dug up 16 Canadian dividend growth stocks with the longest histories of annual dividend increases. Why 16?  I basically cut the list off of companies that have paid increasing dividends for at least 14 years.

I have created a list below, but more due diligence is required before you buy as the only criteria I used is number of years of increasing dividends.  This list was created by combining sources from company websites, DividendInvestor.com, and Dividend Growth Investing & Retirement.

As of November 9, 2015

Company Symbol Years of Dividend Growth 5 year avg Dividend Growth Rate Payout Ratio Current Yield
Canadian Utilities CU 43  9.72%  71%  3.4%
Fortis Inc. FTS 41 4.99% 79% 3.6%
Canadian Western Bank CWB 23  14.43% 28%  3.5%
Atco Ltd ACO.X 21  11.46%  42%  2.6%
Thomson Reuters TRI 21  3.04% 55%  2.5%(USD)
Empire Company Ltd EMP.A 21  8.17%  34% 1.5%
Ensign Energy Services ESI 20  6.56%  1,200% 5.5%
Imperial Oil IMO 20  4.79%  26%  1.3%
Metro Inc MRU 20  14%  30%  1.3%
Canadian National Railway CNR 19  17.49% 36%  1.6%
Enbridge Inc ENB 19  16.4% 1,000%  3.6%
Home Capital Group HCG 16  10%  24%  2.6%
Saputo Inc SAP 15  17%  43% 1.7%
Canadian Natural Resources CNQ 14  29.4%  80%  2.7%
SNC Lavalin SNC 14  8.6%  14% 2.4%
Transcanada Corp TRP 14  5.25%  90%  4.8%

As a disclaimer, I have positions in most of the stocks listed above.  My holdings include CU,FTS, CWB, TRI, ESI, IMO, ENB, CNQ, SNC, and TRP.

For me, I like dividend stocks with a yield above 2.5%, a payout ratio less than 80%, strong financials, and, of course, an established track record of dividend increases.  Once I create a dividend stock watchlist, I wait for them to drop in price to reach a particular dividend yield (when to buy dividend stocks).

As previously mentioned, more due diligence is required before blindly buying company’s with the longest history of dividend growth.  For example, from the table above, there are some stocks with red flags such as ESI with a very high payout ratio and yield which appears unsustainable (especially at current oil prices).

If you are looking to build a portfolio of dividend growth stocks, some other considerations include market capitalization (ie. the size of the company) and diversification by sector (utilities, financial services, consumer cyclical/defensive, energy, industrials, basic materials, real estate, communication services, and technology).  In a future article, I will put together my thoughts on an ideal diversified dividend growth portfolio.

Are you a dividend growth investor?  Which are your favorite Canadian dividend stocks?

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FrugalTrader About the author: FrugalTrader is the founder and editor of Million Dollar Journey (est. 2006). Through various financial strategies outlined on this site, he grew his net worth from $200,000 in 2006 to $1,000,000 by 2014. You can read more about him here.

{ 29 comments… add one }
  • Echo April 8, 2013, 10:33 am

    Interesting list. I’ve got some cash in my trading account but I’m having a tough time finding a dividend growth stock to buy. This gives me a few ideas investigate further.

    I recently bought SNC-Lavalin and Empire, and I’ve held Fortis for a few years.

    AGF scares me a bit with its nearly double-digit yield.

  • Canadian Dividend Blogger April 8, 2013, 11:22 am

    AGF hasn’t raised its dividend since July 2011, and even then they probably shouldn’t have as their earnings were dropping. There are a couple of good names here too though, like Empire, Ensign and Canadian REIT.

  • Jordan April 8, 2013, 12:03 pm

    Hi Frugal — what earnings numbers do you use to calculate payout ratio? 12-mos. trailing EPS or some kind of multi-year average?

    The main reason I ask is that my spreadsheet (link below) has TCL posting losses, and a negative payout ratio currently.


  • John April 8, 2013, 6:13 pm

    With regards to your leveraged portfolio and performing the Smith manoeuvre, it is my understanding that one must have an expectation of income (in your case, dividends) in order to make the interest on their investment loan tax deductible.

    Does this then mean that any sale of securities from your leveraged portfolio are 100% taxable as income rather than 50% taxable as capital gains? Since you’ve purposefully earmarked the investment loan as an income generator to gain a tax credit on the interest paid.

