Best dividend-paying Canadian stocks

Dividends pay you regardless of where the market goes. They let you live off income, not capital. And they let you beat inflation. So seek stocks with growing dividends from The Investment Reporter Key stock buys.

In January and February, stock markets fell worldwide. We urged you to buy at that time and if you took our advice, you’re likely sitting on some nice share price gains. Just keep in mind that such gains come and go as the ‘bi-polar’ stock market careens from over-pessimism to over-optimism.

Dividends from ‘dividend aristocrats’ are much more reliable than share price gains: at least, provided that the dividends are supported by increasing earnings. Then you get a growing stream of dividend income regardless of where the stock market goes. These dividends can enable you to sustain your lifestyle without dipping into your capital.

Even better, dividend aristocrats typically raise their dividends faster than inflation. This is particularly important for retirees who come from families with longevity. After all, central banks target inflation of two per cent a year. Also, as baby-boomers retire and the labor market shrinks, the remaining employees will have bargaining power. They can demand, and receive, higher wages. This will contribute to inflation in the future.

At this time of the year, many ‘dividend aristocrats’ raise their dividends. Since we published our March 4 Investment Planning Guide, 11 of our Key stocks have raised their dividends. One Key stock reduced its dividend.

Canadian Imperial Bank of Commerce now pays dividends of $4.72 a share. This was up by 2.6 per cent from $4.60 a share. Of the big five banks, CIBC yields the most and is one of our best buys for income.

CCL Industries now pays dividends of two dollars a share. That’s up by a whopping one-third from $1.50 a share. It’s a best buy for growth.

Gildan Activewear now pays dividends of 31.2 U.S. cents a share. That’s up by an attractive fifth from 26 U.S. cents a share. It remains a buy.

Goeasy Ltd. now pays 50 cents a share. That’s up by a quarter, from 40 cents a share. It’s one of our best buys for growth.

Magna International now pays dividends of one U.S. dollar a share. That’s up by 13.6 per cent from 88 U.S. cents a share. It’s one of our best buys for growth.

Metro Inc. now pays dividends of 56 cents a share. That’s up by an impressive 19.1 per cent from 47 cents a share. It remains a buy.

Royal Bank of Canada now pays dividends of $3.24 a share. That’s up by 2.5 per cent from $3.16 a share. The banks raise their dividends more than once a year. So their dividend growth is better than it looks when they raise their dividends by only a little. It remains a buy.

SNC-Lavalin Group now pays dividends of $1.04 a share. That’s up by four per cent from a dollar a share. We expect the company to become a dividend aristocrat again. It remains a buy.

Stantec Inc. now pays dividends of 45 cents a share. That’s up by 4.7 per cent from 43 cents a share. It remains a buy.

Stella-Jones Inc. now pays dividends of 40 cents a share. That’s up by an impressive quarter, from 32 cents a share. It’s one of our best stocks to buy for growth.

Transcontinental Inc. now pays 74 cents a share. That’s up by 8.8 per cent from 68 cents a share. It’s a ‘best buy’ stock for growth.

One of the least stable of the five economic sectors is Resources. As commodity prices have plunged, many producers had to reduce or eliminate their dividends to conserve cash. So while they may pay high dividends in good times, they’re liable to cut them in downturns.

Encana Corp. has cut its dividend by nearly 79 per cent, to six cents a share. With the company continuing to lose money, it may need to cut its dividend again at some point. Encana Corp. remains a hold.

 

The Investment Reporter, MPL Communications Inc.
133 Richmond St. W., Toronto, On, M5H 3M8, 1-800-804-8846