10 dividend stalwarts for your portfolio

Want great yields and growth?

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If you’ve ever run a marathon you know there are three types of runners. There are the ones that sprint past you the moment the gun goes off, only to fade a short while later. There are the ones who just seem to get in your way. And somewhere in the middle are the quiet runners sporting a pair of floppy ears who finish the race ahead of them all, with plenty of gas left in the tank.

Forget the Tortoise or the hare, it’s the pace bunnies who really know how to run a race. The same can be said about your portfolio. Everyone wants to dart ahead of the crowd, but it’s the steady eddies that can really give your investments a boost over time.

Investors are often attracted to companies with very high yields, but chasing yield alone isn’t always a smart move. Take Just Energy Corp. The company boasts a rosy 20% yield, but investors holding this stock have lost nearly 6% over the past five years, and that’s including the dividend.

In some cases high yields can even be a sign of distress. Just think of that sprinter who collapses from exhaustion before the finish line.

On the S&P/TSX Composite there are several solid dividend stocks to choose from, but we didn’t just want to identify companies that offer a rich dividend; we set out to identify those companies that have a steady track record of growing their dividends and delivering strong shareholder returns. To ensure a level playing field we also lift out trusts and REITs from our screen.

To compile our list we award five-points each for 5-year dividend growth and 5-year total return. But since we can’t project stock performance, we give 10 points to dividend yield. And to ensure we’re listing only companies with the most secure dividends available, we eliminated the ones that paid out more in dividend over the past 12 months than they earned in profit.

Coming out on top is Constellation Software. Although the company sports a yield of 2.6%, it wins top marks for nearly doubling its dividend over the past five years and returning 450%.

So here is our top 10 list of dividend stocks that could give your portfolio some added stability. But remember, this is just a starting point, always remember to do your own research or get professional advice before investing.

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