Canadian Dividend Kings List May 2022

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 watch Netflix, Tesla, and even robust tech stocks like Amazon, crash alongside speculative investments like bitcoin, suddenly the Canadian blue chip companies that consistently produce tax-efficient streams of income are looking better and better.

Sure, inflation is rough – but it’s rough for everyone. I’d argue that it’s actually less of an issue for Canadian Dividend Kings that have proven that they have the price-making power to keep profit margins consistent, despite increased costs.

By investing primarily in Canadian Dividend Aristocrats with high yields and Canadian dividend growth stocks, you can ensure your portfolio will continue to generate free cash flow 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).  

Honestly, you could convince me that RBC or TD would also make excellent choices, but I just love National Bank’s low payout ratio.

 There is little doubt in my mind that the ultra-conservatively valued Canadian banks will continue to hold up well throughout 2022, no matter what interest rates do. Their consistent profit growth in all economic conditions will only look better and better as interest rates increase and economic headwinds persist. 

The durable competitive advantage (or “Moat”) enjoyed by the Canadian banking oligopoly is more than enough to offset new taxes that the Trudeau government campaigned on.

And while many North American equities have climbed to atmospheric valuations, National Bank just boringly chugs along at a P/E ratio of 11.4. Finally, National Bank is the pick from amongst the Canadian “Big 6” due to its heavy concentration in Quebec and Ontario, as well as its relatively low exposure to mortgages.

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.

National Bank Update: Over the first half of the year, National Bank hasn’t exactly lit the world on fire, but it’s not down very much YTD vs the TSX 60, or American stocks. Most importantly, the company had an incredible first-quarter earnings report and announced an increased dividend. I feel great about the company long term, and am definitely adding to my position now when the P/E ratio is below 10!

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:

• 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 May 2022

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:

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Here is the same table sorted by yield:

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:

• Dividend Stocks Rock Newsletter Signup
• How to Build a Dividend Growth Portfolio
• Beating the TSX (dogs of the TSX stock picks)
• How to buy stocks
• When to buy dividend stocks
• How to create a stock watchlist
• Top Canadian stock screeners