Fastest-Growing Canadian Dividend Payers Deliver Strong Performance Amid Market Turbulence

Strategic Insights -

Arjun Deiva's research identifies companies that have prioritized resilience and future growth potential over high current dividends. These companies, tracked over the past five years, have demonstrated remarkable performance despite the COVID-19 pandemic, Russia-Ukraine war, inflation, and shifting monetary policy. Dividend payments have offered investors a consistent source of income, while dividend growth is a more robust indicator of stability, suggesting management's confidence in sustaining payouts. The analysis applied stringent parameters, including a minimum five-year annualized dividend growth rate of 10% and a dividend coverage ratio of over three.

Key Takeaways:

  • The analysis identified 11 companies that passed the screen, focusing on resilience and future growth potential over high current dividends.
  • These companies achieved an average one-year total return of 27.2%, outperforming the S&P/TSX Composite High Dividend Index's return of 15.20%.
  • Dollarama Inc. topped the screen with a one-year estimated dividend growth rate of 30.6% and a dividend coverage ratio of 17.5 times.
  • Imperial Oil Ltd. ranked second, with a one-year estimated dividend growth rate of 23.2%, driven by its business model centered around consumer staples and its significant ties to Exxon Mobil.
  • Analysts forecast substantial growth for Dollarama, prioritizing its strong fundamentals and potential for dividend increases in the coming years.

Statistics:

  • The COVID-19 pandemic, Russia-Ukraine war, inflation, and shifting monetary policy have created significant turbulence in the stock market over the past five years.
  • The S&P/TSX Composite Index has experienced substantial fluctuations, affecting investor returns.
  • Dollarama Inc. achieved a one-year estimated dividend growth rate of 30.6%, significantly surpassing the 10% minimum parameter.
  • Imperial Oil Ltd's total return over the past five years was 259.8%, delivering strong performance amidst market uncertainty.

Sources:

  • Arjun Deiva, CFA, an MBA candidate at the University of California, Berkeley, Haas School of Business.
  • FactSet, a financial data and analytics provider.
  • Globeandmail.com, for the original article "Fastest-Growing Canadian Dividend Payers."