A rough year for big-cap dividend growers
WHAT ARE WE LOOKING FOR?
There seem to be no sure bets these days. What was hot earlier in the year is now not and what was not is now hot.
So it is not surprising that some investors who otherwise might have chased the latest trend in the market are taking a more conservative approach and gravitating toward big-cap dividend paying stocks, particularly those that have a history of growing their dividends.
HOW HAVE BIG-CAP DIVIDEND-GROWING STOCKS FARED?
George Vasic, strategist at UBS Securities Canada Inc., took his annual look at the big-cap dividend growers in the S&P/TSX 60 index and found they too have had a rough time over the last year.
The list is dominated by financial stocks. But there are some non-financial issues as well, and while such stocks are far from abundant, those that are there can provide some sector diversification, Mr. Vasic noted. Three non-financial issues - Canadian Tire Corp. Ltd., Canadian Pacific Railway Ltd. and Shaw Communications Inc. - were added to the list, as they now have established a five-year track record of dividend growth. TransCanada Corp. was transferred to the list as it has become more of a dividend grower than a high-yield play. SNC-Lavalin Group Inc. was another addition as it has now graduated from the mid-cap index.
What's more, four energy stocks besides Imperial Oil Ltd., which was already on the list, now have grown their dividends for five consecutive years, thereby allowing for the creation of an energy dividend-growers list.
WHAT DID WE FIND?
Both the financial dividend-growing stocks and the non-financial dividend-growing stocks have outshone the TSX 60 on an annualized basis since 1995 by a healthy margin, and that is without taking their dividend yields into account.
That is not to say that it has been smooth sailing even for some dividend-growth stocks. Some have recorded quite hefty declines over the past year. The one-year price changes ranged all the way from an increase of 24 per cent for SNC-Lavalin Corp. to a decline of 37.3 per cent for Canadian Tire.
The 10-year price changes for those that have them are even more diverse.
UBS dividend growers
| $ Price | % | YTD % | 1-yr % | 10-yr % | Div. growth % | Div. growth % | ||
| Company name | Symbol | Aug. 8 | Yield | price chg | price chg | price chg | 1995 to 2003 | 2003 to 2008 |
| Bank of Montreal | BMO-T | 49.04 | 5.8 | -12.9 | -24.1 | 44.8 | 9.6 | 15.9 |
| Bank of Nova Scotia | BNS-T | 50.91 | 3.9 | 1.3 | 5.4 | 208.6 | 13.3 | 18.2 |
| Canadian National Railway | CNR-T | 56.61 | 1.7 | 21.4 | 0.3 | 326.4 | 22.5 | |
| Canadian Natural Resources | CNQ-T | 77.58 | 0.5 | 8.5 | 10.2 | 1,386.4 | 21.7 | |
| Canadian Pacific Railway | CP-T | 67.03 | 1.5 | 4.4 | -11.1 | 14.2 | ||
| Canadian Tire Corp. | CTC.A-T | 50.10 | 1.7 | -32.5 | -37.3 | 26.2 | 16.0 | |
| CIBC | CM-T | 62.35 | 5.7 | -11.6 | -28.8 | 72.7 | 10.5 | 16.2 |
| Enbridge Inc. | ENB-T | 44.50 | 3.0 | 11.2 | 18.0 | 184.8 | 6.5 | 9.7 |
| EnCana Corp. | ECA-T | 70.95 | 2.4 | 4.8 | 11.8 | 658.0 | -0.3 | 62.1 |
| Imperial Oil | IMO-T | 48.31 | 0.8 | -11.6 | 7.4 | 511.5 | 4.0 | 4.4 |
| Manulife Financial | MFC-T | 37.57 | 2.9 | -7.4 | -6.1 | 18.8 | ||
| National Bank of Canada | NA-T | 51.75 | 4.9 | -1.0 | -10.8 | 116.5 | 13.2 | 18.1 |
| Royal Bank of Canada | RY-T | 47.64 | 4.3 | -6.1 | -11.4 | 156.5 | 14.3 | 18.4 |
| Shaw Communications | SJR.B-T | 22.26 | 3.6 | -5.8 | -5.8 | 234.3 | 4.6 | 95.2 |
| SNC-Lavalin Group | SNC-T | 53.20 | 0.9 | 10.5 | 24.0 | 1,434.6 | 15.1 | 29.2 |
| Sun Life Financial Inc. | SLF-T | 39.81 | 3.8 | -28.5 | -23.5 | 16.2 | ||
| Suncor Energy Inc. | SU-T | 54.07 | 0.4 | 1.2 | 15.6 | 860.0 | 3.8 | 15.8 |
| Talisman Energy Inc. | TLM-T | 17.77 | 1.1 | -4.2 | -2.7 | 377.7 | 20.8 | |
| TD Bank | TD-T | 62.96 | 3.8 | -9.4 | -6.5 | 145.7 | 12.9 | 15.3 |
| Thomson Reuters | TRI-T | 37.32 | 2.7 | -7.4 | -11.5 | -5.4 | 4.5 | 8.3 |
| TransCanada Corp. | TRP-T | 39.85 | 3.6 | -1.7 | 8.1 | 71.4 | 0.7 | 5.9 |
SOURCE: GLOBE INVESTOR AND UBS
