Canadian Dividend Kings & Aristocrats – September 2023

Investing in Dividend Kings (aka Dividend Aristocrats) always looks subpar when technology stocks race ahead as they have so far in 2023.  That said, they make you look like a genius when those high-risk, high-growth stocks plummet 50%+ in downturns. Click here to jump directly to my 2023 picks.

While 2023 hasn’t been a banner year for Canadian dividend kings, they have benefitted from a broader macroeconomic picture that has been mostly positive. Certain economic sectors such as telecoms, utilities, and pipelines are capital-intensive, and do see their profit margins narrowed lightly by increased costs when interest rates go up. 

That said, for companies with the long-term track record of Dividend Aristocrats or Dividend Kings, interest rate gyrations are nothing they haven’t managed through before.

Reliable (if small) long-term stock appreciation, combined with juicy dividends, are why Canadian dividend kings hold a sacred place in my portfolio. We may very well be in a “sideways” market for a while, and in that situation, holding stocks that spin off gobs of dividend cash is an excellent way to position oneself.

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!

I was looking like a real genius until last week’s quarterly earnings.  While National Bank is still the performing big bank stock so far in 2023 (by a sizeable margin) it is only up about 3% YTD. When factoring in the juicy 4.3% dividend yield, the total return has still been solid if not spectacular.

Higher-for-longer interest rates and increased loan-loss provisions have weighed on the entire Canadian banking sector. I personally think the entire sentiment is overdone, and that the banks are oversold at the moment.

The mini-banking crisis we saw down in the USA earlier this year barely even phased the Big 6 up in Canada.  Trust in the banks remains quite strong. Given National Bank’s home base of Quebec, their mortgage business is much less risky than banks which loaned out huge amounts of mortgages in Ontario and BC over the years.

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.

Don’t just take my word for it, see what Mike Heroux has to say about National Bank after the latest round of bank earnings reports in 2023.  Mike used to work for National Bank for many years, so if you’re looking for someone that understands all aspects of this company – 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:

  • 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 2023

Company

Ticker

Years

Current Yield

5 year Revenue Growth 

Payout Ratio

Canadian Utilities

CU.TO

50

5.69%

-0.18%

99.64%

Fortis Inc.

FTS.TO

48

4.24%

5.87%

79.32%

Toromount Industries Ltd

TIH.TO

32

1.55%

12.50%

28.28%

Canadian Western Bank

CWB.TO

30

4.62%

8.17%

35.85%

Atco Ltd

ACO.X.TO

28

5.20%

1.59%

57.03%

Thomson Reuters

TRI.TO

28

1.51%

4.62%

62.03%

Empire Company Ltd

EMP.A.TO

27

2.12%

4.71%

24.81%

Imperial Oil

IMO.TO

27

2.54%

15.80%

12.70%

Metro Inc

MRU.TO

27

1.72%

7.47%

30.48%

Canadian National Railway

CNR.TO

26

2.14%

5.58%

39.16%

Enbridge Inc

ENB.TO

26

7.81%

3.74%

271.26%

Saputo Inc

SAP.TO

22

2.56%

9.10%

48.39%

TC Energy Corp

TRP.TO

21

7.66%

2.18%

560.84%

Canadian National Resources LTD

CNQ.TO

21

4.03%

22.00%

47.32%

CCL Industries Inc

CCL.B.TO

20

1.80%

6.06%

27.35%

Transcontinental Inc.

TCL.A.TO

20

7.13%

8.05%

55.31%

Finning International Inc

FTT.TO

20

2.33%

8.20%

28.74%

Ritchie Bros Auctioneers

RBA.TO

19

1.63%

12.30%

28.80%

TELUS Corp

T.TO

18

6.35%

6.57%

117.59%

Cogeco Communications Inc.

CCA.TO

18

4.79%

5.43%

30.70%

Cogeco Inc

CGO.TO

17

5.94%

4.99%

26.51%

National Bank

NA.TO

12

4.47%

7.94%

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

2.92%

421.33B

PG

Procter & Gamble Co.

2.41%

366.53B

KO

The Coca-Cola Co.

2.89%

275.56B

MMM

3M Co.

5.83%

56.18B

LOW

Lowe’s Cos., Inc.

2.05%

120.94B

CL

Colgate-Palmolive Co.

2.36%

67.02B

TGT

Target Corp.

2.79%

70.40B

EMR

Emerson Electric Co.

2.48%

47.28B

HRL

Hormel Foods Corp.

2.71%

22.36B

PH

Parker-Hannifin Corp.

