Overview Of The Canadian Dividend Space
by | Posted 10.1.2012 | Post Comment (No Comments)

Today, I decided to take a better look at the dividend space in Canada. As it becomes clear that international diversification is key for any dividend portfolio, looking to Canada makes a lot of sense. Why? When we compare the Canadian and US economies, there are similarities but also a lot of differences. Before getting into the specifics, here are a few interesting facts:

The main Canadian stock index, the S&P TSX60 has a dividend yield of 3.08% (almost 50% higher than the 2.06% dividend yield offered by the S&P500).

-The top names are:

TATransAlta Corp7.89
PWTPenn West Petroleum Ltd7.56
ERFEnerplus Corp6.62
COSCanadian Oil Sands Ltd6.56
CPGCrescent Point Energy Corp6.32
SLFSun Life Financial Inc6.2
BCEBCE Inc5.21
ARXARC Resources Ltd4.99
BMOBank of Montreal4.95
POWPower Corp of Canada4.86

-the top sectors that contribute to the TSX60 yield are:

SectorAnnual Yield in TSx60% Of Total
Commercial Banks1.17219348738.10%
Oil Related0.74533179924.20%
Telecom Services0.31731571510.30%
Life/Health Insurance0.2002228856.50%
Mining0.2410669487.80%
Agricultural Chemicals0.0793328552.60%
Transport-Rail0.0782874782.50%
Electric-Integrated0.0473954171.50%
Multimedia0.0427225661.40%
Real Estate Oper/Develop0.0279425670.90%
Auto/Trk Prts&Equip-Orig0.0230838480.80%
Retail-Drug Store0.0200869260.70%
Food-Retail0.0153730330.50%

Analysis

-I do think that overall, an investor that would only buy Canadian dividend stocks would be making a big mistake. It is basically a bet on Banks+Insurance companies as well as Natrual Resources as over 75% of the dividends are paid out by such companies

That being said, it is clear that you’d be missing out if you didn’t include a few Canadian companies in your portfolio. For example, financial companies are very difficult to trust in the US given everything that has happened. In Canada, the banks are very protected and very conservative but still pay solid dividend payouts Several of the big Canadian names are also traded on US markets. Among the names that you can look out for are:

Bank of Montreal (BMO)
Bank of Nova Scotia (BNS)
Canadian Imperial Bank of Commerce/Canad (CM)
Royal Bank of Canada (RY)
Toronto-Dominion Bank/The (TD)

One of them is only traded in Canada:

National Bank of Canada (NA)

The other very interesting sector of course is commodities which should continue to do well despite the world economy struggling. There are several interesting names. Here are a few of the top yielding ones:

You can also find out more about these stocks on CanadianDividendStocks, our website dedicated to Canadian stocks. And finally, while REIT stocks are not in the TSX60, they provide great income and investment possibilities, you can find out more about them at CanadianReit.ca🙂

Do you invest in Canadian dividend stocks? If so, what kind of experience have you had?