Canadian Dividend Kings & Aristocrats – January 2023
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 2023 picks.
After the first couple months of 2023, the Canadian market has continued to quietly chug along relative to the more volatile numbers seen in much of the world. For dividend-focused investors, this steady-as-she-goes growth is exactly what the financial planner ordered. Reliable (if small) long-term stock appreciation, combined with juicy dividends, are why Canadian dividend kings hold a sacred place in my portfolio.
While it looks like inflationary pressures are beginning to ease, top line revenue numbers continue to look good for the vast majority of Canada’s dividend all stars. Real returns though are dependent on profit margins and the ability to keep costs controlled. So far so good for the major Canadian blue chippers on this dividend kings list.
With most of Canada’s best dividend stocks being part of long-time market oligopolies, we see that they have been able to maintain or even grow their profit margins – meaning more profit for shareholders.
With little-to-no news of dividend cuts (or even pauses), dividend-focused investors have likely found it much easier to navigate the stormy market waters relative to growth stock enthusiasts.
Top Canadian Dividend King Pick for 2023: National Bank
Our 2021 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 was National Bank (NA).
So… you might be surprised to learn that my Canadian dividend king pick for 2023 is (*drumroll*) National Bank!
Yes – I’m sticking with Canada’s fastest growing bank! I continue to believe in my investing thesis, the market just needs time to bear out the underlying fundamentals. So far so good, as National Bank shares are up nearly 11% year-to-date (and that doesn’t even take into consideration the juicy 3.9% dividend).
National Bank’s latest quarter earnings report saw a $2.35 EPS, and that represented a strong earnings beat. The Bank’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.
Out of all the Canadian banks, National bank has been the most generous with its dividend raises over the last 3- and 5-year periods – BUT even with all that dividend generosity, it still has a fairly low payout ratio. That bodes well for the long-term, and certainly means there is no dividend cut in store for 2023.
While Provision for Credit Losses (PCLs) will hold the banks a bit in 2023, I don’t see this as a significant headwind overall. 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.
My insights on National Bank – as well as the 2023 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. Mike used to work for National Bank for many years, so if anyone understands 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 2023.
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 $73,000/year in dividends and if you are interested, you can follow my latest dividend update 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:
- A 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);
- A 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;
- A 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 January 2023
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 | 4.08% | 5.87% | 79.32% |
Toromount Industries Ltd | TIH.TO | 32 | 1.55% | 12.48% | 28.28% |
Canadian Western Bank | CWB.TO | 30 | 4.60% | 8.17% | 35.85% |
Atco Ltd | ACO.X.TO | 28 | 4.45% | 1.18% | 83.33% |
Thomson Reuters | TRI.TO | 28 | 1.59% | 4.62% | 29.32% |
Empire Company Ltd | EMP.A.TO | 27 | 1.81% | 4.85% | 21.02% |
Imperial Oil | IMO.TO | 27 | 2.59% | 16.80% | 29.41% |
Metro Inc | MRU.TO | 27 | 1.70% | 7.47% | 30.48% |
Canadian National Railway | CNR.TO | 26 | 2.01% | 5.58% | 39.16% |
Enbridge Inc | ENB.TO | 26 | 6.389% | 3.74% | 271.26% |
Saputo Inc | SAP.TO | 22 | 1.97% | 6.14% | 108.03% |
TC Energy Corp | TRP.TO | 21 | 6.82% | 2.18% | 560.84% |
Canadian National Resources LTD | CNQ.TO | 21 | 4.55% | 22.31% | 30.73% |
CCL Industries Inc | CCL.B.TO | 20 | 1.59% | 7.60% | 25.20% |
Transcontinental Inc. | TCL.A.TO | 20 | 5.97% | 8.05% | 55.31% |
