Earn Passive Income With The Top 10 Canadian Dividend Aristocrats In 2022 - Sure Dividend

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Earn Passive Income With The Top 10 Canadian Dividend Aristocrats In 2022

This is a guest contribution from Bernd Skorupinski of Online Trading Campus

Do you want to make passive money that will grow over time but doesn’t need much effort? Start by investing in Canadian dividend aristocrats. It will not be easy to accumulate a sizable nest egg with a low-interest savings account. Because of the low-interest rates in place, saving money through interest and bonds is nearly impossible.

Even still, 62% of Canadians with TFSAs have nothing but cash in them. Like dividend aristocrats, reliable and trustworthy stocks may be terrific buys. This post aims to assist you in locating the finest dividend aristocrats in Canada according to our online trading academy (onlinetradincampus.com).

What Is A Dividend Aristocrat?

To compensate shareholders, corporations often pay dividends. A portion of the company’s profits is distributed to its investors (based on how much equity or how many shares of the company they have). Every company does not pay dividends, and even those that do aren’t all the same.

When it comes to dividend payers, there are commoners and aristocrats. Even if we abandon the “royal” metaphor, dividend aristocrats are still superior to typical dividend stocks since they raise their payouts every year. This is how an aristocratic dividend stock is first honored with the title.

S&P Canada BMI-member companies in Canada are classified as “dividend aristocrats” as long as:

There are far fewer regulations here than in the United States. To qualify as a dividend aristocrat, a corporation must have raised dividends for 25 years in a row.

Dividend Aristocrat Characteristics

Dividend aristocrat stocks have a few more traits you should be aware of. Dividend aristocrats are large-cap, well-established, blue-chip corporations that tend to provide higher dividends than their peers because of their relatively higher safety margins. That’s why it’s incredibly vital to use the word “relatively” because no stock is entirely safe from market fluctuations.

If profits aren’t high enough, they can indeed reduce payouts. In contrast to other dividend stocks, dividend aristocrats rely on the reputation of their payouts and merely decrease their dividends once they can have them thrown out of the aristocracy ranks.

It’s also worth noting that dividend aristocrats aren’t usually the highest-yielding investments. Another danger indicator is an unusually high yield (particularly at the expense of an untenable payout ratio). While it’s true that a dividend aristocrat can be a wise investment if the stock drops or falls (for a while), that’s only true if the company has a reasonable chance of recovering.

Finally, others believe that dividend aristocrats merely offer dividends. But the truth is that many dividend aristocrats are also decent growth companies that provide adequate capital growth opportunities, but the trade-off is typically a little dividend yield.

Therefore, the dividend yield isn’t the only item to consider when deciding on a dividend aristocrat stock. Investing to start a dividend income requires careful consideration of several variables, including expected capital growth, payout ratios, dividend growth rates, and even the frequency of dividend payments.

10 of the Best Canadian Dividend Aristocrat Stocks

Several things influence the strength of a company’s dividends. The stock’s performance is also a factor in several of these characteristics, which change over time. To that aim, we’ve organized our list of the top ten best Canadian dividend aristocrat stocks by seniority.

Figures from September 2020 are included in this list.

Fortis (FTS)

As far as dividend aristocrats go, Fortis is currently the most admired stock on the TSX. It is the second-oldest aristocrat in Canada, having increased dividends for 46 years in a row (after Canadian Utilities). Fortis is a good investment since it is a utility stock operating in Canada, the United States, and the Caribbean.  The company serves over 1.1 million gas utility consumers and 2.2 million electric consumers.

Even in economic recessions, customers prioritize utility payments; thus, this provides a steady flow of cash and income for the corporation. Ninety-nine percent of the company’s $56 billion in assets are subject to regulation. Fortis maintains a solid asset base. As a result, the firm is well-positioned for the future because it focuses on clean energy and renewable energy sources.

Indeed, Fortis has a respectable dividend growth rate and a strong dividend yield. Its dividends grew at a CAGR of 4.78 percent from 2016 to 2020. In addition to dividends, Fortis also provides investment returns. During the recent decade (2010–2020), the firm increased at an annual pace of around 9.6% (growth rate adjusted for dividends). That’s a significant payout for a dividend aristocrat, but not in the same league as high-yielding growth companies (which carry greater risk).

Fortis, in my perspective, takes the top rank for reasons other than its dividend growth record.

