What are we looking for?
Canadian companies that have raised their dividends for at least five consecutive years at a double-digit annual growth rate.
The screen
The Bank of Canada held its policy rate at 2.25 per cent on June 10, its fifth consecutive pause, as it weighed higher inflation from elevated oil prices against an economy that contracted in the first quarter. With growth stalling and geopolitical uncertainty persisting, investors can combine stability with growth by rotating into companies that compound shareholder income through the cycle, rather than chase the highest current yields. A long record of dividend increases signals balance-sheet discipline and durable cash flow, while a conservative payout suggests those increases can continue.
Using FactSet’s screening tool, I identified Canadian dividend growers by applying the following criteria:
- included in the S&P/TSX Composite
- market capitalization greater than $10-billion
- pays a dividend and has raised it for five consecutive years
- dividend expected to grow over the next year
- five-year dividend compound annual growth rate greater than 10 per cent
- dividend payout ratio below 70 per cent
- interest coverage ratio above three times
- net debt to EBITDA below three times
The 10 companies that passed were ranked by their five-year dividend compound annual growth rate.
What we found
Energy producers, boosted by crude prices lifted by the conflict in the Middle East, dominated the top of the list, while the group’s average dividend yield of just 1.7 per cent highlights that these are dividend growers rather than high yielders.
Cenovus Energy Inc. CVE-T, a Calgary-based integrated oil producer, ranked first with a five-year dividend compound annual growth rate of 65.7 per cent, a figure inflated by the rebuilding of a payout the company suspended during the 2020 oil crash. The growth is now backed by strong cash flow generation.
For the first quarter ended March 31, Cenovus delivered record upstream production of 972,100 barrels of oil equivalent a day, up 19 per cent year-over-year, driven by its acquisition of MEG Energy and the scaling up of new growth projects. Free funds flow more than doubled to $2.2-billion and net earnings climbed to $1.57-billion from $859-million a year earlier, allowing the company to reduce net debt to $8.1-billion and raise its annual dividend 10 per cent to 88 cents a share.
Management notes the dividend is funded even at a US$45-a-barrel oil price, providing a strong margin of safety if crude prices weaken.
Imperial Oil Ltd. IMO-T, one of Canada’s largest integrated oil companies, ranked second with a five-year dividend compound annual growth rate of 26.8 per cent. Imperial has increased its annual dividend for 31 consecutive years and paid one every year for more than a century, raising its quarterly payout 20 per cent to 87 cents a share for 2026. The increase is well protected by a payout ratio of just 44 per cent and one of the strongest balance sheets in the group, with net debt to EBITDA of 0.5 times.
For the first quarter ended March 31, net income fell to $940-million from $1.29-billion a year earlier, as unplanned downtime reduced refining throughput. The company still returned $350-million to shareholders in dividends and intends to renew its share buyback in June, 2026.
The information in this article is not investment advice. The author assumes no liability for any consequence relating directly or indirectly to any action or inaction taken based on the information contained above.
Arjun Deiva, CFA, is an MBA candidate at the University of California, Berkeley, Haas School of Business.