Investing in Dividend Kings (aka Dividend Aristocrats) has come back into style again in 2022, after a decade of fast-paced outperformance for technology growth stocks. Click here to jump directly to my 2022 picks.

As we head into the fall of 2022, we have seen a small rally amongst some of the tech stars that had completely cratered to start the year, but “boring” Canadian dividend kings continue to plod along spinning off gobs of free cash flow.

Controlling costs continues to be the name of the game as far as bottom lines go in this inflationary environment, but the pricing power exhibited by the major Canadian blue chips (and their oligopoly market structures) have demonstrated that they can raise prices right alongside increased costs. Thus keeping that bottom line nice and steady!

By investing primarily in Canadian Dividend Aristocrats with high yields and Canadian dividend growth stocks, you can ensure your portfolio will continue to generate a calming dividend yield no matter what the noise in the overall stock markets is. The ever better part is that you can then use those juicy dividends to buy even more equities at their current depressed price point.

Top Canadian Dividend King Pick for 2022: National Bank

Last year’s top Canadian dividend king pick was Enbridge. I simply felt that given the company’s track record of producing solid returns and rewarding shareholders, the valuation was substantially off. 

The stock rewarded me with a capital gain of over 21%, plus the 8.1% dividend (at time of purchase) for an overall return of roughly 29.5%. That compares favorably to the overall return of the TSX (27%) and 25% for CDZ – the Canadian dividend aristocrats ETF.

For 2022 our Canadian dividend king is National Bank (NA).  

While I had higher hopes for National Bank when I made the pick back in late December, I remain steadfast in my prediction that this stock will outperform going forward.

National Bank just released Quarterly results and their earnings per share beat of $2.35 per share was noteworthy, given RBC’s significant underperformance. The company’s Canadian operations continue to hold impressive profit margins – and given the strength of Quebec’s regional economy (National Bank’s home base) I don’t see any reason why this won’t continue to be the case.

I wrote more about the loan loss provisions that the financial institutions were setting aside in my investing in Canadian bank stocks article.

The banks should continue to benefit from the growing interest rate spreads, and their cautious building of reserves is the exact reason why they are such solid long-term investments.

October sees National Bank’s P/E ratio down below 9x, and its yield up to 4.2%. This represents an excellent buying opportunity for the stock in my opinion. Considering the low payout ratio of National Bank vs the Big 5 Canadian banks, I think the prospects for growth and future dividend raises are excellent. I bought more of this stock for my portfolio near the end of September.

While National Bank is down about 12% YTD, this is exactly in line with the average for Canadian bank stocks, and roughly the same as the TSX index overall. With a price-to-book ratio of 1.5 (significantly below the 1.7x long-term average for Canadian banks) AND an excellent management track record, I just don’t see the downside here.

My insights on National Bank – as well as the 2022 Canadian Dividend Kings list below – are based on my own research, but also relied heavily on the advice and tools provided by Dividend Stocks Rock.  

DSR not only provides excellent written advice, but also a ton of free webinars, and ideal tools for analyzing both the Canadian and American dividend markets. Read my DSR review for an in-depth look at just why I’m such a big fan of what fellow Canadian Mike Heroux has put together.

BTW – As an additional vote of confidence in my National Bank pick, you can see Mike Heroux list it as one of his five underrated Canadian dividend stocks for August 2022. Mike used to work for National Bank for many years, so if anyone understand this company inside and out – it’s him!

Dividend Aristocrats and Dividend Kings Offer Stable Growth

In fact, many studies (such as Vanguard) have proven that dividend growers are likely to outperform the market and do it with less volatility. Dividend growers such as the best Canadian dividend aristocrats will continue to increase their dividend in 2022.

Canadian companies with a long history of dividend growth will generally show a strong business model and robust financials. They have gone through many recessions and never stopped increasing dividend payments. In times of confusion and fear, you can go back and look at how companies went through the past crisis and kept their dividend streak alive. 

I use the dividend strategy for my leveraged portfolio, a significant portion of my RRSP, and our corporate portfolio.  We currently collect a little over $50,000/year in dividends and if you are interested, you can follow my dividend updates here.

In the past, I’ve written a number of articles on dividend growth stocks, I’ve never properly categorized them. Here are the most common dividend terms as they relate to the U.S. stock market:

  • Dividend Achiever is a company that has increased its dividend at least 10 years in a row;
  • A Dividend Contender is a traded company that has raised dividends for 10 to 24 consecutive years.
  • A Dividend Champion is a company that has increased its dividend at least 25 years in a row (regardless if it is part of the S&P 500 or not);
  • Dividend Aristocrat is a company that is part of the S&P 500 and that has increased its dividend at least 25 years in a row;
  • Dividend King is a company that has increased its dividend at least 50 years in a row.  The true cream of the crop.

