By request, I have updated/re-written this article that was originally published in 2013. In this article, I have included all Canadian dividend stocks that have a 15+ year track record of increasing their dividends, which brings it up to 22 in total (18 in 2017). This list will give you a good idea on some of the top dividend growth stocks in Canada.
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 a dependable stream of increasing tax-efficient 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 but it also has to provide diversification within the portfolio. Unfortunately, the TSX has a limited number of stocks that have a long dividend growth history. To see a list of top 10 dividend positions, keep reading below.
Doing some background research for 2019, I dug up 22 Canadian dividend growth stocks with the longest histories of annual dividend increases. Why 22? I basically cut the list off of companies that have paid increasing dividends for at least 15 years. Usually, there is little change in the list because companies who have a mandate to pay increasing dividends tend to follow that pattern.
Sometimes, dividend companies get removed from the list because of 3 possible reasons – a pause in dividend increases, a dividend cut/reduction, or if the company gets acquired. This time around, there have been two companies removed from the list, SNC Lavalin (SNC.TO) and Canadian REIT (REF.TO). SNC is going through a tough time with fraud allegations and earnings issues and has decided to reduce its dividend to shore up the balance sheet. Canadian REIT, on the other hand, was acquired by Choice Properties (CHP.UN) thus removed from the list.
On the other hand, there have been five new additions to the list since my last update in 2017. These additions include:
- Plaza Retail REIT
- Ritchie Bros Auctioneers
- Suncor Energy
- Cogeco Communications Inc.
- Telus Corporation
I have created a list below, but more due diligence is required before you buy as the only criteria I used is the number of years of increasing dividends. This list was created by combining sources from company websites, DividendInvestor.com, and Dividend Growth Investing & Retirement.
Top Dividend Growth Stocks on the TSX
As of March 2019
|Company||Symbol||Years of Dividend Growth||10 year avg Dividend Growth Rate||Payout Ratio||Current Yield|
|Toromount Industries Ltd||TIH||29||11.3%||35.18%||1.56%|
|Canadian Western Bank||CWB||27||9.0%||37.24%||3.40%|
|Empire Company Ltd||EMP.A||24||6.6%||36.47%||1.44%|
|Canadian National Railway||CNR||23||14.7%||36.62%||1.89%|
|Canadian Natural Resources||CNQ||18||21%||43.75%||3.52%|
|Plaza Retail REIT||PLZ.UN||16||4.8%||240.3%||6.76%|
|Ritchie Bros Auctioneers||RBA||16||7.5%||52.73%||1.96%|
|Cogeco Communications Inc.||CCA||15||16.6%||29.81%||2.48%|
As a disclaimer, I have positions in most of the stocks listed above.
As promised, my personal top dividend holdings include (as referenced from my Dec 2018 financial freedom update):
- Fortis (FTS) – 45 years of increases;
- Bell Canada (BCE) – 10 years of increases;
- Emera (EMA) – 12 years of increases ;
- Enbridge (ENB) – 23 years of increases;
- TransCanada Corp (TRP) – 18 years of increases;
- Royal Bank (RY) – 8 years of increases;
- Canadian Utilities (CU) – 47 years of increases;
- Telus (T) – 15 years of increases; and,
- Bank of Nova Scotia (BNS) – 8 years of increases.
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 companies with the longest history of dividend growth. For example, from the table above, there are some stocks with red flags such as companies with high payout ratios. The list of stocks in this article should be treated as a starting point for your research.
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 (ie. utilities, financial services, consumer cyclical/defensive, energy, industrials, basic materials, real estate, communication services, and technology).
Notice how there are no big 5 banks on the list (they are at the 8-year mark of dividend increases)? Goes to show that in order to have proper diversification, you need more than just the history of dividend increases. Here is a more detailed article on how to build a diversified dividend growth portfolio.
Are you a dividend growth investor? Which are your favorite Canadian dividend stocks?If you would like to read more articles like this, you can sign up for my free weekly money tips newsletter below (we will never spam you).