# Best Dividend Stocks



## Belguy (May 24, 2010)

I am working on a new portfolio of some of the best dividend paying stocks. So far, my research has come up with the following:

BCE (BCE)
Emera (EMA)
Transcanada (TRP)
Shaw (SJR.B)
Fortis (FTS)
Enbridge (ENB)
Can Utilities (CU)
Ensign Energy (ESI)
Saputo (SAP)
CN Rail (CNR)

Source: MoneySense.ca

And, from Canadian Business, the following additions:

Fairfax Financial Holdings Ltd. (FFH)
Mullen Group Ltd. (MTL)
Rogers Communications Inc. (RCI.B)

Are there any companies that you would delete from this list and why?

Do you have any additions to suggest and why?

How many different stocks would you hold in a portfolio of dividend payers?

How do you diversify internationally? For example, do you use dividend ETF's such as the iShares Dow Jones Select Dividend Index Fund (DVY) for U.S. exposure and the Powershares International Dividend Achievers Portfolio (PID) which seeks international companies that have increased their annual dividend for five or more consecutive years.

This is my first posting on this site. I am an orphan from the 50Plus Investing Forum which was recently deleted without prior notification. I would appreciate hearing from anyone out there who used to participate in that forum.


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## HaroldCrump (Jun 10, 2009)

Belguy said:


> I am working on a new portfolio of some of the best dividend paying stocks. So far, my research has come up with the following:
> 
> BCE (BCE)
> Emera (EMA)
> ...


If you plan on holding these approx. 15 Canadian companies in your dividend portfolio, consider the Canadian dividend ETF - XDV.
It has only 30 companies and contains all of the holdings you listed above (except BCE perhaps).
For an exciting low fee of 0.50% you can hold 30 of the finest Canadian dividend payers.
If you're going with ETFs for US & international dividend payers, might as well do ETF for Canadian.

Having said that, set your expectations for a reasonable target yield.


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## Broke (May 11, 2010)

Belguy said:


> I am working on a new portfolio of some of the best dividend paying stocks. So far, my research has come up with the following:
> 
> BCE (BCE)
> Emera (EMA)
> ...


Hello Belguy and welcome to this forum. I, too, am a former 50-Plus member and joined this one a few days ago. 

I know you are a fan of ETFs, but you may want to visit the PHN web site and have a look at their "Dividend Income Fund". It gave an average of over 9% per year for the last 10 years. And if you are not interested in the fund, al least you can see which securites comprise it.

https://www.phn.com/Portals/0/PDFs/DownloadFundProfiles/Series A/download_DIF.pdf


Also, if you are working on making a list of dividend paying stocks, you may want to use the Globe and Mail stock filter and make your own selection instead of just relying on a list publisehd by someone else.


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## Cal (Jun 17, 2009)

At a quick glance there are a few companies I wouldn't buy, as I am not that familiar with them (MTL, SAP, ESI, CU, SJR.B).

And I would definitely add a bank or two to the mix of that.


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## Belguy (May 24, 2010)

I do already invest in the iShares Select Dividend Income Fund (DVY) instead of the iShares Canadian Dividend Fund (XDV) mainly because I feel that it offers better diversification by market sectors. Also, I hold the iShares Canadian Value Index ETF (XCV) and the iShares Canadian SmallCap ETF (XCS) and the iShares Russell 2000 ETF (XSU) for my North American holdings.

I think that this is better suited for me rather than having to research and keep on top of several individual companies.

Any other thoughts?

Nice to hear from you again, Broke.


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## HaroldCrump (Jun 10, 2009)

Belguy said:


> I do already invest in the iShares Select Dividend Income Fund (DVY) instead of the iShares Canadian Dividend Fund (XDV) mainly because I feel that it offers better diversification by market sectors. Also, I hold the iShares Canadian Value Index ETF (XCV) and the iShares Canadian SmallCap ETF (XCS) and the iShares Russell 2000 ETF (XSU) for my North American holdings.
> 
> I think that this is better suited for me rather than having to research and keep on top of several individual companies.
> 
> Any other thoughts?


You have answered your own questions:
_I think that this is better suited for me rather than having to research and keep on top of several individual companies._

Given the ETFs you already have, you already own most of those companies anyway.