Dividend Aristocrats and Dividend Kings in Canada

Here in Canada, we have a relatively small market and an even smaller list of quality dividend stocks.  In a previous article about the top Canadian dividend growth stocks, you will see a number of dividend achievers (10 years+ ), a handful of dividend aristocrats (25 years+), but no dividend kings in Canada (although FTS (48) and CU (49) are getting close).

As of September 2022

Company

Ticker

Years

Current Yield

5 year Revenue Growth 

Payout Ratio

Canadian Utilities

CU.TO

50

4.96%

0.67%

164.94%

Fortis Inc.

FTS.TO

48

4.34%

6.68%

79.85%

Toromount Industries Ltd

TIH.TO

32

1.54%

15.24%

33.77%

Canadian Western Bank

CWB.TO

30

5.28%

9.08%

30.97%

Atco Ltd

ACO.X.TO

28

4.34%

1.18%

83.33%

Thomson Reuters

TRI.TO

28

1.61%

-11.67%

14.02%

Empire Company Ltd

EMP.A.TO

27

1.89%

4.85%

21.02%

Imperial Oil

IMO.TO

27

2.02%

8.74%

29.41%

Metro Inc

MRU.TO

27

1.55%

7.41%

29.17%

Canadian National Railway

CNR.TO

26

1.83%

3.76%

35.57%

Enbridge Inc

ENB.TO

26

6.50%

6.37%

117.23%

Saputo Inc

SAP.TO

22

2.17%

6.14%

108.03%

TC Energy Corp

TRP.TO

21

5.98%

1.30%

187.82%

Canadian National Resources LTD

CNQ.TO

21

3.69%

22.31%

30.73%

CCL Industries Inc

CCL.B.TO

20

1.48%

7.60%

25.20%

Transcontinental Inc.

TCL.A.TO

20

5.64%

5.53%

59.95%

Finning International Inc

FTT.TO

20

3.38%

5.32%

38.19%

Ritchie Bros Auctioneers

RBA.TO

19

1.62%

3.52%

68.35%

TELUS Corp

T.TO

18

4.76%

5.76%

103.38%

Cogeco Communications Inc.

CCA.TO

18

4.16%

2.90%

30.15%

Cogeco Inc

CGO.TO

17

4.49%

2.45%

24.37%

National Bank

NA.TO

12

4.05%

8.14%

31.37%

???????  (Hidden, click for access)

???????  (Hidden, click for access)

???????  (Hidden, click for access)

?.??%

?.??%

?.??%

Canadian Dividend Aristocrat Definition

While I used the terms dividend achievers and dividend aristocrats for the Canadian stock market  in the previous section, I must highlight that the official definition of the Canadian dividend aristocrat differs from the one established in the U.S.

In order to be considered as a S&P Canadian Dividend Aristocrat, the company must have increased its dividend payout every year for five years – Therefore, we are looking at stocks that have a good potential for raising its dividend but still pretty far away from 25 consecutive years.

Dividend Kings List

In a few years, we will be able to have a shortlist of Canadian dividend kings (including Fortis and Canadian Utilities). In the meantime, where do we find these elusive dividend kings? You’ll have to look at the biggest market in the world – the US!  In the US, there are 30 dividend kings that have increased their dividend at least 50 years in a row.  

Here is a table supplied by Dividend Stocks Rock:

Ticker

Name

Dividend Yield

Market Cap 

JNJ

Johnson & Johnson

2.62%

453.03B

PG

Procter & Gamble Co.

2.77%

312.52B

KO

The Coca-Cola Co.

2.96%

257.44B

MMM

3M Co.

4.85%

67.88B

LOW

Lowe’s Cos., Inc.

2.17%

120.20B

CL

Colgate-Palmolive Co.

2.57%

63.13B

TGT

Target Corp.

2.59%

76.82B

EMR

Emerson Electric Co.

2.40%

50.79B

HRL

Hormel Foods Corp.

2.26%

25.14B

PH

Parker-Hannifin Corp.

1.88%

36.43B

SWK

Stanley Black & Decker, Inc.

4.23%

11.19B

CINF

Cincinnati Financial Corp.

2.79%

15.73B

DOV

Dover Corp.

1.67%

17.36B

GPC

Genuine Parts Co.

