Top 10 Canadian Dividend Stocks – July 2020

Top 10 Canadian Dividend StocksWhile we know that the stock market will grow over time, on a day-to-day or even month-to-month basis, the stock market is always changing value due to the daily fluctuation of all the stocks.

The opportunities will vary every month and that’s why it’s important to have a systematic approach to understanding which dividend stocks are an opportunity. An opportunity can be for a stock you already own or simply for a new addition to your portfolio. It is important to note that the rankings below do not assess the viability of the business. Some of the companies are strong blue chip stocks while others are smaller companies with growth or just simply beaten down.

Top 10 Canadian Dividend Stocks

Here are the top 10 Canadian dividend stocks for this month, see below for the details. This is obviously a snapshot in time at the time of writing, many factors could change the rankings.

Here is a quick excerpt on the top 10 dividend growth stocks opportunities identified through the Canadian Dividend Stock Screener.

Stay on top of your next investment decision with the Dividend Snapshot Canadian Dividend Screener. Review the Chowder Rule along with the 3, 5, and 10 year ratios for dividend growth, EPS growth and the payout ratio to pick a solid investment for your portfolio.

The monthly top 10 rarely have the same top 10 stocks. Be sure to come back, or better yet, follow the top 10 with the Canadian Dividend Screener.

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#10 – Canadian Western Bank

Canadian Western Bank is a leading bank in Canada. It is a part of the CWB Financial group and was formed by the amalgamation of Bank of Alberta and Western & Pacific Bank of Canada. The bank provides specialized financial services in business and personal banking, and wealth management services to small and medium-sized companies. It operates through an extensive network of branches, business offices, mobile relationship teams, and financial experts. Canadian Western Bank has a huge presence in western parts of Canada. It focuses on general commercial, equipment financing; and construction and real estate project financing. Canadian Western Bank offers a wide range of services including chequing and savings accounts, mortgages, loans and investment products in the personal banking segment through a network of 42 branches. The bank is known for its full suite of financial solutions and deep knowledge of targeted segments in the Canadian commercial banking sector.

Investment Data

#9 – Emera

EMA - EmeraEmera Inc. is a leading North American diversified energy and services company with assets worth $30 billion. The company engages in the generation, transmission, and distribution of electricity and gas, and provides other utility energy services. Emera Inc. has operations in Canada, the USA and in four Caribbean countries. The company serves a diverse base of residential, commercial as well as industrial customers. It operates a balanced and diversified portfolio consisting of ~90% regulated assets in electric utilities, gas LDCs; and unregulated gas-fired generation across North America. Emera reports its results in six operating segments: Emera Florida and New Mexico, Nova Scotia Power Inc., Emera Maine, Emera Caribbean, Emera Energy, and corporate & other. The company invests in electricity generation, transmission and distribution, gas transmission and distribution, and utility energy services. It also has investments in renewable energy assets.

Investment Data

#8 – Genworth MI Canada Inc.

MIC - GenworthGenworth is the largest private residential mortgage insurer in Canada providing mortgage default insurance to Canadian residential mortgage lenders. The company offers both transactional and portfolio mortgage insurance. Genworth is known for delivering value at every stage of the mortgage process. The company operates through its subsidiary, Genworth Financial Mortgage Insurance Company Canada (Genworth Canada). With more than two decades of experience, Genworth has developed deep relations with lenders, brokers, realtors, etc. and has built a broad underwriting and distribution platform across Canada. Genworth provides tailored mortgage insurance products which help customers buy homes with a minimum 5% down payment. The company has helped more than 1.5 million families buy their own homes. Genworth has a strong capital position with a track record of annual dividend increases and share buybacks. Superior customer service, a robust risk management framework and innovative processing technology form a deep moat around Genworth’s business.

Investment Data

#7 – Canadian Utilities

CU - SmallCanadian Utilities is one of the largest utility companies in Canada. It is a subsidiary of ATCO. By geography, Canada is its principal place of business accounting for 94% of revenues, followed by Australia (5%) and other countries (1%). The company owns regulated electric and gas distribution and transmission assets worth $22 billion serving more than two million customers around the world. About 86% of Canadian Utilities’ earnings comes from regulated sources, and the remaining 14% is derived from long-term contracted assets. Canadian Utilities has core investments in electricity, pipelines & liquids and retail energy business units, as well as its international operations in Australia and Latin America. Its segments are Electricity (70% of 2018 earnings), Pipelines & Liquids (40%) and Corporate & other (-10%). The company owns an extensive network consisting of 87,000 km electrical powerlines, 64,500 km pipelines, 21 global generating plants, water infrastructure capacity of 85,200 cubic meters per day, and natural gas and hydrocarbon storage capacities.

Investment Data

#6 – CIBC

CIBC or Canadian Imperial Bank of Commerce is a leading North American financial institution, formed as a result of the merger between the Canadian Bank of Commerce and the Imperial Bank of Canada in 1961. The bank operates through its four strategic business units Canadian Personal and Small Business Banking (48% of latest net income), Canadian Commercial Banking and Wealth Management (24%), U.S. Commercial Banking and Wealth Management (13%), and Capital Markets (15%). The bank caters to 11 million individual, small business, commercial, corporate and institutional clients in Canada, the U.S. and around the world. CIBC has a strong client focused culture and operational efficiencies which drive shareholder value and aid growth across different platforms. CIBC’s investment in technology and digital platforms should also meet the evolving needs of its clients. The bank caters to 11 million individual, small business, commercial, corporate and institutional clients in Canada, the U.S. and around the world.

