Just the other day we wrote about a fundamental dividend investing strategy that included a few Canadian and US dividend paying stock picks. Rob Carrick, from Globeinvestor.com, has also come up with an article indicating his picks for a dividend play. His strategy is similar to ours but with more depth! Not only does he screen for consistent dividend growth, he analyzes other factors such as payout ratios and earnings growth.
Here is his criteria in detail:
The all-star requirements
1. A yield above 1.3 per cent, which is an arbitrary threshold that was applied so that some high-quality but lower-yielding stocks would be included.
2. A strong record of growth in the dollar amount of dividends paid out over the past five years — the technical requirement was that dividends must have risen by an average of at least 15 per cent over any four-quarter period.
3. More than one dividend increase in the past five years, so that high dividend growth isn’t a result of a one-time event.
4. A payout ratio – the portion of earnings paid out as dividends — that is close to or below the average for the applicable sector so as to provide a cushion if earnings decline.
5. Solid earnings growth, which here means average annual increases of at least 10 per cent over the past five years.
Based on his criteria, here are some of his Dividend All-Stars:
There are many dividend stocks listed on the Toronto Stock Exchange, but only a select group can be considered all-stars. Here’s a list of these stocks, as compiled using a tough five-step screening process.
- Bank Of Montreal
- IGM Financial
- Nat’l Bank Of Cda
- Royal Bank Of Cda
- CIBC
- Great-West Lifeco
- Bank of Nova Scotia
- Reitmans Cda
- Power Financial
- Husky Energy
- Sun Life Financial
- Teck Cominco ‘B’
- Power Corp Of Cda
- Manulife Financial
- CHC Helicopter
- Toromont Ind
- Industrial Alliance
- Loblaw Companies
- Ensign Energy Svs
- Shaw Comm ‘B’
- Empire ‘A’
- Home Capital Grp
- Canadian West Bk
As you can see, most of our picks are on his list except we focus primarily on steady dividend paying stocks who are in the higher yield range (greater than 2.5%). If you are looking for the long term investment, you will be hardpressed to find a better investment than a strong dividend paying stock.
Be Wise.. and Be Stingy…