2.31%

21.88B

FRT

Federal Realty Investment Trust

4.31%

8.12B

NDSN

Nordson Corp.

1.19%

12.53B

LANC

Lancaster Colony Corp.

1.90%

4.62B

AWR

American States Water Co.

1.85%

3.17B

CWT

California Water Service Group

1.72%

3.17B

ABM

ABM Industries, Inc.

1.94%

2.65B

NWN

Northwest Natural Holding Co.

4.03%

1.67B


Buy Dividend Stocks Using the Best No Fee Discount Brokers

We constantly review and compare discount brokers with a particular focus on FREE ETFs, so that you can rebalance your portfolio without paying more than you have to. Read about the most popular brokers like Qtrade and Questrade as well as robo-advisors like Wealthsimple and learn how to maximize your savings!

Currently, the best place to buy Canadian dividend ETFs is Qtrade. Not only is it the best online broker in Canada by a fair margin, Qtrade is also the only place where you can buy AND sell ETFs for free.

Here is the same table sorted by yield:

Ticker

Name

Dividend Yield

Market Cap 

MMM

3M Co.

4.85%

67.88B

FRT

Federal Realty Investment Trust

4.31%

8.12B

SWK

Stanley Black & Decker, Inc.

4.23%

11.19B

NWN

Northwest Natural Holding Co.

4.03%

1.67B

KO

The Coca-Cola Co.

2.96%

257.49B

CINF

Cincinnati Financial Corp.

2.83%

15.51B

PG

Procter & Gamble Co.

2.77%

312.52B

JNJ

Johnson & Johnson

2.62%

453.03B

TGT

Target Corp.

2.59%

76.82B

CL

Colgate-Palmolive Co.

2.57%

61.08B

EMR

Emerson Electric Co.

2.40%

50.79B

GPC

Genuine Parts Co.

2.31%

21.88B

HRL

Hormel Foods Corp.

2.26%

25.14B

LOW

Lowe’s Cos., Inc.

2.17%

120.20B

ABM

ABM Industries, Inc.

1.94%

2.65B

LANC

Lancaster Colony Corp.

1.90%

4.62B

PH

Parker-Hannifin Corp.

1.88%

36.43B

AWR

American States Water Co.

1.85%

3.17B

CWT

California Water Service Group

1.72%

3.17B

DOV

Dover Corp.

1.67%

17.36B

NDSN

Nordson Corp.

1.19%

12.53B

As you can see from the list, some of these names are very recognizable with global brand awareness and long term competitive advantage.  Names such as Procter & Gamble, Coke, Johnson & Johnson, 3M, Colgate, and Lowe’s.

You will also notice that most of them show a low dividend yield. From this list, only Altria (MO) shows a yield over 5% (~8.78%). The dividend king average yield is 2.74% with an average dividend growth of 6.50%. This shows you that one must pay for the quality. Finally, most dividend growers will not only reward shareholders with dividend increases, but also with steady capital appreciation.

As a disclaimer, I hold the following dividend kings within my RRSP: Procter & Gamble; 3M; Emerson Electric; Coca-Cola; Target; and, Johnson & Johnson.  Also, this post is not meant to provide recommendations for your portfolio, but a starting point for your research.

Canadian Dividend King FAQ

Canadian Dividend King 2022 Outlook

While everyone else tries to get rich quick my jumping on and off the latest crypto trade, meme stock, or NFT, I prefer to cautiously and consistently look at companies that can produce profits for their shareholders.

What a crazy idea right?

The truth is that if you’re a patient investor that understand the value of a durable long-term advantage, then Canada is the place to be.  Our Canadian dividend kings are able to lock in long-term profits due to their position in secure oligopolies.

If you want to thoroughly understand Canadian dividend kings and American dividend aristocrats, then I recommend checking out one of Mike Heroux’s upcoming free webinars.

If you are interested in dividend investing, here is More Dividend Stock Investing Info:

I've Completed My Million Dollar Journey. Let Me Guide You Through Yours!

Sign up below to get a copy of our free eBook: Can I Retire Yet?

FT

FT is the founder and editor of Million Dollar Journey (est. 2006). Through various financial strategies outlined on this site, he grew his net worth from $200,000 in 2006 to $1,000,000 by 2014. You can read more about him here.
Subscribe
Notify of

This site uses Akismet to reduce spam. Learn how your comment data is processed.

