Category Archives: Growth Investing

5 Canadian Dividend Stocks with Incredible Dividend Growth

The Canadian Dividend Aristocrat list is a good place to explore prospective dividend stocks for buying. There are dividend stocks that grow their dividends at an incredible pace. Ideally, we aim to focus on dividend stocks with long-term growth trends.

Typically, the longer the dividend growth streak of a dividend stock, the better. But you’ve got to investigate its business and determine if more above-average growth is coming. And make sure you pay a reasonable multiple for the stock.

grow dividends

You can observe the one- and three-year dividend growth rates (DGR) to get an idea of recent dividend increases. Also, look at the five- and 10-year DGR. The 10-year rate will likely include a recession, which provides a glimpse of how resilient the business might be during tough economic times. Dig into the year(s) of recession for the real resilience of the business.

Here are some of the top Canadian Dividend Aristocrats with incredible five-year DGR. Stocks with high dividend growth tend to have small yields. (Typically, you would find blue-chip Canadian dividend-growth stocks growing dividends in the 5-7%. It would be amazing to find one growing its dividend at 10%.)

Dividend stockDG streak5-year DGRRecent Yield
goeasy (TSX:GSY)635.1%1.6%
Agnico Eagle Mines (TSX:AEM)(NYSE:AEM)524.3%2.3%
Savaria (TSX:SIS)822.4%2.4%
Canadian Pacific Railway (TSX:CP)(NYSE:CP)520.5%0.8%
Enghouse Systems (TSX:ENGH)1419.1%1.1%

Source: Data for DG streak and 5-year DGR columns are from the Canadian Dividend All-Star list. Data for Recent Yield column is from Yahoo Finance.

We believe by going through many examples, investors can better identify the type of dividend stocks to invest in for long-term buy and hold or potentially sizing a position accordingly for trading. Here are five dividend stock examples.

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Stock Market is High: Time to Stop Buying Stocks?

The stock market is trading near its all-time high. Morningstar revealed that of the 682 U.S. stocks that its equity analysts cover, “only 5(!) have 5 stars, while 83 receive a single star.”

For those who are not familiar with Morningstar’s star system, 5 stars represent super undervalued while 1 star represents super overvalued. 

The Volatility Index, the “Fear Gauge” or “Fear Index” is a 30-day forward-looking measure of the volatility of the market. The lower the VIX is at, the less fear or more complacent the market is and vice versa. The Volatility Index also suggests there’s little fear in the stock market right now. 

Source: Stockcharts – Volatility Index

Although Morningstar covers less than 20% of the stocks on the U.S. market, its coverage includes many prominent names across different industries.

Should investors stop buying stocks in a high market? As the stock market has ascended to new heights, it has become more difficult to find value, but they do exist if you look for it.

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A Canadian Dividend Aristocrat in the Making?!

A Canadian Dividend Aristocrat typically refers to a TSX stock that has increased its dividend for at least five years. Ever wonder what a Canadian Dividend Aristocrat must be like before it actually becomes one?

Let’s rewind a bit. The stock must pay its first dividend and after that, be able to continue increasing its dividend year after year. Therefore, it should generate stable (ideally growing) earnings. 

I believe I have a stock here that is a Canadian Dividend Aristocrat in the making. However, I’m probably way ahead in this thinking because it’ll likely take years before it will pay its first dividend.

Why do I hold shares of this stock now if it pays no dividend? …because if I’m right, this stock is going to give me a whole lot of capital gains before it initiates a dividend. 

Right now, this small-cap stock has better places to allocate its capital. It was no April Fool’s joke when it announced another acquisition on Thursday, which drove the stock price 13% higher. 

Source: Yahoo Finance – TSX:CTS’s April 1, 2021 price action
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