What are we looking for?
Sustainable dividends from Canadian companies set for strong gains by cutting costs and streamlining operations.
The screen
Canadian National Railway Co. CNR-T is a recent example of a company making headlines for its efficiency moves. The country’s largest railway is cutting 400 management positions across Canada and the United States – or about 6 per cent of its non-unionized work force. The plan is expected to save $75-million annually.
There’s no question restructuring often focuses on trimming payroll, but the best plans also spur long-term growth.
To find companies winning those gains – increasingly through technology such as artificial intelligence and robotics – we started with a list of leading players across a range of sectors. With a focus on income stocks, we then narrowed that list before applying our TSI Dividend Sustainability Rating System. It awards points to a stock based on eight criteria:
- 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;
- one point for five years of continuous dividend payments;
- two points for more than five.
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 six Canadian firms set to benefit from streamlining and cost cutting.
Montreal-based Canadian National Railway Co. is cutting management positions. Quebec-based grocer Metro Inc. MRU-T has built technologically advanced fresh and frozen food distribution centres in Toronto and cut its payroll.
Headquartered in Saskatoon, Nutrien Inc. NTR-T is the world’s largest producer of agricultural fertilizers. The company accelerated its operational efficiency and cost-saving moves last year and expects to report $200-million in total savings for 2025 – with more to come. Andrew Peller Ltd. ADW-A-T, based in Grimsby, Ont., is Canada’s second-largest wine producer. The company has now completed a cost-cutting plan that limits rising costs for glass bottles and shipping.
Montreal’s Saputo Inc. SAP-T is a top global dairy producer. The company continues to streamline its operations – including consolidating its manufacturing plants. And finally, Molson Coors Canada Inc. TPX-B-T– jointly based in Montreal and Colorado – is the world’s third-largest beer maker with brands such as Coors Light, Molson Canadian and Carling. The firm is now cutting 9 per cent of its North American work force.
Scott Clayton, MBA, is senior analyst for TSI Network and associate editor of TSI Dividend Advisor.