Dividend Aristocrats: 2012 Canadian Edition

Dividend aristocrats are companies with a policy of consistently increasing dividends every year for a specific period of time.  In Canada, the time frame to reach dividend aristocrat status is 5 consecutive years of dividend increases.  These companies are tracked by the S&P/TSX Canadian Dividend Aristocrats Index.

In the U.S., the period of time to become a dividend aristocrat is considerably longer.  It takes at least 25 consecutive years of increasing dividends for a company to qualify for the S&P 500 Dividend Aristocrats Index.

Recent History For Dividend Aristocrats

The dividend aristocrat list lost 20 per cent of its members back in 2009, dropping from 70 companies to just 56.  The financial crisis of the previous year led to some high-profile dividend cuts and caused many other consistent dividend growers to put their increases on hold while they dug-in for the recession.

In 2010, the dividend aristocrat list became even more exclusive when it dropped another 16 companies from the index, reducing the list to just 40 members.  By 2011, there were only 38 dividend aristocrats remaining in the index.

Dividend increases were hard to come by during these three lean years and many solid companies were dropped from the index, including some of Canada’s largest banks, insurance companies, and REIT’s.

2012 Canadian Dividend Aristocrats

Most of the big banks increased their dividends in 2011 for the first time in three or four years.  In addition to the banks, many other Canadian companies were able to weather the storm during the global recession and reward their shareholders with consecutive years of dividend increases.

The 2012 version of the Canadian dividend aristocrats has increased to 58 members after adding 21 new companies while deleting just two (North West Company and Toromont Industries) from the list.

Here is the complete list of 2012 Canadian dividend aristocrats:

Constituent Name Symbol Constituent Name Symbol
AGF Management Ltd B Nvtg AGF.B Fairfax Financial Hldgs FFH
Ag Growth International Inc AFN Finning Intl Inc FTT
Atco Ltd I Nvtg ACO.X Fortis Inc FTS
Atlantic Power Corporation ATP Home Capital Group Inc HCG
Bank of Nova Scotia BNS IGM Financial Inc IGM
Barrick Gold Corp ABX Imperial Oil Ltd IMO
Bird Construction Inc. BDT Intact Financial Corp IFC
CCL Industries Inc B CCL.B Jean Coutu Group Inc A PJC.A
Cameco Corp CCO Keyera Corp. KEY
Canadian National Railways CNR Methanex Corp MX
Canadian Natural Resources CNQ Metro Inc A MRU.A
Canadian Pacific Railway CP Northern Property REIT NPR-U
Canadian Real Estate Inv Trst REF-U Pason Systems Inc PSI
Canadian Tire Corp Ltd CTC.A Reitmans Canada Ltd A RET.A
Canadian Utilities Ltd CU Ritchie Bros Auctioneers RBA
Canadian Western Bank CWB Rogers Communications RCI.B
Cogeco Cable Inc. CCA Saputo Inc SAP
Cogeco Inc. CGO Shaw Communications SJR.B
Computer Modelling Group CMG ShawCor Ltd A SCL.A
Constellation Software Inc. CSU Shoppers Drug Mart SC
Corus Entertainment Inc. CJR.B Suncor Energy Inc SU
Dorel Industries B DII.B TELUS Corp T
Emera Inc. EMA Talisman Energy Inc TLM
Empire Co Ltd A Nvtg EMP.A Thomson Reuters Corp TRI
Enbridge Inc ENB Tim Hortons THI
Enbridge Income Fund Holdings ENF Toronto-Dominion Bank TD
Ensign Energy Services ESI TransCanada Corp TRP
Exchange Income Corporation EIF Transcontinental A Subvtg TCL.A

Claymore Dividend ETF (CDZ)

Investors can replicate the performance of the S&P/TSX Canadian Dividend Aristocrats Index by purchasing CDZ, the dividend ETF from Claymore.  This ETF tracks the dividend aristocrat index and has a Management Expense Ratio (MER) of 0.67%.

CDZ offers a relatively low cost way for investors to diversify their dividend holdings.

Final Thoughts on Dividend Aristocrats

I use the dividend aristocrats index as part of my criteria for selecting a dividend growth stock, but I don’t believe the 5-year track record of dividend growth is good enough to measure a company’s ability to grow their dividends over time.  I prefer the much tougher 25-year measuring stick of the S&P 500 Dividend Aristocrats Index.

That said, when I’m looking for more dividend stocks I can start with these 58 dividend aristocrats and then narrow them down to find the best companies that fit my portfolio and investing policy.

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What are your thoughts on the Canadian Dividend Aristocrats Index?  Is the 5-year time frame too short?

15 Responses to Dividend Aristocrats: 2012 Canadian Edition

  1. I would rather have a longer period. And then, as you say, go through a large list and pick out those I like. At the same time, I am perfectly willing to investing in dividends stocks without a 25 year track-record of increases every year. But for an “aristocrat” label I think at least 15 years would be good, and maybe more.

  2. I have heard of the term “aristocrat” before but never saw it applied to dividend paying stocks.

    This is a great term to show the cream of the crop.

    Doesn’t that ETF seem to have a large expense rate for a group of stocks that do not need major rebalancing?

  3. Thanks for the list of “Dividend Aristocrats”. It is a useful guideline to choosing stocks for a portfolio that lets you sleep well. I agree that a 5 year term for evaluation is too short. Ten years or more would give a more accurate track record.

  4. Why do you show a company like Imperial Oil in your 2012 Canadian Dividend Aristocrats when it hasn’t had a dividend increase for several years?

    • Hi John, while its true that IMO’s last dividend increase was in 2010, you have to look at the total dividends paid each year:

      In 2009 they paid quarterly dividends of 10 cents a share (total of 40 cents).

      In 2010 they increased the dividend to 11 cents a share in the 3rd quarter, making their total dividends paid 42 cents.

      Then in 2011 there was no dividend increase, but because they paid 11 cents a share for 4 quarters, their total dividends paid that year came to 44 cents.

      • That is not correct to say Dividend aristocrats are companies with a policy of consistently increasing dividends every year for a specific period of time. In Canada, the time frame to reach dividend aristocrat status is 5 consecutive years of dividend increases.

        In this case the amount paid out in dividends annually was higher only because of timing. So it is not 5 consective years of divended increases (one is misleading use of english)

        • @John – Fair point. But I’m going off of the language on the Canadian Dividend Aristocrats index, and to qualify for it you just need to pay more dividends then the last year for 5 consecutive years.

          Companies can manipulate the timing of those increases in order to remain on the list, which it looks like IMO has done.

          By the way, it looks like they’ve increased their dividends again to 12 cents a share, so they’ll stay on the list for at least another year or two.

  5. “I prefer the much tougher 25-year measuring stick of the S&P 500 Dividend Aristocrats Index.”

    I’m aware of some U.S. firms that have done that like Proctor & Gamble. What Canadian firms have managed to pass along steady increases for 25 years or more? Can you do a post on Canadian stocks that have that track record?

    • @Bruce – it would be a short post; I believe there are only two Canadian companies to reach that status. Canadian Utilities (CU) and Fortis (FTS) have increased their dividends for 39 consecutive years.

      There are a handful of companies that are fairly close to reaching 20+ years (Enbridge and ATCO, for example). I can dig a bit deeper and come up with a post listing Cdn. dividend aristocrats with the longest track record.

  6. I agree, 5 yrs is a little too short. Is there any website that easily contains the dividend yields of these Aristocrats and well as their dividend growth rates?

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