    • FrugalTrader FrugalTrader April 8, 2013, 7:50 pm

      @John, yes an “expectation” of income, but not “mandatory” as any equity can “potentially” pay a dividend. Sales of securities under an investment loan still qualify for capital gains tax (ie. not income).

  • My Own Advisor April 8, 2013, 10:18 pm

    I hold a few position above.

    I like dividend payers above 4% and payouts under 80%. Many banks fall into that list.

    Unfortunately, few others in Canada do.

    I see very few deals in the CDN market right now.

    I would definitely avoid AGF and TCL. Regarding the latter, I don’t see any growth in TCL and there hasn’t been in 10 years.

    My favourite stocks? All 5 big banks, all telcos, all life insurance and many energy and utilities.

    I think you have more holdings than I do :)

  • John April 8, 2013, 11:21 pm

    @FrugalTrader, I guess that’s where I am confused.

    Can one really declare the borrowed money is for the purpose of income generation, receive tax deductions on the interest and yet still call the purchased securities capital property?

    Purpose: http://www.cra-arc.gc.ca/E/pub/tp/it533/it533-e.html#P124_11018

    Disposition of Securities: http://www.cra-arc.gc.ca/E/pub/tp/it479r/it479r-e.html

    The disposition of securities section doesn’t really spell it out very clearly in my opinion. Your thoughts?

  • Goldberg April 9, 2013, 10:05 am

    John. You are mixing apples and oranges. Owning stocks is owning a share of a business expected to earn income filtered to you directly (div) or indirectly (value appreciation) which meets purpose.

    And disposal of securities is capital gains, unless your business is repeatedly buying/selling, than that’s income. That is not the case for FT. He is a sporadic and passive investor.

    What FT is doing, tens of thousands are as well. His case is rather clear cut and uncontroversial… which is not always so.

  • John April 9, 2013, 1:43 pm

    @Goldberg, thanks for your response.

    You’re right. The Smith manoeuvre is a very popular strategy and from what I’ve read the CRA hasn’t gone after anybody implementing it as such.

    As someone trying to educate himself on the exact mechanics of the Smith manoeuvre and how it fits into our tax system I still find it strange that one can declare the purpose of an investment loan to be income generating but can call the purchased securities capital property rather than income property.

    But hey, if that’s how it works…cool.

  • Roni Mitra April 9, 2013, 2:33 pm

    Retail investors should always judge the smart money’s sentiment before making an investment decision.I would take these things into account when making decisions but a good article.

  • FrugalTrader FrugalTrader April 9, 2013, 7:26 pm

    @Jordan and CanadianDividendblogger, you guys are right, something doesn’t look right there. I’ll need to double check my numbers.

  • Goldberg April 10, 2013, 9:33 am

    @ John. Its the same thing with every other investments, never mind Smith Manoeuvre. For example, in a regular account, if you buy income trust that channel all its earnings to shareholders through dividends, you are buying a capital asset for the purpose of income. It won’t grow much since it doesn’t invest in new projects, it just channel its earnings to dividends. But when you sell your income trust, its a capital gains.

    Smith Manoeuvre or not, buying shares is buying a business for the purpose of income. And when selling said shares, its a capital gains for sporadic, passive investors like FT.

  • SST April 10, 2013, 9:03 pm

    @Roni #10: “Retail investors should always judge the smart money’s sentiment…”

    Only problem is that ‘smart money’ gets on board way before ‘retail investors’ ever take notice, and once they do, it’s the smart money that sells to them.

    Phases of a Bull Market:

    And then there is the problem with ego.
    Most people would like to think that they are the “smart money”. ;)

  • CanadianTaxSystemIsAJoke April 10, 2013, 9:58 pm

    @John Our tax system is a mess. The Smith manoeuvre is obviously an income tax avoidance mechanism (loophole) and the fact that CRA is not currently doing anything about it is mind-blowing. On the other hand there are a lot of other tax loopholes in our tax system and one can’t predict what CRA will do or not do.

    • FrugalTrader FrugalTrader April 11, 2013, 9:49 am

      I don’t see it as a loophole. People borrow to invest all the time (leverage), either through equities, their business, or rental properties. How do you see the SM as a tax loophole?

  • The Dividend Guy April 11, 2013, 9:56 am

    Hey FT!

    how’s your pick doing since the beginning of the year? I think it’s an interesting list but some stocks don’t pay enough dividend to be considered in my portfolio.

