Tag Archives: TSX:CP

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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Warning: Railroad Stocks Are Expensive. What Should Investors Do?

Railroad stocks have been really resilient in this economic downturn. Some are even making all-time highs! However, they are all expected to experience earnings cuts this year on a GAAP basis, which is not surprising given the far and wide impact the COVID-19 pandemic is having on the global economy.

Stock Price Chart on North American Railroad Stocks

Railroad stock data by YCharts. The 1-year price action of railroad stocks: CN Rail, CP, UNP, NSC, and CSX.

In other words, these railroad stocks are getting expensive. Some are fully valued. Others are slightly overvalued.

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Safest Dividends On the Planet

Want to create a secure, growing income stream from your dividend stock portfolio? What are the characteristics of the safest dividends? Investors buy dividend stocks for the stable income. So, it’s essential to choose stocks that generate safe, growing dividends.

The characteristics for the safest dividends include:

  • stable earnings
  • culture of increasing dividends, and
  • conservative payout ratio

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Stable Business. Stable Earnings.

Behind each stock that pays a dividend is a business. If the business is not profitable, it cannot pay healthy dividends. Which sector or industry is the business in? The type of the business helps us determine whether a business’s earnings are stable or not.

For example, consumer staples and utilities typically generate very stable earnings because there’s a consistent demand for their needed products and services no matter how the economy is doing.

On the other hand, businesses whose profitability rely on commodity prices can fall hard in price. Many energy companies have cut their dividends in this oil rout.

Look at Crescent Point Energy Corp (TSX:CPG)(NYSE:CPG) and Canadian Oil Sands Ltd (TSX:COS) as examples. In 2015, they slashed dividends by 57% and 86%, respectively. What did you expect? Both are expected to earn negative earnings in fiscal year 2015.

There’s a similar situation with regards to falling earnings for the miners such as Teck Resources Ltd (TSX:TCK.B)(NYSE:TCK) and BHP Billiton plc (ADR) (NYSE:BBL)(NYSE:BHP). Falling earnings have led to falling prices for energy companies and mining companies alike. Read More