# Canadian dividend paying stocks



## leeder (Jan 28, 2012)

Hello, I'm looking to hold a few Canadian dividend paying stocks. I'm a pretty passive investor and will likely hold these stocks indefinitely. My initial investment will be about $15k, likely split evenly between 5 stocks (so about 3k each). I just want to get an opinion for the following stocks and if anyone has any better suggestions (other stocks? should I look at ETFs? are the below stocks I have listed diversified enough?)

BCE Inc.
Corus Entertainment
Husky Energy
IGM Financial
TransAlta Corporation

Thanks!


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## londoncalling (Sep 17, 2011)

I think a better question is why did you choose these 5? Not trying to be rude but if you offer insight into why you selected those 5 stocks others will be able to confirm/refute your hypothesis. At first glance they seem like decent picks. However, what makes those 5 better than any others? I haven't studied your selections and cannot comment as I don't hold any of those stocks myself.
I'm certain if you try to explain why you think those are the stocks for you you will receive many replies. More importantly, you will learn lots about yourself as an investor(what you know, what you do not know and what you need to know) and your picks. 

Cheers! and welcome to the forum.


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## doctrine (Sep 30, 2011)

I would not buy IGM while their net sales of new mutual funds are negative, which they currently are by about $1B/year. They are buying back stock so you won't see a big effect on their per share earnings or dividends, but there is not a lot of room for growth and risk if low cost ETFs take off. Would take a bank like BNS or BMO over them - similar yield but less risk and likely better capital appreciation long term.


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## Miser (Apr 24, 2011)

londoncalling said:


> I think a better question is why did you choose these 5? Not trying to be rude but if you offer insight into why you selected those 5 stocks others will be able to confirm/refute your hypothesis. At first glance they seem like decent picks. However, what makes those 5 better than any others? I haven't studied your selections and cannot comment as I don't hold any of those stocks myself.
> I'm certain if you try to explain why you think those are the stocks for you you will receive many replies. More importantly, you will learn lots about yourself as an investor(what you know, what you do not know and what you need to know) and your picks.
> 
> Cheers! and welcome to the forum.


Nice post!
I for one, will heed your advice,


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## leeder (Jan 28, 2012)

Thanks for the response. I'll try to be more specific then. 

Here's my background: I've basically maxed out on my RSP (on mutual funds) and TFSA (normal HISA account) contributions. I don't have any other liabilities, such as mortgage or car financing. At the same time, I have excess cash that I know I won't be touching that is sitting in an account and not generating much of a return. That's why I'm thinking of opening a non-registered account and dabble in the stock market.

My considerations: I am not an active trader. And, like everybody, I would like to maximize returns and minimize tax. That's why I decided on Canadian dividend paying stocks because eligible dividends can provide dividend tax credits. I had considered owning a bunch of ETFs, but I figure that some of the distributions may not be eligible dividends. I also believe that I may get more in return if I just own the stock instead (I could be wrong though).

Why I chose these 5 stocks: Setting aside about $15k, I believe investing $3k in different Canadian sectors would be diversified enough of a portfolio. I tried to follow a criteria, in which all dividend distributions have increased in the last couple years. The only exception was Husky Energy, but I haven't heard too many bad news from them recently, and I think it's undervalued. I also tried to screen for P/E ratios less than 15, decent payout ratio, and dividend yield greater than 1. Of course, I also looked for any negative news reports that might seriously affect the company.

I hope that's enough detail haha. I welcome any feedback/suggestions.


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## leeder (Jan 28, 2012)

doctrine said:


> I would not buy IGM while their net sales of new mutual funds are negative, which they currently are by about $1B/year. They are buying back stock so you won't see a big effect on their per share earnings or dividends, but there is not a lot of room for growth and risk if low cost ETFs take off. Would take a bank like BNS or BMO over them - similar yield but less risk and likely better capital appreciation long term.


Interesting, doctrine. I didn't find out any info about the net sales of mutual funds. I had considered BMO as well, but leaned towards IGM last minute because I couldn't find too many negative news about them and their share price was lower.


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## Argonaut (Dec 7, 2010)

I like the 5 x $3000 dividend stock model, this is what I did with my TFSA last year. 

As mentioned, I would dump IGM for a bank. TD or BNS is the pick here. I would also dump the two resident pump-stocks, Husky and TransAlta. Actually I would scrap it all except for maybe BCE and the excellent 5x3000 model.

1x Telecom: BCE, Telus
1x Bank: TD, BNS
1x Pipeline: ENB, TRP, IPL.UN
1x REIT: REI.UN, REF.UN
1x Utility: FTS, EMA, CU

I had this in my 2011 TFSA minus a bank and plus CNR, which returned 15%+ altogether.