Metro (MTRAF)

Another “oldie” on this list is Metro. If you look at the company’s record of increasing dividends over the past 25 years, you may mistake it for an aristocrat. While it may appear to be a downgrade from Fortis, particularly when it comes to the dividend yield, the company more than makes up for it in two primary areas: dividend growth and capital gains. Over the previous five years, the firm increased its dividends by about 9.4%.

Even more impressive is Metro’s long-term capital growth record. It has a Compound Annual Growth Rate (CAGR) of 17 percent between 2010 and 2020. In fewer than five years, you may expect to see a twofold increase in your capital with this. Due to its low yield, Metro may not be the best choice for an investment strategy focused on dividends. Your investment profile will be more active as a result. Additionally, dividend-paying investors must occasionally liquidate their shares (when dividends are insufficient to cover expenses). Having the support of growth-oriented aristocrats like Metro in these times might be advantageous.

While not as secure as Fortis, the corporation has its own unique assets that make it a viable option. In addition to utilities, it deals with food and health, which are more crucial. Over 950 grocery stores and 650 medicine stores are part of the supermarket chain’s many banners. For long-term investors, it’s a great choice because of its massive presence and business style.

Enbridge (ENB)

Enbridge’s absence from a list of dividend aristocrats would undoubtedly be a disservice to the company. It’s one of Canada’s primary energy firms and a market leader. Using its massive pipeline network, the firm transports one-fourth of the oil produced in the United States. One-fifth of the US’s natural gas is transported via this pipeline. To that end, it has invested in 21 wind farms totaling 3.9 GW in capacity and is actively looking into additional potential sources.

The firm has always been liberal with its dividends, and it hasn’t decreased them despite the economic difficulties. Even throughout the 2008 crisis and when the oil price plummeted between 2014 and 2016, it maintained its massive yield and large payouts. Oil demand pushed prices into negative levels for the first time during the 2020 market meltdown, when supply dried out. Even though the company’s payout ratio reached a dangerously high level, its dedication to maintaining its dividends gives it a deserved inclusion on our list. Not to mention its hefty payout, which may make or break any dividend-based strategy.

The company’s finances are secure thanks to a plethora of assets. It has a strong foothold in the North American energy market. However, there isn’t much room for capital appreciation. 

Canadian National Railway (CNI)

Canada’s largest railway company, the Canadian National Railway, maintains a 20,000-mile network throughout Canada and the Mid-Atlantic region of the United States. Its logistics division generates the majority of the company’s income. CNR’s railroads connect three coastlines (the Atlantic, the Pacific, and the Gulf of Mexico) in terms of logistics and heavy freight transit.

The firm has a long and colorful history of connecting disparate regions of the United States. Because they are a part of the country’s history, these enterprises attract a lot of favorable investor emotion. On the other hand, CNR appears to be a sound investment from a purely monetary standpoint. The company’s assets outweigh its liabilities by approximately 1.7 times, making it a solid, asset-backed business. In addition, it has a lack of competition as another advantage.

It follows in the footsteps of Metro as a dividend stock: While the income isn’t particularly enticing, the capital growth is. It has increased by about 17% annually during the previous decade (based on its 10-year CAGR). Between 2016 and 2020, it increased profits by around 9% each year. There are times when it is expensive; thus, an excellent opportunity to buy is when the stock is more reasonably valued during a market downturn or recession.

Telus (TU)

Canada’s telecommunications sector, like banking, is nearly oligopolistic, with three telecom behemoths dominating more than 90% of the market. Telus is one of the big three, and it is a dividend aristocrat with a track record of 16 consecutive years of dividend growth. Voice calls, internet, IPTV, and other forms of entertainment are just a few of the many services and products this telecom juggernaut offers. As of 2019, the corporation had more than 10.2 million cellphone customers, two million internet customers, and 1.2 million TV subscribers.

The success of the 5G rollout and government restrictions are critical to the company’s future growth, as are the other two telecom giants (to curtail the power that comes with an almost no competition environment).

Even though the firm pays a respectable dividend return, it is not what distinguishes it from its larger, more established competitors. The firm has much potential for capital expansion. From 2010 to 2020, its CAGR (dividend-adjusted) is 12.7%. The company’s financial situation is sound. For the most part, buying Telus at a discount or a reasonable price gives you a good return on your investment in terms of both growth and dividends.

National Bank Of Canada (NTIOF)

According to some, the National Bank of Canada isn’t even one of five big banks. Nonetheless, this solid financial institution has been dubbed “big-six” in various contexts because of its prominence. It can be an excellent investment opportunity for those willing to wait for the market to recover before investing (when the valuation is substantially down).

