The Globe and Mail attempts to identify Canadian stocks with sustainable,
growing dividends in its Thursday edition. The Globe's Ian Tam writes in the Number Cruncher column that many Canadian investors continue
to rely on banks as a part
of their core equity holdings. Recent commentaries from bank
executives citing the challenges
of low interest rates and
depressed economic growth may lead investors to
seek out additional ideas. As a result, Mr. Tam looked for companies
in Canada that have a history
of growing dividends -- and the
capacity to continue to grow
these dividends in the future. A
key measure of this sustainability
is the payout ratio, which is the
ratio of dividends paid to either
cash flows or earnings. A company
paying out too high of a
percentage in dividends is likely
unable to continue to do so in
the future. Mr. Tam's picks had to have a payout
ratio on cash flow of less than 60
per cent, as well as a payout ratio
on earnings of less than 60 per
cent. Only companies
with a market cap greater
than $1.4-billion were considered.
Stocks with a history of growing dividends are Suncor Energy, Alimentation Couche-Tard, West Fraser Timber, Cogeco Cable and Pason Systems.
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