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## peterboro31 (May 11, 2010)

Belguy said:


> I am working on a new portfolio of some of the best dividend paying stocks. So far, my research has come up with the following:
> 
> BCE (BCE)
> Emera (EMA)
> ...


On the discontinued 50Plus Forum I posted a link to a Toronto Star story re growth and income portfolios. I set up a trial portfolio online and tracked back 10 years from January2010; the current value of original $10000 invested is $32010; a 220.3% for the income portfolio. I didn't track the growth portfolio. In the next post I will supply a link to the portfolio details.


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## peterboro31 (May 11, 2010)

Belguy said:


> I do already invest in the iShares Select Dividend Income Fund (DVY) instead of the iShares Canadian Dividend Fund (XDV) mainly because I feel that it offers better diversification by market sectors. Also, I hold the iShares Canadian Value Index ETF (XCV) and the iShares Canadian SmallCap ETF (XCS) and the iShares Russell 2000 ETF (XSU) for my North American holdings.
> 
> I think that this is better suited for me rather than having to research and keep on top of several individual companies.
> 
> ...


 Hi Belguy: DVY doesn't exist.


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## peterboro31 (May 11, 2010)

Hi Belguy: Would you please post the valid TSX symbol for the select dividend i-share etf; DVY is not valid. Thanks


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## cannon_fodder (Apr 3, 2009)

I hope this isn't threadjacking, but what about Canadian stocks which pay dividends in US dollars? I currently have one (MX) but would like to find out if there are more. Globe investor and google have turned up empty so far.

The reason is simple - it looks like my wife and I will be retiring to a country where the US dollar is used. My goal is to live off our dividends and not touch our capital.


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## humble_pie (Jun 7, 2009)

hello fodder - this is an interesting & little-known issue, not just for those who may plan to live in US dollar jurisdictions but for everybody who holds canadian dividend-paying stocks.

i believe i've posted about this before. Plain fact of the matter is that a number of canadians pay their divs in USD initially. Investors holding these companies in their canadian accounts nearly always pay an invisible currency exchange fee. It's doubly invisible because not only does it not show up anywhere on any financial statement, but also - and this is much worse - the brokers themselves don't know about this at the front line, and the higher-up management that is quietly collecting a currency exchange fee on each and every dividend certainly isn't telling their front line reps or training them to deal with this issue. I'd like to add that i tend to believe the transfer agents are splitting the forex fees with the brokerage houses ... everybody along the line is probably taking a small cut ... and there's almost no way the retail investor can find out.

word of mouth can be good, though. For starters, traditionally all of our big canadian miners paid their divs in USD as the primary currency. Most of these miners (noranda, inco, falconbridge) are gone to forreign owners now, but you'll still find barrick paying divs in USD. Also (i believe, but this has to be checked out) encana and a number of the big energy companies.

if you've spotted that methanex is in this grouip, then i'd wonder about agrium & potash.

other companies paying divs in USD include thomson reuters & biovail. Somewhat to my surprise, cn rail pays initially in CAD, although it would make sense for them to switch because they're mostly a US railway now.

asking an individual company's IR doesn't always work, because sometimes they have no clue themselves. Typically, they will assure you that you can receive your dividend "in whichever currency you choose." They just don't fill in that if you happen to pick the wrong currency you'll get dinged.

a surefire way to tell which is the primary currency used to be to compare the actual dividend amounts. When one would reach 3 even & logical decimal places, say .375, i used to assume that this was the primary currency, because in every case the same dividend in the alternate currency would be posted in a ragged amount going out 4 decimal places, eg a US div of .375 would turn out to be a canadian div of .4082, so right away you could see which was the primary issue.

however this approach is not so helpful nowadays because the currencies are trading quite closely. So as a countermeasure i'd be even more observant. I'd watch for/doublecheck any dividend going out to 4 ragged decimal places in CAD, and i'd scrutinize a company's website super-carefully (thomson, for example, states right on its website that it pays in USD.)

the solution is to put all canadians that pay divs in USD in the US account. Wonderfully enough, the brokers are able to keep track of the fact that these are canadian divs eligible for the canadian div tax credit; and they do send correct T5 tax slips.


