For global dividend growth investors, the Canadian dividend aristocrats list can be a source of investment ideas. Like the US Dividend Aristocrats, the “Canadian” version is also created and maintained by S&P. The major difference is the number of consecutive years of dividend increases. To become a member of the Canadian dividend aristocrats list, 5 years of consecutive dividend increases are already sufficient, while the minimum requirement is 25 years for the US stocks.
Difference Canadian and US Dividend Aristocrats
The S&P 500 applies the following criteria to construct the US Dividend Aristocrats list:
- must be members of the S&P 500
- must have increased dividends every year for at least 25 consecutive years
- Market Cap at least USD 3 billion
- Liquidity at least USD 5 million (average daily value traded)
- Diversification, at least 40 constituents and not sector allocation above 30%
The Canadian Dividend Aristocrats are based on Canadian companies within the S&P Canada BMI traded at the Toronto Stock Exchange (TSX) and a managed dividends policy of increasing dividends for at least 5 consecutive years. Furthermore, their market cap should be at least CAD 300 million.
When looking at the fundamentals, the average dividend yield of 4.2% is almost double the 2.3% of the US Dividend Aristocrats. Also, the P/E ratio is lower, 25.61 (US) versus 16.5 (Canadian).
Higher total returns with lower volatility is the perception of investors in the Dividend Aristocrats. So, what about the Canadian dividend aristocrats and their historical performance? The annualized total return over the last 10 years is 9.72% for the Canadian dividend aristocrats while the benchmark returned 7.68%. The performance chart below clearly shows what the effect is of this annual outperformance of +2% in the long run.
Looking at the details on a year to year basis, one will note that higher total returns with lower volatility is not the case of the Canadian dividend aristocrats. Also, the standard deviation, a risk indicator, is also hovering around the value of the benchmark.
Sector overview of the Canadian Dividend Aristocrats
As you can see below, the Financial sector accounts for 22.8% of the index. The IT-sector is on the other end of the spectrum at 1.1%. For comparison, the largest US dividend aristocrats sector is Consumer staples.
Canadian Dividend Aristocrats List
Below are the 96 companies which are currently (Feb-2020) part of the index and meeting the index criteria as defined by S&P.
The top-10 holdings in the Canadian Dividend Aristocrats are listed in the table below:
All constituents are listed below and group by sector.
CommunicationsTracking all the Canadian dividend aristocrats is simple, BlackRock offers the ISHARES SP TSX CDN DIVIDEND IDX FD (TSE:CDZ), which is an ETF tracking this S&P index. Please be aware that convenience comes with a cost. This ETF has a management expense ratio of 0.66%.
Other Sources of Dividend Investment Ideas
The Dividend Aristocrats list is not the only way to quickly screen for businesses that regularly pay rising dividends.
- The Dividend Kings List is even more exclusive than the Dividend Aristocrats. It is comprised of less than 20 businesses with 50+ years of consecutive dividend increases.
- The MoneyInvestExpert Defensive Aristocrats is a performance-based top-10 selection of the Dividend Aristocrats to outperform the market on the long-term.
- Portfolio lists like the Berkshire Hathaway Portfolio or Bill Gates’stock portfolio can be a source.
- For the European focused investors there is also the list of European Dividend Aristocrats.
- Dividend Champions are not necessarily members of the S&P 500 index, have increased their dividend for 25 or more consecutive years.
- 100+ years of dividend, the list of stocks that pay over 100 year of dividend can be an list of inspiration.
Next to selecting the right dividend stocks, important principles for successful long-term investing are Disciple, Diversification, Defensive & indeed Dividend. Read more about this in our free e-book.
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