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11 Top Canadian Dividend Stocks Available as ADRs

by: David Hunkar August 29, 2008 | about stocks: BMO / BNS / BPO / CNI / CNQ / ENB / IMO / MFC / RY / SLF / TD    

David Hunkar

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There are many stocks in the Canadian stock markets that have high dividend yields and/or dividend growth rates. The goal of this post is to identify those Canadian stocks that consistently raised dividends year over year and trade as ADRs in the US. We shall use the S&P TSX Canadian Dividend Aristocrats Index as the basis.

S&P TSX Canadian Dividend Aristocrats Index:
This index has a total of 37 companies. It includes companies which have followed a managed-dividend policy of increasing dividends every year for at least 7 years.

S&P created this index because dividends have played a major role in the returns of the S&P/TSE Composite Index. Since 1956 dividends alone have accounted for 30% of the total returns of the TSE Composite Index. So dividends account for almost 1/3rd of returns. The past 5 year return of the Dividend Aristocrats is 18.31% (using Canadian dollars).

Canadian Dividend Aristocrats Index - Components as ADRs in US:

Out of the 37 stocks in the index, 11 of them trade as ADRs in the NYSE. Hence an investor looking to add some Canadian dividend stocks can easily add them to their diversified portfolio. The following is a listing of those 11 ADRs:

1. Bank of Montreal  (BMO)
Dividend Yield - 6.13%

2. Bank of Nova Scotia Halifax (BNS)
Dividend Yield - 4.11%

3. Brookfield Properties Corp (BPO)
Dividend Yield - 2.80%

4. Canadian National Railways (CNI)
Dividend Yield - 1.75%

5.Canadian Natural Resources Limited  (CNQ)
Dividend Yield - 0.44%

6.Enbrdige Inc (ENB)
Dividend Yield - 2.98%

7.Imperial Oil Ltd (IMO)
Dividend Yield - 0.73%

8.Manulife Financial Corp (MFC)
Dividend Yield - 2.83%

9.Royal Bank of Canada (RY)
Dividend Yield - 4.41%

10.Sun Life Financial Serv Canada (SLF)
Dividend Yield - 3.63%

11.Toronto-Dominion Bank (TD)
Dividend Yield - 3.97%

Note: The above yield info. is as of Aug 29, 2008.

For a full listing of the Dividend Aristocrats Index click the link below: TSX-Dividend-Aristocrats-Index-Components

The latest factsheet of this index can be found by clicking the link below: TSX-Dividend-Aristocrats-Index-Factsheet

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This article has 19 comments:

  •  
    Aug 29 07:48 AM
    With a headline like that, I thought perhaps the author would consider the Canadian Royalty Trusts, but was disappointed that he didn't. Why not at least consider Canadian Oil Sands Trust, Penn West Energy Trust, Penn Growth Trust, Precision Drillilng Trust, and the others as well. He did include Canadian National Resources, I should note. The energy related trusts don't have the baggage that comes with the financials, and I like that.
    Reply
  •  
    Aug 29 08:44 AM
    good thinking red baron.i agree. you have to think for yourself these days as everybody has an agenda
    Reply
  •  
    Aug 29 09:00 AM
    The trust structure will be dismantled in the next few years as the government legislates (closes) the tax loopholes which allowed the creation of trusts. Most high-yielding trusts you see in your scans are distributing capital anyways.
    Reply
  •  
    Aug 29 09:43 AM
    I would not consider any financial institution a top stock in my book.
    I much prefer energy trusts with higher and stable dividend yields. Oil prices will only go in one direction in the long run (up, up and up)

    1) COSWF pays 12% and will likely increase the dividend 20% further according to Kurt Wulff (SA contributor)
    2) PWE pays 13%
    3) ERF pays 12% (They announced a recent increase for September)
    4) HTE pays 17%

    Yes, the income trust structure will be dismantled soon, but under the new (or conventional) corporate structure will trusts continue to pay regular dividends as before.

    The trick here is to properly structure trusts your portfolio.
    1) Within a retirement account (IRA for USA or RRSP for Canada) the dividends are taxed and the dividend taxes are essentially lost money.
    2) Outside a retirement account, the taxes paid on the dividends can deducted on your tax return and offset your total taxes due.
    Reply
  •  
    Aug 29 09:49 AM
    with good yields & the deduction off your us tax the trusts are ok as long as they pay the good yields.
    Reply
  •  
    Aug 29 10:01 AM
    I own CNQ, but at a .44% dividend, I'd hardly classify it as "high yield". Yes, it has raised it's dividend for 7 years, but from a very small base...it has a long way to go until "high yield" territory.
    Reply
  •  
    Aug 29 10:05 AM
    CNQ is probably the best oil sands play. But what is it doing on a dividend aristocrats list with a yield of 0.44%
    Reply
  •  
    Aug 29 10:51 AM
    Canadian stocks trade on US markets directly, not as ADRs. The Bank of New York Mellon ADR website lists no Canadian ADRs.
    Reply
  •  
    Aug 29 11:30 AM
    I am not fond non US firms, anything can and does happen. You could buy some real dividends here in the US.
    BAC @ 9.5%; CNB @ 8.5%; PFE @ 6.5%; MO @ 5.5% GE @ 4.4%; D @ 3.6%; and KO @ 2.8%.

