What are we looking for?
Sustainable dividends from Canadian stocks near all-time highs despite market uncertainty.
The screen
There are a number of Canadian stocks, across economic sectors, now trading at or near all-time highs despite tariff fears and the broader market turmoil. That supports one of our key Successful Investor principles: spread your money out across most if not all of the five main economic sectors: manufacturing and industry, resources and commodities, consumer, finance and utilities.
There’s no way to predict which sectors will rise or fall in any given year or market, or which sector will produce the top performers. Still, by diversifying across the five sectors, you limit the harm you can suffer from unexpected bad news (such as tariffs!) or changes in investor fashion.
Indeed, out-of-favour sectors have a way of abruptly reversing course, but waiting on their return to popularity before you buy threatens to limit your potential gains.
Our search started with a list of Canadian stocks at or near their all-time highs, but also with strong revenue and earnings outlooks, and offering dividends. We then applied our TSI Dividend Sustainability Rating System. It awards points to a stock based on key factors:
- one point for five years of continuous dividend payments – two points for more than five;
- two points if it has raised the payment in the past five years;
- one point for management’s commitment to dividends;
- one point for operating in non-cyclical industries;
- one point for limited exposure to foreign currency rates and freedom from political interference;
- two points for a strong balance sheet, including manageable debt and adequate cash
- two points for a long-term record of positive earnings and cash flow sufficient to cover; dividend payments;
- one point for an industry leader
Companies with 10 to 12 points have the most secure dividends, or the highest sustainability. Those with seven to nine points have above average sustainability; average sustainability, four to six points; and below average sustainability, one to three points.
More about TSI Network
TSI Network is the online home of The Successful Investor Inc. – the group of widely followed Canadian investment newsletters by editor and publisher Pat McKeough. They include our award-winning flagship newsletter, The Successful Investor, and the TSI Dividend Advisor. TSI Network is also affiliated with Successful Investor Wealth Management.
What we found
Our TSI Dividend Sustainability Rating System generated seven stocks: Brampton, Ont.-based Loblaw Cos. Ltd. L-T plus Montreal’s Metro Inc. MRU-T continue to profit from their broad range of food, drugs and more. Alamos Gold Inc. AGI-T, based in Toronto, and Lundin Gold Inc. LUG-T, headquartered in Vancouver, have soared to new heights as gold-stock investors seek sustainable dividends on top of share-price growth. AltaGas Ltd. ALA-T, headquartered in Calgary, continues to channel the steady profits from a big 2018 acquisition into new growth areas. Fortis Inc. FTS-T, based in Newfoundland, is the main supplier of electrical power in Newfoundland and PEI. It also owns electrical and gas utilities across North America. And finally, Toronto-based Intact Financial Corp. IFC-T.
offers investors exposure to Canada’s largest provider of property and casualty insurance.
We advise investors to do additional research on investments we identify here.
Scott Clayton, MBA, is senior analyst for TSI Network and associate editor of TSI Dividend Advisor.