1.83%

41.34B

SWK

Stanley Black & Decker, Inc.

3.70%

13.19B

CINF

Cincinnati Financial Corp.

2.87%

16.42B

DOV

Dover Corp.

1.40%

19.85B

GPC

Genuine Parts Co.

2.21%

24.07B

FRT

Federal Realty Investment Trust

4.49%

7.86B

NDSN

Nordson Corp.

1.21%

12.34B

LANC

Lancaster Colony Corp.

1.60%

5.87B

AWR

American States Water Co.

1.78%

3.35B

CWT

California Water Service Group

1.86%

3.19B

ABM

ABM Industries, Inc.

2.09%

2.77B

NWN

Northwest Natural Holding Co.

4.20%

1.74B


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Here is the same table sorted by yield:

Ticker

Name

Dividend Yield

Market Cap 

MMM

3M Co.

5.83%

56.18B

FRT

Federal Realty Investment Trust

4.49%

7.86B

NWN

Northwest Natural Holding Co.

4.20%

1.74B

SWK

Stanley Black & Decker, Inc.

3.70%

13.19B

JNJ

Johnson & Johnson

2.92%

421.33B

KO

The Coca-Cola Co.

2.89%

275.56B

CINF

Cincinnati Financial Corp.

2.87%

16.42B

TGT

Target Corp.

2.79%

70.40B

HRL

Hormel Foods Corp.

2.71%

22.36B

EMR

Emerson Electric Co.

2.48%

47.28B

PG

Procter & Gamble Co.

2.41%

366.53B

CL

Colgate-Palmolive Co.

2.36%

67.02B

GPC

Genuine Parts Co.

2.21%

24.07B

ABM

ABM Industries, Inc.

2.09%

2.77B

LOW

Lowe’s Cos., Inc.

2.05%

120.94B

CWT

California Water Service Group

1.86%

3.19B

PH

Parker-Hannifin Corp.

1.83%

41.34B

AWR

American States Water Co.

1.78%

3.35B

LANC

Lancaster Colony Corp.

1.60%

5.87B

DOV

Dover Corp.

1.40%

19.85B

NDSN

Nordson Corp.

1.21%

12.34B

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.

Dividend King Investments for Canadian Retirees

Canadian retirees love collecting stable, dependable Canadian dividends. It makes sense that amongst those who prioritize stability and income flow, Dividend Kings and Dividend Aristocrats are in the highest demand.

In addition to the obvious reasons for retirees to love Canadian blue chip companies with strong balance sheets, there is a bit of a hidden reason as well: the tax advantages. Canadian dividend income is actually taxed at a negative rate until you hit the $40,000-$50,000 range (exact figure depends on which province you live in).

This means that a retired couple can earn close to $100,000 in Canadian dividend income before they pay a dime in income tax! At lower income thresholds, that negative tax rate can actually help offset income tax owing from part-time work or CPP/OAS payments.

Of course, it should be pointed out that one must hold these Canadian dividend stocks outside of their RRSP and TFSA in order to benefit from this tax treatment. It’s also important to understand that this advantageous tax treatment only pertains to Canadian stocks, and not to American or other international stocks. Dividends generated by those companies will almost assuredly be hit with a withholding tax before you get the money in your brokerage account.

Given the tax benefits and relative stability (still more risky than a Canadian GIC) it’s no wonder that Canadian Dividend King stocks are a hit with retirees. It is key to remember though, that diversity is your investing friend. It can be easy to become too focused on one specific type of company within the Canadian market. 

Canadian Dividend King FAQ

Canadian Dividend King 2023 Outlook

Investing in dividend kings isn’t about trying to make a quick buck using speculative investment strategies such as momentum trading or anything like that. 

It’s simply about selecting companies that have shown the discipline and management efficiency that is necessary to grow a dividend over a long period of time.

If you are willing to be patient, and focus on long-term durable competitive advantage, then Canadian dividend kings are very likely to reward you given their long-term track record, as well as Canada’s overall growth.

My main source for Canadian dividend news (as well as news on American Dividend Aristocrats) is Mike Heroux’s “Dividend Stocks Rock” platform.  Mike’s detailed analysis and personal transparency are second-to-none.  His exclusive webinars containing up-to-the-minute information offer incredible investor value.

If you’re interested in learning more about the companies on our Canadian dividend kings list, consider the following articles:

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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.
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Ronaldo
1 year 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
1 year 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
2 years 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
3 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
4 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
4 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
4 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
4 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
4 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
7 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
7 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)