For a decade-old aristocrat, the bank’s high yield and stability are good reasons to purchase it, but its long-term capital and dividend growth prospects are even better. Considering the “stability” of the Canadian banking industry, it increased by roughly 12 percent each year over the past decade.

The company has more than 422 locations in Canada (495 globally), 2.7 million customers, and $565 billion in assets under administration. The single flaw in this bank’s armor is its worldwide reach, which is exclusively centered on Cambodia and vulnerable to local headwinds.

Toronto-Dominion (TD)

TD is one of the major five in the market. Currently, it is the country’s second-largest bank, the fifth-largest bank in terms of branches, and the sixth-largest bank in terms of total assets in North America. It has more than 26 million global clients and 2,300 operational sites. Moreover, it’s among Canada’s most Americanized financial institutions, having a sizable presence on the other side of the border.

TD has a strong history of paying dividends. Over the past 160 years, the bank has paid dividends to its shareholders. Nine years in a row, the bank has been expanding its dividends. It has a well-balanced financial position with more than $1.4 trillion in total assets. Its dividend history and dividend sustainability are essentially identical to that of the market leader, Royal Bank of Canada, but TD wins because of its recent capital expansion velocity.

Additionally, the bank has an advantage in terms of digital consumers (over 13 million). That’s the following business area, and minimal dependency on brick-and-mortar branches means lower operating expenses and larger profit margins.

Exchange Income Fund (EIF)

Exchange Income Fund, similar to TD, has a nine-year dividend increase streak under its belt, but it boasts a higher yield and more substantial capital growth potential. In terms of size, it’s the tiniest stock on the list (by both market cap and assets). EIF is particularly interested in acquiring aviation and aerospace firms as part of its acquisition strategy.

The organization has a vast spectrum of underlying assets to choose from. It has amassed a wide range of firms and organizations linked with the aircraft sector, from material and production companies to sales companies and a flying school.  As a result, 2020 was a rough year for the firm and other airlines worldwide. While stock prices and earnings fell precipitously, the corporation decided not to cut its payouts.

On top of its high return, this firm also provides a reasonable probability of financial appreciation. Considering dividends, the 10-year compound annual growth rate (CAGR) is well over 14%.

Granite REIT (GRT-UN.TO)

To begin this list, we have the oldest dividend aristocrats in real estate. For the past nine years, dividends have increased. Despite the industry’s reputation for solid dividend yields, granite’s dividend yield is significantly lower than other REITs. Granite is on this list for two reasons that others aren’t: It has a rich history of growth and a well-balanced portfolio of investments.

There are roughly 100 assets in the company’s portfolio in nine countries. The majority of the company’s portfolio consists of contemporary warehouse facilities, which helped it perform better than other commercial REITs. This is especially true in commercial real estate, where e-commerce is increasing and is a valuable asset class to have.

With a 10-year CAGR of 27.7%, the firm is far and by the fastest-growing company on our list, making it possible for investors to double their money in three years. As for dividends, the company’s good yield and long-term dividend payments make it a worthwhile investment.

Algonquin Power And Utilities (AQN)

Algonquin is the final utility stock on the list, and it’s one of my favorites since it does it all. Focusing on renewable and green energy assets puts it in an advantageous position in the future, as more and more customers will choose renewable over fossil. The company’s financial position is exceptionally solid. The dividend yield is rather appealing for an aristocrat, and the stock’s capital appreciation potential is astounding.

The company’s wide range of assets also works in its favor. Liberty Power, the company’s power division, owns 35 renewable energy projects, including wind, solar, hydroelectric, and thermal. The assets are dispersed across Canada and the United States. It also owns and manages almost 8,400 kilometers of gas distribution lines and over 2,300 kilometers of water distribution mains. The vast majority of the company’s revenue comes from dependable utility customers, with hundreds of thousands of water, wastewater, gas, and electric connections.


We at our online trading academy believe that dividends and overall portfolio growth are more important than a company’s yield. You should consider these factors when evaluating a company’s worth.

For both short- and long-term investors, this list of dividend aristocrats can provide more than simply a high dividend yield.

If you are interested in finding more high-quality dividend growth stocks suitable for long-term investment, the following Sure Dividend databases will be useful:

The major domestic stock market indices are another solid resource for finding investment ideas. Sure Dividend compiles the following stock market databases and updates them monthly:

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