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## locke (Oct 17, 2009)

cannon_fodder said:


> I hope this isn't threadjacking, but what about Canadian stocks which pay dividends in US dollars? I currently have one (MX) but would like to find out if there are more. Globe investor and google have turned up empty so far.
> 
> The reason is simple - it looks like my wife and I will be retiring to a country where the US dollar is used. My goal is to live off our dividends and not touch our capital.


You can get US denominated dividends from Canadian companies that are cross listed on US exchanges i.e. RY TD TRP. Just buy them on the NYSE and you'll get US dividends.


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## davext (Apr 11, 2010)

Depending on how much money you're investing, I would suggest not going with a fund or ETF. The dividends being paid are already low, especially compared to what some US companies offer. I'd say that if you are investing a significant amount of money, consider buying each of the stocks individually which gives you more flexibility and can save you money in the short to long run.


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## 412driver (Apr 30, 2010)

HaroldCrump said:


> For an exciting low fee of 0.50% you can hold 30 of the finest Canadian dividend payers.


May be a dumb question, I am fairly new, instead of paying this "exciting" fee, can one not simply buy these dividend payers and hold them in an account (like Q Trade) and collect the dividends without paying anyone any fees?


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## Mr_DIY (Feb 3, 2010)

412driver said:


> May be a dumb question, I am fairly new, instead of paying this "exciting" fee, can one not simply buy these dividend payers and hold them in an account (like Q Trade) and collect the dividends without paying anyone any fees?


By buying an ETF you only pay one trade commission plus the fee. For small portfolios this is often less expensive than paying 30 trade commissions and no fee.


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## Cal (Jun 17, 2009)

412 - to save on commissions you can meet people to pick up most of the dividend paying stocks at www.dripinvesting.org. They have a share exchange board. Then you can drip the stocks yourself, and make optional cash purchases without paying commissions.

If you don't want to read and research companies, and want to keep it simple, then stick with the etf.


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## 412driver (Apr 30, 2010)

Thanks for the info. I enjoy the reading and studying of companies.


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## cannon_fodder (Apr 3, 2009)

Thanks Humble and Locke. That's really easy then. Thank you very much for that.

BUT, if I buy it on the NYSE would the US government not take 15% of the dividend payout? I have had that issue in the past with US only listed stocks. Or because of the interlisting I can get around that issue?


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## humble_pie (Jun 7, 2009)

fodder with all due respect for locke's suggestion to buy canadian interlisted stocks on new york, i would not agree. This is unecessary & creates additional currency conversion fees.

first of all, you can buy canadian interlisted stock EITHER in canada OR on the relevant US exchange & then ask your broker to journal said stock to the alternate currency account if you wish. You don't need to buy it in new york or pay for it in USD.

next, about the dividends. As i've posted above, a minority of canadian companies pay their divs primarily in USD. Transfer agents and/or brokerage houses collect currency conversion fees when they convert these divs into CAD for deposit in individual investors' canadian accounts.

the same holds true in reverse. Since the majority of canadian companies pay their divs primarily in CAD, any investor holding stocks of such companies in their US accounts will also pay currency conversion fees for each dividend. As a long-term strategy, this should be avoided.

fodder, if i were in your situation i'd plan something like the following:

1) be aware that all your canadian investments are going to be subject to canadian non-resident withholding tax when you move outside canada UNLESS you retain domiciliation in canada & continue to file canadian tax returns. (This is a different - and complex - topic.)

2) assuming you will leave some investments in canadian companies even after you cease to reside in canada, the smart thing to do imho would be to accrue the canadian income in CAD in batches until you would have at least 5 - 10k. At that point you would exchange these CAD into USD virtually for free by using the Gambit. It's often called norbert's gambit, but i've practiced it for years without ever hearing of norbert. So have many other people.

recently canadian capitalist posted his own detailed example of the Gambit over on his blog. He did much better than the bank exchange rate or the broker's rate for US dollars.

and i've noticed another person on this board who has developed his own version of the Gambit. He raises US cash by selling 100 or 200 interlisted canadian shares that he already owns on US markets. One might say he does half-Gambits.

if you are planning to live in a US dollar jurisdiction but still keep significant canadian investment interests, then for sure you'd want to learn how to do the Gambit.


