Lists & Rankings

Best dividend stocks

The stable choice for your money when the market is falling.


 

Methodology: We combed the list for companies with a dividend return greater than 2.5% and a payout ratio below 60% of earnings (to ensure the dividends are backed by capital). These seven companies also all have a beta of less than one (indicating low volatility) and a five-year annualized dividend growth rate of more than 10%.

Why you should care: In a bull market, all eyes are on stampeding capital gains, but when markets fall, slow-and-steady dividend investing often enjoys renewed popularity. During the last recession, however, many dividends got slashed. In fact, the fourth quarter of 2008 was the worst year for dividend cuts since 1956, when Standard & Poor’s began to keep records. Three years later, dividend stocks are again a stable choice, especially since many investors aren’t confident in the growth of equity markets. And the best dividend performers tend to be rock-solid companies with a low chance of seeing their yields cut or eliminated.

Worth noting: Some of the companies on this list are returning favourites. Among them are Enbridge and Rogers, which have consistently increased their dividends—even during the recession. Corus Entertainment also rejoins the list after dropping off last year.

Among the big banks, which are generally considered safe dividend picks because they pay out solid 4% yields, only one made our cut: RBC. Now that its U.S. consumer banking unit is reportedly up for sale, the company may put an end to its decade-long struggle south of the border, which should be good news for the stock.