    I was happy to see that my list of 20 US stocks and 10 Cdn stocks both beat dividend ETFs and global index this year after 3 months.

    I should have bought all those stocks ;-) lol!

  • Goldberg April 11, 2013, 11:05 am

    It’s not a tax loophole at all since there is a risk that those equities will come falling down or the dividend will be eliminated, or both. You get the deductibility for your investment loan since you are taking a risk. How large or small of a risk is not the point. It’s an investment. There’s a risk of loss. And its a loan.

    In the US, mortgage interest loans are deductible, no need for SMs. SM in Canada allows for a middle ground between the US way, and not at all. Plus it stimulates investment that otherwise wouldn’t be (since the equity would lay dormant rather than being borrowed against and invested).

    I don’t see a tax loophole here.

  • Michael June 15, 2013, 11:05 pm

    Any thoughts on Royal Gold? It’s not a company I usually see in dividend lists. I’d never heard of it prior to reading your article. It looks like I might have to add it to the Canadian Dividend All-Star List as it has more than 5 years of dividend increases.

    I already own Fortis, SNC Lavalin, from your list and if CNQ drops to $25 (2% yield point) I’d be interested in buying.

  • SST June 16, 2013, 2:12 am

    Don’t waste your time with anything gold.
    It is high-risk and doesn’t produce anything.

    Well…that is if you don’t count 11 years of dividend growth. :)

  • Victor July 31, 2013, 4:16 am

    Great list as it has a mix of stocks from across a diversified spectrum of industries; however I invest in U.S. stocks only :) Look forward to your post on top U.S dividend growth stocks.

  • Bernie November 9, 2015, 1:26 pm

    The title of your article should have read “The 16 Canadian Dividend Growth Stocks with the longest records of dividend increases for 2015”.

    Everyone’s opinion of their top 16 will vary. I wouldn’t base my favourites on length of dividend streak alone. I would choose any or all of the Canadian “big five” banks over your choice of top 16. Their streaks may be short due to freezes
    brought on by the great recession but how can anyone discount TD, BNS or CM who never once cut their dividend or RY and BMO who last cut over 70 years ago? Furthermore, some of the “top 16” you list have had only nominal increases on occasion and/or went 6 to7 quarters without an increase.

  • Peter November 13, 2015, 2:29 am

    Did you mention the dividend astrocrats list for Canada? For the u.s.?

    Provides a good starting list for companies that always increase dividends…..

  • Peter November 15, 2015, 12:52 am

    Good article but I don’t think it mentioned anything about the DRIP of stocks

  • SST November 15, 2015, 11:25 am

    Peter, try this Canadian PF website: http://www.dividendgrowthinvestingandretirement.com/canadian-dividend-all-star-list/

    The spreadsheet has a ton of metrics/data on dividend stocks, including DRIP.

  • Chris Daniels November 18, 2015, 11:45 pm

    Nice article. What about high dividend index etf’s? Ever considered that?

  • Peter November 19, 2015, 2:44 am

    I disagree with Metro and Saputo in your list. The yield is too low. I prefer the sweet spot which is 3 to 4.50% yield. I also like to purchase just enough shares to have the DRIP buy 1 share and then that is dripped next dividend payment. Of course, you buy a few more shares just in case it goes up. When the yield is too low, you end up paying way too much to get a DRIP share. I prefer to get shares and this way, I am truly in it for the long run. A lot of people say they are in it for the long run. This 1 DRIP share gives me something to look forward to. The next dividend payment will be even bigger.

  • Yves Quevillon November 29, 2015, 11:04 am

    What do you think of Brookfield Asset Management (TSX: BAM.A)? I am considering buying. Thanks!

  • Dividend Beginner May 8, 2016, 8:45 pm

    Great post! Love the Canadian Dividend All-Stars and try to keep my portfolio picks within that realm. Tons of great names here.

  • Patrick June 13, 2016, 6:16 pm

    In response to Peter’s comment about Saputo’s yeild being too low- in my dividend portfolio, (running for 10 yrs now) Saputo is my 2nd best performer, only bested by Starbucks. I own several of the big Canadian banks, and while their yield is higher, their value in my portfolio is average. Clearly, there is more to dividend investing than yield alone.

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