Last updated by BM on June 17, 2024
Summary
This is a weekly installment of our MP Market Review series, which provides updates on the financial markets and Canadian dividend growth companies we monitor on ‘The List’.
- Getting a Head Start on ‘The List’ for 2025 in this week’s newsletter.
- Last week, dividend growth of ‘The List’ stayed the course and has increased by +8.8% YTD (income).
- Last week, price return of ‘The List’ was down with a return of +3.1% YTD (capital).
- Last week, there were no dividend announcements from companies on ‘The List’.
- Last week, there were two earnings reports from companies on ‘The List’.
- This week, no companies on ‘The List’ are due to report earnings.
DGI Clipboard
“This is one of the keys to successful investing: focus on the companies, not on the stocks.”
– Peter Lynch
Getting a Head Start on ‘The List’ for 2025
As we approach the midpoint of 2024, it’s the perfect time to start scouting candidates for next year’s list. Monitoring potential additions closely allows us to evaluate how they compare to our existing list of members.
While we’re comfortable building a portfolio of quality dividend growers from our current list, we always keep an eye on potential future candidates. This forward-thinking approach has paid off in the past, as evidenced by our early additions of TFII-N and MFC-T before launching our public-facing model portfolio in 2022, both of which have proven excellent choices.
Identifying Potential Candidates
We’ve identified six companies on the TSX that will meet our first two criteria for inclusion on ‘The List’ in 2025:
Dividend Growth Streak: At least 10 years.
Market Cap: Minimum of one billion dollars.
Evaluating Candidates
When deciding who stays and who goes, we focus on two additional criteria:
Diversification: We limit it to five companies per sector, preferably two per industry.
Cyclicality: We exclude REITs and pure-play energy companies due to their high cyclicality.
Four of the six potential candidates are in the Financial Services sector, meaning they must be compared against our existing list to determine if there’s room for them based on our diversification criteria.
All the Financial Services companies on our current list have increased their dividends in 2024, making it likely they will remain on next year’s list unless something changes with their long-term earnings power. Thus, only one spot may be available for a new candidate in this sector. The same holds for the Consumer Cyclical and Consumer Defensive sectors, with only one spot open.
Final Decision
The final decision will depend on assessing their cyclicality against our remaining quality indicators. We also like to keep our list manageable. For us, manageability for our Canadian candidates means less than thirty companies on ‘The List’.
Your Input
I welcome your analysis on which of these up-and-coming dividend growers you believe should be on ‘The List’ for next year. Feel free to share your insights!
DGI Scorecard
The List (2024)
The Magic Pants 2024 list includes 28 Canadian dividend growth stocks. Here are the criteria to be considered a candidate on ‘The List’:
- Dividend growth streak: 10 years or more.
- Market cap: Minimum one billion dollars.
- Diversification: Limit of five companies per sector, preferably two per industry.
- Cyclicality: Exclude REITs and pure-play energy companies due to high cyclicality.
Based on these criteria, companies are added or removed from ‘The List’ annually on January 1. Prices and dividends are updated weekly.
While ‘The List’ is not a standalone portfolio, it functions admirably as an initial guide for those seeking to broaden their investment portfolio and attain superior returns in the Canadian stock market. Our newsletter provides readers with a comprehensive insight into the implementation and advantages of our Canadian dividend growth investing strategy. This evidence-based, unbiased approach empowers DIY investors to outperform both actively managed dividend funds and passively managed indexes and dividend ETFs over longer-term horizons.
For those interested in something more, please upgrade to a paid subscriber; you get the enhanced weekly newsletter, access to premium content, full privileges on the new Substack website magicpants.substack.com and DGI alerts whenever we make stock transactions in our model portfolio.
Performance of ‘The List’
Last week, dividend growth of ‘The List’ stayed the course and has now increased by +8.8% YTD (income).
Last week, price return of ‘The List’ was down with a return of +3.1% YTD (capital).
Even though prices may fluctuate, the dependable growth in our income does not. Stay the course. You will be happy you did.
Last week’s best performers on ‘The List’ were Enghouse Systems Limited (ENGH-T), up +5.0%; Waste Connections (WCN-N), up +1.85%; and CCL Industries Inc. (CCL-B-T), up +0.86%.