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## leeder (Jan 28, 2012)

@ Argonaut: Congrats on the 15%+ return! One thing I wanted to emphasize is that I'm planning to hold these investments in a non-registered account because *I've already maxed out my contributions in RSPs and TFSA.
*
Couple questions for you on your suggestions:

1) Is it worthwhile to hold REIT in a nonregistered account? From what I understand, the distributions are a mix of return of capital, dividends, capital gains, and interest. I'm thinking that it may not be tax efficient to do so.

2) What do you think of the future outlook of pipelines and REIT? I'm scared that these two sectors are overvalued.

If you could please provide your opinion, I would appreciate it!


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## humble_pie (Jun 7, 2009)

leeder you have done a fine job coming up with the plan to hold 5 stocks outright in order to receive 100% of the dividends plus 100% of the eligible dividend tax credits, while avoiding etf mers along along with possible etf interference with the tax accounting.

so far, so good. What i didn't care so much for was your list of choices.

argo's Famous Five list came to mind, of course, so i'm glad he visited this thread & offered its current version.

the difference is that argo's list was not plucked from stock screeners but was hewn out of solid experience. It can stand up to any analytic, of course, & these are all good solid stocks w good dividends. But in addition argo has held them in one of his accounts ever since he joined this forum more than a year ago.

for a carefully hand-crafted small portfolio, i'd take argo's list any time, every time. Another advantage of this plan is that the investor can build on it easily by adding more $$ to any of the individual holdings. The same list would serve just as well for a portfolio of 50k or even 100k.

you'll also note that there are choices in each category, so the final word & the finishing touches will be your own.


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## Uranium101 (Nov 18, 2011)

if you are serious about deferring taxes, non dividend stocks is the ideal source. no sell = no tax


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## leeder (Jan 28, 2012)

Uranium101 said:


> if you are serious about deferring taxes, non dividend stocks is the ideal source. no sell = no tax


haha... yes, you're quite right. I suppose it's a comfort thing. I don't want my investment to be based solely on stock price, in which my gain/loss is determined when I sell the stock. Additionally, I find that most companies that distribute dividends tend to be more reliable. I guess I can live with a little bit of tax; nonetheless, I still want to minimize that aspect.


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## Argonaut (Dec 7, 2010)

It's always nice to get the humble endorsement. But to play devil's advocate to the both of us, this list has performed quite poorly in comparison to the general market so far in January. 

I haven't noticed much because gold and silver are doing well for me, but for the equity-only investor it is something to watch out for. These strong-dividend types may indeed be riding a bit high from last year, but I would buy them all again today. They serve my purpose of creating a "dividend-snowball" on top of my TFSA hill. Intention and execution will vary for different investors.


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## KaeJS (Sep 28, 2010)

Argo is right. 

I hold BCE, CPG, ECA, TRP, TA, BMO for solid dividend payers. 

The only one that has performed this year is BMO. 

However, this is expected as they were largely sought after last year and have a lower general beta. Most stocks have a higher beta than these ones, anyway, and thus, they would not perform as well even if they hadn't been largely sought after last year. 

I am still holding all of them with no plans to sell.


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## Toronto.gal (Jan 8, 2010)

KaeJS said:


> I am still holding all of them with no plans to sell.


So, you're an investor and a trader, but is that even possible? Don't you have to be either investor or gambler? 

*Argo:* I did say to you that your history degree came in handy!


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## gibor365 (Apr 1, 2011)

KaeJS said:


> Argo is right.
> 
> I hold BCE, CPG, ECA, TRP, TA, BMO for solid dividend payers.
> 
> ...


KaeJS, no any US dividend chapmions/contenders?


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## KaeJS (Sep 28, 2010)

Toronto.gal said:


> So, you're an investor and a trader, but is that even possible? Don't you have to be either investor or gambler?






gibor said:


> KaeJS, no any US dividend chapmions/contenders?


My only US position right now is 50 shares of MT @ 17.85.

I sold all my US positions. I will buy some in the future, but I have no capital right now. I still have $3,600 of margin to cover before I can consider buying more stocks.


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## newbie (Dec 12, 2009)

KaeJS said:


> My only US position right now is 50 shares of MT @ 17.85.
> 
> I sold all my US positions. I will buy some in the future, but I have no capital right now. I still have $3,600 of margin to cover before I can consider buying more stocks.




TRP Short positions change


2012.01.13 2011.12.30 Net Change 
TRP 26,090,435 23,405,857 2,684,578 

GL


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## gibor365 (Apr 1, 2011)

newbie said:


> TRP Short positions change
> 
> 
> 2012.01.13 2011.12.30 Net Change
> ...


Ata jahol letargem misparim shelha l safa ioter pshuta?