Finning International Inc | FTT.TO | 20 | 2.68% | 8.20% | 28.74% |
Ritchie Bros Auctioneers | RBA.TO | 19 | 1.75% | 3.52% | 28.80% |
TELUS Corp | T.TO | 18 | 5.13% | 6.57% | 117.59% |
Cogeco Communications Inc. | CCA.TO | 18 | 4.37% | 5.43% | 30.70% |
Cogeco Inc | CGO.TO | 17 | 4.75% | 4.99% | 26.51% |
National Bank | NA.TO | 12 | 3.88% | 7.93% | 36.80% |
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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 | 2.57% | 458.79B |
PG | Procter & Gamble Co. | 2.43% | 356.40B |
KO | The Coca-Cola Co. | 2.80% | 271.75B |
MMM | 3M Co. | 4.90% | 67.51B |
LOW | Lowe’s Cos., Inc. | 2.04% | 122.86B |
CL | Colgate-Palmolive Co. | 2.42% | 65.13B |
TGT | Target Corp. | 2.95% | 66.58B |
EMR | Emerson Electric Co. | 2.19% | 55.93B |
HRL | Hormel Foods Corp. | 2.41% | 24.86B |
PH | Parker-Hannifin Corp. | 1.86% | 36.30B |
SWK | Stanley Black & Decker, Inc. | 4.19% | 11.06B |
CINF | Cincinnati Financial Corp. | 2.70% | 16.27B |
DOV | Dover Corp. | 1.51% | 19.00B |
GPC | Genuine Parts Co. | 2.02% | 24.79B |
FRT | Federal Realty Investment Trust | 4.21% | 8.23B |
NDSN | Nordson Corp. | 1.10% | 13.55B |
LANC | Lancaster Colony Corp. | 1.73% | 5.41B |
AWR | American States Water Co. | 1.71% | 3.42B |
CWT | California Water Service Group | 1.65% | 3.32B |
ABM | ABM Industries, Inc. | 2.01% | 2.98B |
NWN | Northwest Natural Holding Co. | 4.19% | 1.64B |
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Here is the same table sorted by yield:
Ticker | Name | Dividend Yield | Market Cap |
MMM | 3M Co. | 4.90% | 67.51B |
FRT | Federal Realty Investment Trust | 4.21% | 8.23B |
SWK | Stanley Black & Decker, Inc. | 4.19% | 11.06B |
NWN | Northwest Natural Holding Co. | 4.19% | 1.64B |
TGT | Target Corp. | 2.95% | 66.58B |
KO | The Coca-Cola Co. | 2.80% | 271.75B |
CINF | Cincinnati Financial Corp. | 2.70% | 16.27B |
JNJ | Johnson & Johnson | 2.57% | 458.79B |
PG | Procter & Gamble Co. | 2.43% | 356.40B |
CL | Colgate-Palmolive Co. | 2.42% | 65.13B |
HRL | Hormel Foods Corp. | 2.41% | 24.86B |
EMR | Emerson Electric Co. | 2.19% | 55.93B |
LOW | Lowe’s Cos., Inc. | 2.04% | 122.86B |
GPC | Genuine Parts Co. | 2.02% | 24.79B |
ABM | ABM Industries, Inc. | 2.01% | 2.98B |
PH | Parker-Hannifin Corp. | 1.86% | 36.30B |
LANC | Lancaster Colony Corp. | 1.73% | 5.41B |
AWR | American States Water Co. | 1.71% | 3.42B |
CWT | California Water Service Group | 1.65% | 3.32B |
DOV | Dover Corp. | 1.51% | 19.00B |
NDSN | Nordson Corp. | 1.10% | 13.55B |
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. 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 2023 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:
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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
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.
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?
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?
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.
I will need to dig a little deeper into CU. Make sure to look at the dividend as a percentage of cash flow as well, as earnings don’t always show the whole picture.
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)
Agreed, even during market bear markets, best to hold onto those quality companies and even better, add to them if you have the cash.
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
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?
Hi Jenn,
Yes, for my RRSP, I typically convert Cad to USD. Here are some tips on how to save money when doing this conversion:
https://milliondollarjourney.com/converting-cad-to-usd-using-horizons-dlrdlr-u-with-cibc-investors-edge-tricky.htm
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
I am on the same page, indexing is much easier, and will give you strong results over the long term. The only except is for early retirees, it’s hard to pass up the temptation of the tax advantages of dividend stocks in a non-registered account.
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.
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)