Investment Data

#5 – Restaurant Brands International Inc.

Investment Data

#4 – Scotia Bank

BNS - SmallScotiabank is a leading international bank in Canada and a leading financial services provider in the Americas. The bank has a presence in personal and commercial, corporate and investment banking, wealth management and capital markets, and serves 25 million customers worldwide. With a rich history of 185 years, the bank has developed an extensive network of over 960 branches and more than 3,600 automated banking machines in Canada, and 1,800 international branches. Scotiabank has a wide geographic presence in attractive markets in Latin America (71% of revenues), Caribbean & Central America (25%) and Asia (4%). It operates through Canadian banking (49% of earnings), international banking (36%) and global banking and markets (15%) business lines. Scotiabank is highly diversified by products, customers and geographies, which reduces risk and volatility. The bank generates nearly 80% of its earnings from high quality and stable businesses which gives stability to cash flows.

Investment Data

#3 – Manulife

MFC - ManulifeManulife Financial Corporation is a leading international financial services company in Canada. The company provides financial advice, insurance, as well as wealth and asset management solutions for individuals, groups, and institutions. As of March 2018, Manulife had $1.1 trillion assets under management making it one of the largest life insurance companies in the world. More than 80% of its assets are fixed income, of which 98% is investment grade. Manulife offers unique product offerings for different markets it serves. The company provides a suite of financial protection and wealth management solutions to meet the current and future needs of individual and group customers. The company also owns reputed brands like Manulife and John Hancock in the USA. Manulife serves 26 million customers in the USA, Canada, and Asia. With more than 125 years of experience, the company has developed strong customer relations and a deep understanding of their financial needs. Clients look to Manulife for reliable and intelligent financial solutions.

Investment Data

#2 – Algonquin Power & Utilities Corp

AQN - Algoquin Power & Utilities CorpAlgonquin Power & Utilities is a diversified utility company in North America with $10 billion in total assets. The company engages in the generation, transmission, and distribution of water, gas, and electricity to communities across the U.S. It also has renewable energy business. As a growing renewable energy company, Algonquin Power owns a strong portfolio of long term contracted wind, solar and hydroelectric assets with 1.5 GW of total installed capacity. The company through its subsidiaries owns an equity interest in more than 39 clean energy facilities. Algonquin Power operates through two subsidiaries: Liberty Utilities (64% of 2018 earnings) and Liberty Power (36%). The company has more than 50 power generation facilities and 20 utilities across North America. Algonquin’s utility business serves nearly 770,000 customers in twelve states across the U.S., through 1,200 miles of electrical transmission lines and 100 miles of natural gas transmission pipelines.

Investment Data

#1 – Canadian Natural Resources

CNQ - Canadian Natural ResourcesCanadian Natural Resources is a large natural gas and crude oil exploration and production company in Canada. The company operates a diversified portfolio of assets (comprising of mix of natural gas, light crude oil, heavy crude oil, bitumen and synthetic crude oil) in North America, the UK North Sea and Offshore Africa. Canadian Natural’s business can be broadly classified into - North America E&P, international, marketing & midstream. The company holds some of the best oil sands assets in North America, particularly thermal in situ properties, having significant growth potential. Canadian Natural completed its transition to a long life, low decline asset base in 2017, which ensures a growing base of sustainable cash flows especially in low commodity price environments.

Investment Data
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Opportunity Score Formula

The top 10 stocks identified above are based on a score calculated using a number of financial data points from the companies. In the end, the score is generated from following five key indicators:

  • 52-Week Range: Trend over the past 52 weeks. Is the stock pulling back from a 52 week high?
  • P/E Ratio: Is the stock price running away from its earnings?
  • Revenue Growth: Is the revenue growing? Growing revenue is important. We don't want to be fooled by share buybacks and cost management only.
  • Dividend Yield: Is the yield attractive? Usually could identify a pullback if the yield starts to go up or major trouble if it goes too high.
  • Dividend Growth: Uses dividend growth and the Chowder Rule. Is the company capable of growing the dividend consistently?
  • Dividend Payout Ratio: Uses historical averages to put today's ratio in perspective. Is the company able to grow the dividend at the same rate it increases its earnings?

The generated score is meant to assess an entry point opportunity based on historical and today's numbers. It completely ignores the business quality, the quality of the company is for every investor to assess. My stock selection process breaks down the quantitative and qualitative assessments investors should establish to pull the trigger before buying.

If you are interested in more details, the Canadian Dividend Screener provides many more data points to help make your investment decision.

Dividend growth investing works and you can generate a healthy retirement income but you have to buy individual stocks. If you are not comfortable with holding individual stocks, you can always buy dividend ETFs or consider different passive income ideas to generate a retirement income.

DISCLOSURE: Please note that I may have a position in one or many of the holdings listed. For a complete list of my holdings, please see my Dividend Portfolio.

DISCLAIMER: Please note that this blog post represents my opinion and not an advice/recommendation. I am not a financial adviser, I am not qualified to give financial advice. Before you buy any stocks/funds consult with a qualified financial planner. Make your investment decisions at your own risk – see my full disclaimer for more details.
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