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## newbie (Dec 12, 2009)

gibor said:


> Ata jahol letargem misparim shelha l safa ioter pshuta?


batuach
Hamisparim halalu omrim she yesh hagdala lmeniot TRP

ani lo yachol lehiot yoter pashut.
yesh lecha lameniot haze esrim veshesh million tishim elef vearba meod vechamesh mikumim meshutafim lenegdo.
ani choshev she ata meviin?
ani lo rotze lichtov be ivrit ki any lo rotze lehanien af echad me ha eter .
bahatzlacha
ve shavua tov

be kitzur ; im anachnu mamshichim ledaber beivrit kol ha anashim po holchim lehitlonen aval lo eichpat li.......


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## doc987 (Nov 23, 2011)

leeder said:


> Hello, I'm looking to hold a few Canadian dividend paying stocks. I'm a pretty passive investor and will likely hold these stocks indefinitely. My initial investment will be about $15k, likely split evenly between 5 stocks (so about 3k each). I just want to get an opinion for the following stocks and if anyone has any better suggestions (other stocks? should I look at ETFs? are the below stocks I have listed diversified enough?)
> 
> BCE Inc.
> Corus Entertainment
> ...


With 15K to invest, if you're looking for diversity and yield amongst canadian companies, i would just buy one of these ETF's instead of buying individual stocks: XIU, XDV, CDZ. This makes more sense for now and when your portfolio grows you can start dabbling into individual equities. Just my opinion.


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## londoncalling (Sep 17, 2011)

leeder said:


> Thanks for the response. I'll try to be more specific then.
> 
> Here's my background: I've basically maxed out on my RSP (on mutual funds) and TFSA (normal HISA account) contributions. I don't have any other liabilities, such as mortgage or car financing. At the same time, I have excess cash that I know I won't be touching that is sitting in an account and not generating much of a return. That's why I'm thinking of opening a non-registered account and dabble in the stock market.
> 
> ...


Now that we know where you`re coming from, you can see where you`re going... I for one agree with others on this board in that your 5 X $3000 is a good way to allocate these funds. I also like your desire to save on tax with dividend grower and payers. You seem to have the rest of your financial house in order so now you can start to be a stock owner. I like that you want to be more active than couch potato and own div stocks. Perhaps that`s because that is what I try to do myself. That doesn`t mean it`s right for you (or me for that matter but it`s seems to be so far) but I think by your post you seem to know what`s going on and what you are capable of...


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## londoncalling (Sep 17, 2011)

Argonaut said:


> I like the 5 x $3000 dividend stock model, this is what I did with my TFSA last year.
> 
> As mentioned, I would dump IGM for a bank. TD or BNS is the pick here. I would also dump the two resident pump-stocks, Husky and TransAlta. Actually I would scrap it all except for maybe BCE and the excellent 5x3000 model.
> 
> ...



I think that you should pick the same allocation as listed above,

1 telco- BCE or Telus
1 bank - any of the big 5 depending on what you are looking for. they each have their merits and hindrances
1 pipeline - ENB, PPL, TRP or IPL I would agree with you that these have had a big run up last year. If you can get one of these on a dip than great. Hard to say what they will do in the short term
1 REIT - I would pick a large cap REIT with high AFFO, decent payout ratio and yield
1 Utility- i don`t own any of FTS, EMA or CU but of the 3 FTS would be my choice.

another option would be to buy CNR or CP as they seem to be stable dividend yielders and growers. Ultimately the choice is yours and the reasons you gave were sound. 

Good luck


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## humble_pie (Jun 7, 2009)

_" i would just buy one of these ETF's instead of buying individual stocks: XIU, XDV, CDZ." _

but the OP has already put forward, very succinctly, all the reasons why he doesn't want to buy an etf. 

1) better performance. A cherry-picked list will not contain all the losers that an index, by definition, has to include.

2) better tax results. The OP is going for strictly eligible dividends so as to obtain 100% dividend tax credits. ETFs notoriously pay out an alphabet soup of roc, dividends, capital gains, special dividends, some interest, etc.

3) zero mers, zero carrying costs.

argo's list has outperformed the indexes, will continue to outperform on a longterm basis. It's a nifty little portfolio-in-a-takeout-box. It's holt renfrew packaged for walmart customers.


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## doctrine (Sep 30, 2011)

IGM's net sales are in their quarterly reports. You have to make sure you look at their MacKenzie results, because they are part of IGM although they report MacKenzie mutual fund sales separately.


> Investors Group Operations
> 
> Mutual fund sales for the nine months ended September 30, 2011 were $4.74
> billion compared to $4.36 billion in the prior year and mutual fund net
> ...


http://www.reuters.com/article/2011/11/10/idUS273406+10-Nov-2011+MW20111110

Therefore, in the first 9 months of 2011, total net redemptions of IGM + MacKenzie (which combined make their total portfolio) were $1.053 billion.