Alimentation Couche-Tard Inc. (ATD-T) was the worst performer last week, down -5.29%.
| SYMBOL | COMPANY | YLD | PRICE | YTD % | DIV | YTD % | STREAK |
|---|---|---|---|---|---|---|---|
| ATD-T | Alimentation Couche-Tard Inc. | 0.9% | $75.90 | -1.1% | $0.70 | 17.4% | 14 |
| BCE-T | Bell Canada | 8.8% | $45.18 | -16.6% | $3.99 | 3.1% | 15 |
| BIP-N | Brookfield Infrastructure Partners | 5.9% | $27.53 | -10.3% | $1.62 | 5.9% | 16 |
| CCL-B-T | CCL Industries Inc. | 1.6% | $72.68 | 25.7% | $1.16 | 9.4% | 22 |
| CNR-T | Canadian National Railway | 2.0% | $167.29 | 0.3% | $3.38 | 7.0% | 28 |
| CTC-A-T | Canadian Tire | 5.2% | $135.15 | -2.5% | $7.00 | 1.4% | 13 |
| CU-T | Canadian Utilities Limited | 5.9% | $30.46 | -5.2% | $1.81 | 0.9% | 52 |
| DOL-T | Dollarama Inc. | 0.3% | $123.85 | 30.3% | $0.35 | 29.5% | 13 |
| EMA-T | Emera | 6.3% | $45.81 | -9.8% | $2.87 | 3.0% | 17 |
| ENB-T | Enbridge Inc. | 7.6% | $48.25 | -0.3% | $3.66 | 3.1% | 28 |
| ENGH-T | Enghouse Systems Limited | 3.3% | $30.46 | -10.3% | $1.00 | 18.3% | 17 |
| FNV-N | Franco Nevada | 1.2% | $116.18 | 5.5% | $1.44 | 5.9% | 16 |
| FTS-T | Fortis Inc. | 4.4% | $53.69 | -2.1% | $2.36 | 3.3% | 50 |
| IFC-T | Intact Financial | 2.2% | $222.40 | 9.4% | $4.84 | 10.0% | 19 |
| L-T | Loblaw Companies Limited | 1.2% | $156.35 | 21.6% | $1.92 | 10.0% | 12 |
| MFC-T | Manulife Financial | 4.6% | $34.50 | 19.5% | $1.60 | 9.6% | 10 |
| MGA-N | Magna | 4.5% | $42.19 | -24.0% | $1.90 | 3.3% | 14 |
| MRU-T | Metro Inc. | 1.8% | $73.99 | 8.0% | $1.34 | 10.7% | 29 |
| RY-T | Royal Bank of Canada | 4.0% | $142.87 | 7.4% | $5.72 | 7.1% | 13 |
| SJ-T | Stella-Jones Inc. | 1.3% | $85.00 | 11.0% | $1.12 | 21.7% | 19 |
| STN-T | Stantec Inc. | 0.7% | $113.27 | 8.2% | $0.83 | 7.8% | 12 |
| T-T | Telus | 7.0% | $21.72 | -8.4% | $1.53 | 7.1% | 20 |
| TD-T | TD Bank | 5.5% | $74.53 | -12.0% | $4.08 | 6.3% | 13 |
| TFII-N | TFI International | 1.2% | $137.60 | 4.9% | $1.60 | 10.3% | 13 |
| TIH-T | Toromont Industries | 1.6% | $117.56 | 4.2% | $1.92 | 11.6% | 34 |
| TRI-N | Thomson Reuters | 1.3% | $167.33 | 16.7% | $2.16 | 10.2% | 30 |
| TRP-T | TC Energy Corp. | 7.2% | $53.25 | 1.8% | $3.84 | 3.2% | 23 |
| WCN-N | Waste Connections | 0.7% | $168.61 | 13.8% | $1.14 | 8.6% | 14 |
| Averages | 3.5% | 3.1% | 8.8% | 21 |
Note: Stocks ending in “-N” declare earnings and dividends in US dollars. To achieve currency consistency between dividends and share price for these stocks, we have shown dividends in US dollars and share price in US dollars (these stocks are listed on a US exchange). The dividends for their Canadian counterparts (-T) would be converted into CDN dollars and would fluctuate with the exchange rate.
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