16 Comments
Newest
Oldest
Inline Feedbacks
View all comments
Ronaldo
6 months ago

Ft or others im age 78 stongly considering selling off a lot of my individual stocks/Etf’s currently down especially small caps stocks held mainly in Sitrade ($10/trade) and setting up an individual retirement stock prtfl aristocrats based on the DGIR Allstar List for candian aristocrats most with 10yr plus div streaks of incr and with most if not all in a non-registered account But also since DGIR insists on sector diversification and a prtl around 30-35 stocks He supplements about 1/3 in usa stocks and a couple of int’l etf’s – ( I do point out i stil have chunk in gic’s for better sleep) : some questions: should i change brokers at least to this new retirement prtfl before i start and if so to which one as there will be a lot of trades out and ins, estimate at least (80 National bk br has zero commissions while Cibc Edge has these canadian deposit receipts); Do i slice down some of which i hold now in aristocrats and pay some cap gain tax so all holdings equal weighted dollar wise in this new Retirement Prtfl; What is best inexpensive way as to $ and Time wise to track performance of this prtflio separately or for that matter any portfolio that runs on different paramaters?; Pondering as to whether or not to hold some of the USA holdings for this prtfl in my RIF to reduce effect of paying the div withholding tax (not sure if there is a limit on the tax treaty relief for usa stocks)? I may include a good portion of my TFSA but will avoid for usa stocks as i understand tax treaty relief does not apply on the american dividends there). With thanks and thanks for great article

Editor
Kyle Prevost
6 months ago
Reply to  Ronaldo

Many many questions here Ronaldo. I’d recommend checking out the Dividend Stocks Rock service and asking Mike some of these in his live webinars. The short version is that I’d definitely look at getting to a cheaper brokerage for sure.

Stephinie
1 year ago

In a few years, we will be able to have a shortlist of Canadian dividend kings (including Fortis and Canadian Utilities). In the meantime, where do we find these elusive dividend kings?

Grizzly Gramps
2 years ago

I have a question – as a rookie investor wannabe:

• HOW does one reliably MEASURE the true ROI, (for use at retirement)? What is the meaning of the varying terminology?

• ONE eg.: saw a company with 2% “yield”, 82% gain. What does that mean, in REAL terms?

How does one decide?

Per $100K invested? What is the useful/usable monthly return, at retirement?

Also,
What is the taxation rate at that time, (how is it calculated), when cashed out?

How can one preserve the principal, and still live off the investment?

What is the minimum investment required to capture RELIABLE annual dividend income of $35K + CPI?

Maxwell
3 years ago

When looking at the CDN list, I see immediately the top stock CU. The earnings don’t cover the dividend.. That would be a concern going forward and one should research this a little deeper.

Same goes with the other stocks that don’t cover their dividends with earnings.

DivInvestor
3 years ago

This is an interesting list for dividend increases and tells you a lot about the quality of the companies. I invest in dividend paying companies but put more emphasis on how long they have been paying and total return. For an example during the last recession in 2008 the CDN banks didn’t increase but also didn’t cut their dividends. The best thing I did was hold on to all my investments and ride it out and the results have been very good. (see my blog at dividend-café.com)

GYM
3 years ago

Tootsie Rolls! Who would have thought! Thanks for sharing this list :)

Altria $MO recently might be considered a Dividend King though it might not technically qualify.

https://finance.yahoo.com/news/altria-investment-royalty-50th-straight-233100137.html

Jenn
3 years ago

Hello, How do you invest in US Dividend stocks in your canadian investment accounts? When you purchase the US stock, are the canadian funds converted into USD?

Mr Fundamental
3 years ago

Great article! I do like the idea of investing in companies with histories of increasing dividends. This is why I have invested in MCD, AFL, WMT. McDonald’s has increased its dividend every year since 1976!
However, I think sometimes people get too enamored with dividend yield/increases, and fail to consider TOTAL RETURN. That is what really matters, and that is why I’ve shifted most of my additional investments over the years into low-cost index investing (VTI is my favourite). I think index investing is the easiest path to maximizing total return over the long run. Do you agree?

Cheers,
Mr Fundamental

Dividend Earner
6 years ago

The US definitely has bigger companies with stronger history of providing returns to investors.

Be careful with the Dividend Aristocrats definition as Canada has one defined by Standard & Poor and it’s adjusted to the Canadian market and requires 5 year of dividend increases with some other rules. The iShare Canadian Dividend Aristocrats follows that rule

Don’t get me wrong, I prefer a 10 year minimum so Dividend Achievers is where I start.

Peter
6 years ago

you fail to mentioned anything about DRIPPing the dividend payments. Both broker DRIPS (no partial DRIP or shares) to company DRIP (partial shares allowed but you might have to pay about $50 to do this)