    I know, two are banks, but when CNB hit $3.50: I pulled the trigger. If you can not find something to buy now, you must be waiting for a new high.
    Reply
  •  
    Aug 29 11:53 AM
    unbelievable that the author is not aware of the difference between an ADR and an interlisted stock.
    Reply
  •  
    Aug 29 12:55 PM
    hwood007,
    Anything can happen and does happen with US firms as well.

    Remember: Enron, Worldcom, Imclone, Adelphia, Bear Stearns ...... etc.

    Reply
  •  
    Aug 29 02:48 PM
    check out FRO.check div. history.i have no connection to firm or wall st. just a happy share holder.
    Reply
  •  
    Aug 29 04:24 PM
    hwood: Your list is reasonable from MO onwards. Those are all fairly safe stocks that are unlikely to cut dividends or inflict significant loss of capital on shareholders. But are you really comfortable when you look at the BAC balance sheet or the PFE pipeline?

    Also, there's a difference between Canada and countries like BRIC. Canada is like USA North: our economies are intertwined, language and culture are the same (excepting Quebec and Tim Horton's vs. Dunkin Donuts), trade is almost entirely free, governments fairly similar, etc. If anything, I would say Canada is safer than the US and potentially higher-growth - if anything further goes wrong in the US, a lot of people will be thinking about moving to Canada, doing more business in the north, or leaning more heavily on them for the resources we need. The only thing Canada needs to be the next hot country is a little bit of global warming. If every place was 10 degrees hotter, British Colombia or New Brunswick would look a lot more appealing relative to Arizona and Florida.
    Reply
  •  
    Aug 29 06:48 PM
    najdorf,

    I agree 100%. In addition, when dealing within the energy /resources sector, things like "nationalization&... whether covert (Putin), or open (Chavez) are MUCH less likely.

    Reply
  •  
    Aug 30 02:33 PM
    najdorf, very true. There is much to like about Canada, but too much of their otherwise healthy economy remains dependent on the US. Most notable, and worrisome, is the extent to which Ontario and Quebec depend on US automobile manufacturers. The agricultural and materials activities in the west offer far more favourable prospects. Regardless of whether there is a population boom (due to continued arctic warming and/or migration out of the sinking US), these activities will continue to generate demand for transportation of both equipment and supplies and output product. A population boom would only serve to increase demand for transportation of consumer goods, since few are manufactured there. All of this is great news for CNI, by far the best company in your list despite its modest dividend. The others are either banks or oil/mining concerns; CNI will continue to benefit from the boom, and when the inevitable bust comes it will still have an excellent business of lasting value. Picks and shovels...
    Reply
  •  
    Aug 31 10:17 AM
    To expand on the previous comments about US investments in Canada.

    Canada is the largest provider of oil to the USA. $150 billion dollars is spent by the USA for Canadian oil. Unlike money spent for Middle East oil which moves one way, the Canada is the largest buyer for US exports ($215 billion according to cia.gov). There is a circuluation of money between the USA and Canada, unlike the money spent for Middel East oil which never returns to the USA and is spent on royal palaces, indoor ski hills and underwater hotels.
    Reply
  •  
    Aug 31 12:12 PM
    and funds Al Quieda, Hamas and Hezbollah.
    Reply
  •  
    Aug 31 04:19 PM
    Just to clarify something about Canadian energy trusts. They were not created by establishing a tax loophole. The Canadian Govt made a decision to further encourage exploration and development of oil, nat gas, and coal properties that the oil majors were not interested in developing (due to poor economics). This was a wise decision which the current Ottawa Govt has completely forgotten as Canadian reserves have grown over 100% since CANROYs were established. Besides this fact would anyone claim that US REITs were established out of a tax loophole? Don't think so. Loophole is a bogus word in this context.
    Reply
  •  
    Sep 08 11:09 PM
    Guys - Sorry for the delayed replies.

    redbaron - Yes Canadian Royalty Trusts have great dividends.But in this
    article I looked at the commons only.Will post a piece on these trusts soon.

    MurphMan - Agreed.Point noted.Thanks.

    weiwentg - It is included in the Dividend Aristrocrats list because it
    increased dividends each year for the past seven years.

    eWhartHog,User 197175 - Thanks for the note.It was an error on my part.

    najdorf - Agree.The number one trading partner of Canada is the US.
    Canada is heavily dependent on US.
    Reply
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