That is why I would not buy IGM, because they are not growing in net sales therefore they require increasing markets to overcome the loss and increase gross income. As well, their net losses in MacKenzie were greater than last year, and the net sales in Investors Group were lower.


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## leeder (Jan 28, 2012)

Thanks everybody! All your postings were very informative. If anyone has any other suggestions on good, high paying Canadian dividend stocks, I am all ears. What do you guys think of the following stocks (and I'm just throwing some out here just for discussion's sakes):

FCR: low share price, P/E less than 15, has paid out pretty consistent amount of dividends every year

AGF-B: another low share price, P/E less than 15, consistent dividend grower

COS: attractive P/E, high dividend payout


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## humble_pie (Jun 7, 2009)

no, now you're getting distracted by too much fiddling with stock screeners (some other cmf members have this failing, too) ))

remember, screeners are backward-looking tools, so they are full of errors. Example: company pays one special dividend once in its lifetime, bang, they get into the screener as a dividend payor. Which is false.

another example: company sells a subsidiary & takes the profits into earnings, which grossly distorts the earnings figs for that year. Bang, the screener goes berserk.

basically the ready-to-go small portfolio already packaged up in argonaut's nice-looking takeout box has one bank, one utility, one big energy producer, one telco & one other swing stock which could be a gold, a retail merchandiser (shoppers is not bad) or a reit.

if it were myself, i'd omit item No. 5 until i had more knowledge. REITS are toppish now plus they have the complicated tax sequellae that you mentioned you wish to avoid.


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## gibor365 (Apr 1, 2011)

leeder said:


> AGF-B: another low share price, P/E less than 15, consistent dividend grower
> 
> COS: attractive P/E, high dividend payout


I wouldn't buy any mutual fund company now, as ETFs popularity should hit them sooner or later.

COS payout is 50% , it's not high at all. But they cut their dividends, in 2010 they paid $.5 quoterly and now $.3

_1 REIT - I would pick a large cap REIT with high AFFO, decent payout ratio and yield
_
This is where I'd pick ETF (ZREor XRE)


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## leeder (Jan 28, 2012)

@ humble_pie: If you were choosing stocks, what kind of qualities would you look at that would prompt you to say, "yes, that's a stock that I want to own".

I totally understand what you're saying about stock screeners and the historical approach that people would take. Yet, something like looking at the growth of dividends in the last 10 years to determine whether the stock is a dividend achiever is also a historical approach.

I guess, as a newb investor, I'm trying to find out where to draw the line in terms of looking at historical data. haha... hopefully, I'm asking the right questions...


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## leeder (Jan 28, 2012)

gibor said:


> _1 REIT - I would pick a large cap REIT with high AFFO, decent payout ratio and yield
> _
> This is where I'd pick ETF (ZREor XRE)


I looked into the ETFs for REITs couple days ago. Two things strike me:

1) These ETFs do not have number of holdings. For example, REI.UN makes up 1/4 of XRE's portfolio

2) Relative high MER with about 0.55% for an ETF

If I did buy a REIT, wouldn't it be more beneficial to buy something like REI.UN? That said, I'm tempted not to buy REIT, just because of the high interest content in the distributions.


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## gibor365 (Apr 1, 2011)

leeder said:


> I looked into the ETFs for REITs couple days ago. Two things strike me:
> 
> 1) These ETFs do not have number of holdings. For example, REI.UN makes up 1/4 of XRE's portfolio
> 
> ...


This is the difference between XRE and ZRE. XRE is capped this is why only REI, HR, CWT and REF make 54% of ETF. ZRE is weighted, so all holdings make up to 6% each. 
And now it's simply dificult to select only 1 REIT


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## doctrine (Sep 30, 2011)

I also don't like AGF for the same general reasons as IGM, except the situation is much worse. AGF is issuing many shares (in options not just for purchases), so there is huge dilution, and they also have net redemptions, which is a worst case scenario.

There is no easy answer on how to know this, other than to follow the companies for a while and read the news releases and at least the highlights and consolidated statements of the quarterly reports.


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## leeder (Jan 28, 2012)

I have another question in regarding income trusts. I know income trusts pay a mix of dividends, ROC, capital gain, and interest. But if I stick it into TFSA, would it not be as beneficial as dividend paying stocks? I'm not very familiar with income trusts, so please pardon my ignorance.

Aside from REITs, are there any good income trusts that anyone can recommend?


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## Argonaut (Dec 7, 2010)

Best part about holding trust-like stocks in a TFSA is that you don't have to worry about time and energy wasted figuring out the rat's nest come tax time. Everything gained in the TFSA is tax free whether it be capital gains, interest, or dividends.

As for what to recommend for that kind of stock, I'm an Inter Pipeline (IPL.UN) cheerleader. It's hard not to be when it's been my flagship hold since Oct '10. Every once in a while it throws out buying opportunities, like the recent dip below 17.50.


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