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## cocojambo (Jul 5, 2010)

Belguy said:


> I am working on a new portfolio of some of the best dividend paying stocks. So far, my research has come up with the following:
> 
> BCE (BCE)
> Emera (EMA)
> ...


That is a good list of stocks with companies that have tons of cash flows. E.g. BCE currently yields almost 6% and is growing fast in the Wireless market (now that it has rights to distribute the iPhone). Shaw will always be around, and CN rail is a solid play.

I like to invest in dividend paying stocks that have earnings per share growth of 20% or more (as the Investors Business Daily) report points out. Here's some http://www.best-dividend-paying-stocks.com/eps-dividend-yield-stocks.html  good international & US stocks that are growing their earnings really fast. A safe bet would be Northwestern Corporation (NWE) which is a Utilities play as well as Amerigas Partners, L.P. Here's a list of the best Canadian dividend stocks:

Company Symbol Current Yield 
Bank of Montreal BMO 3.56% 
National Bank of Canada NA 3.33% 
IGM Financial IGM 3.42% 
TransCanada Corporation TRP 3.41% 
Great West Lifeco GWO 2.86% 
Bank of Nova Scotia BNS 3.11% 
AGF Management AGF.B 2.36% 
Canadian Imperial Bank of Commerce CM 2.79% 
Enbridge ENB 3.09% 
Power Financial Corp PWF 2.72% 
Royal Bank of Canada RY 2.62% 
Toronto-Dominion Bank TD 2.76% 
Sun Life Financial SLF 2.36% 
Fortis FTS 3.19% 
Manulife Financial MFC 1.78% 
Toromont TIH 1.84% 
RIOCAN Real Estate Trust REI.UN 5.00% 
Husky Energy HSE 2.72% 
Sobeys SBY 1.44% 
Canadian Western Bank CWB 1.34% 
Imperial Oil IMO 0.8% 
Brookfield Properties BAM.LV.A 1.16% 
Canadian Natural Resources CNQ 0.52% 
Canadian National Railway CNR 1.63%


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## Square Root (Jan 30, 2010)

Need some Cdn Banks. Once they start growing dividends again (next year?) They will outperform. If your investment objective is income mostly, I wonder why you would give .5% away foy an ETF? This would probably represent 10-15% of your target yield. Extra diversification perhaps but you would get the vast majority of this diversification benefit with your picks.


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## Square Root (Jan 30, 2010)

cocojambo said:


> That is a good list of stocks with companies that have tons of cash flows. E.g. BCE currently yields almost 6% and is growing fast in the Wireless market (now that it has rights to distribute the iPhone). Shaw will always be around, and CN rail is a solid play.
> 
> I like to invest in dividend paying stocks that have earnings per share growth of 20% or more (as the Investors Business Daily) report points out. Here's some http://www.best-dividend-paying-stocks.com/eps-dividend-yield-stocks.html  good international & US stocks that are growing their earnings really fast. A safe bet would be Northwestern Corporation (NWE) which is a Utilities play as well as Amerigas Partners, L.P. Here's a list of the 'best' Canadian dividend stocks:
> 
> ...


Some of these yields look wrong to me-too low. Certainly the banks, TRP?


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## james_57 (Jul 5, 2010)

Square Root said:


> Some of these yields look wrong to me-too low. Certainly the banks, TRP?


Fortis (FTS) is a bit over 4%. I would also look at IPL.UN if you are considering FTS. (in my recent go-to-cash defensive move, i held on to both)


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## cocojambo (Jul 5, 2010)

Square Root said:


> Some of these yields look wrong to me-too low. Certainly the banks, TRP?


You're right, I'm sorry. I got this list from an old Vancouver Sun article but the yields on these stocks have risen higher because the stocks have been hit bad. 

E.g. Royal Bank of Canada (RY)'s current yield is 3.93%

Bank of Nova Scotia's current yield is 4.12%


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## Cal (Jun 17, 2009)

Toronto Star article 7/11/10:

http://www.thestar.com/business/mon...-here-are-the-best-stocks-for-dividend-growth


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## Square Root (Jan 30, 2010)

Cal said:


> Toronto Star article 7/11/10:
> 
> http://www.thestar.com/business/mon...-here-are-the-best-stocks-for-dividend-growth


Standard dividend article. Preaching to the converted. Much easier to look back than ahead.


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