Sturdy. I like that word. The Cambridge dictionary describes sturdy as – physically strong and solid or thick, and therefore unlikely to break or be hurt. That’s what I look for in the manner that I run our stock portfolios. I don’t like to be hurt. I will look for better risk adjusted returns by avoiding portfolio pain as much as possible. Sturdy Canadian dividend stocks will suit me just fine.
To my portfolio I say ‘do me a solid’.
Ian Tam of Morningstar Canada recently offered a list of Sturdy Canadian dividend stocks. The screens that Ian ran were looking for …
The factors combine profitability, index sensitivity, dividend yield and dividend growth metrics to rank the stocks. Stocks were also screened to ensure reasonable dividend payout ratios.
Ian also found that when he back tested the metrics the model showed an annualized return of 11.1% between September 1997 and December 2020, while the S&P/TSX Composite index produced 6.6%. In theory it is a market beating approach. But as usual, past performance (or any back tests) does not guarantee future returns.
Here’s the list of stocks from that screen.
My portfolio, on solid ground.
I was pleased (but not surprised) to find six of the seven Canadian dividend payers that I hold in my own concentrated Canadian stock portfolio. Those companies are BCE, Telus, RBC, TD Bank, Scotiabank and TC Energy. Only Enbridge was missing from the list. All of my stocks are considered to have a moat or wide moat.
Also on Ian’s list of Sturdy Canadian dividend stocks:
Great-West Lifeco, Canadian Utilities, Emera, Brookfield Infrastructure Partners, Capital Power Corp, Northwest Company, Cogeco Communications, Shaw Communications, Aecon Group and two REITS – CT REIT and Killiam Apartments REIT.
Within the portfolio construction Ian also paid attention to a limit of 4 stocks per sector when he ran his performance tests.
To my eye and from my research on the history of market-beating Canadian dividend stocks, that looks like a fine list. One might be better off with a more diversified list, compared to my concentrated portfolio. And certainly, none of this is advice. For those who construct their own stock portfolio you can use lists as a source of ideas for additional research.
As an investor, I’ll admit that I like to borrow ideas.
The sturdy dividend ETF.
And speaking of lists you might also look to Horizons Dividend ETF HAL for a few names. That ETF is also designed for total returns and it applies AI (artificial intelligence) to seek greater financial health. Today, we’re calling that ‘sturdiness’. To round out the mix, you’ll find HAL holds a few dividend growth names from the technology sector. It is not a high dividend yield strategy.
While I hold that concentrated stock portfolio, for my wife’s accounts we hold the TSX 60 XIU and Vanguard’s High Dividend Yield- ticker VDY. I do not expose her to that same concentration risk. That said, my stock portfolio has outperformed her ETF mix. 🙂
We also hold, US dividend growth stocks, Canadian and US bonds, gold stocks and gold ETFs that hold physical gold. I also have a bitcoin fund in the mix. I have a 5% portfolio weighting in bitcoin, but of course that can fluctuate wildly, day by day and week by week.
Related post: The new balanced portfolio.
The most important consideration is that you embrace a plan and invest like clockwork. Keep it simple. Keep it cheap.
I’ll be back soon with an update on our personal portfolio performance for 2020, plus a look at Canadian Dividend ETFs.
Right on cue Mark Brown on MoneySense offers a list of great dividend stocks for 2021. In that post you’ll find an A-Team and B-Team.
And speaking of stock selection here’s Mark from My Own Advisor with 5 stocks he wants to buy in 2021. On that list you’ll find 4 Canucks and one of my US growth picks – BlackRock. That is a very solid 5-pack IMHO.
Rob at Passive Canadian Income offers his 2020 summary and a look to 2021 targets.
And sticking to the dividend theme, Matthew at All About The Dividends, with his buying and selling for January of 2021.
Skipping the dividends.
And on the non dividend front, on Findependence Hub – the RRSP playbook for 2021.
On the bitcoin and cryptocurrency front Enoch at Savvy New Canadians gives his take on the Wealthsimple offering.
And always a must read, the Sunday Newsletter from The Sunday Investor.
On the Maple Money Podcast Karl Staib shows you how to turn your struggles into stepping stones.
On the real estate front, will the Canadian housing market crash in 2021?
Here’s where Dividend Athlete is putting his money in 2021.
One of my favourite reads each week is the Mauldin Report. Here’s the forecast for the US stock market in 2021. Bubble bubble?
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Check out EQ Bank for those who want to make their cash work a lot harder. The current high interest savings account rate is 1.5%. EQ Bank recently introduced RRSP and TFSA accounts with a rate of 2.3%. You’ll also find GICs.
At Questrade Canadians can buy ETFs for free.
Thanks for reading, we’ll see you in the comment section.