A-grade stocks represent our top picks—and, reflecting a challenging set of market conditions, they’re scarcer than usual. But there are many strong Bs worth a look. Here’s how we graded this year’s winners.
Photo by Surface on Unsplash
Our evaluation encompassed all of the dividend-paying stocks within the S&P/TSX Composite Index. We recognize that limiting our focus to this group means not capturing some other great Canadian companies, but we wanted to ensure we’re targeting the comparatively larger and more liquid stocks. To make the cut for our list of best dividend stocks, we believe a company must possess three important characteristics: It has to offer an attractive and growing dividend yield, generate a meaningful stream of cash flow (so it can pay out the dividends) and be reasonably priced.
Our process to find stocks with these three ingredients sounds simple, but there was a fair bit of data to go through. We pulled and reviewed a dataset of dividend-paying stocks trading on the TSX and condensed it into a top tier containing the best of the best, as well as a second tier of honourable mentions worthy of further examination. The companies are ranked according to our three criteria. Rankings were based on data as of November 30, 2022.
We applied higher weightings to the first two criteria to reflect their greater importance. The best companies achieved the lowest set of scores. Think of it like golf: the lower the score, the better the performance.
The top-tier companies demonstrate strong qualities for all three criteria, and the second-tier companies are also worth looking at. Companies that didn’t make the cut for either tier fell short on one or two criteria.
Before you log in to your brokerage account, though, here’s a reminder that MoneySense’s “Canada’s best dividend stocks” ranking is based on a purely quantitative analysis of data collected from publicly available stock market information. To ensure broad representation, we included companies that may not have data for a specific field, but those earn no points for that category. And, notably, this ranking does not consider management talent or how economic pressures could weigh on a company’s earnings.
Here’s the breakdown of the three criteria used in our evaluation.
Note: To view all the data in the tables, slide the columns right or left using your fingers or mouse. You can filter or rearrange the rankings by using the search tool or clicking on column headings. You can also download the data to your device in Excel, CSV and PDF formats.
When you combine these three things, you get the “Best dividend stocks in Canada for 2023.”
Share this article Share on Facebook Share on Twitter Share on Linkedin Share on Reddit Share on Email
You can exclusively hold international ETFs in any Canadian account, without paying a penalty. But there are taxes and...
There are five factors in deciding the timing of retirement—plus a sixth factor that isn’t important even though many...
Money and happiness have a complex relationship. Income provides, but experiences, treats and giving make us all happy, so...
When you have the choice for withdrawals, it makes sense to look at the pros and cons of taking...
We outline the movies and shows available on each streaming service, plus the cost, number of users and other...
Withholding tax is generally the only Canadian tax a non-resident pays for their CPP pension, and the tax burden...
Learn how to get mental health support in Canada, whether or not you have workplace benefits or insurance coverage.
Can you share the column details? IE Total Score vs Rank meaning.
thanks.
BTW, your pivot tables need a correction to number vs text
Response from Aman Raina: “The approach that was taken was to evaluate dividend paying stocks that trade on the TSX/S&P Composite Index, but evaluating them beyond just ranking the highest to lowest dividend yields and dividend growth rates. Other quantitative factors were considered which include a company’s ability to continuously pay dividends from their cash flow and valuation. For each of these criteria, companies were ranked with their ranking making up their score for each factor. A weighting was applied to each criteria to emphasize importance to compute a weighted ranking. Historically from previous evaluations that were done, an emphasis was put on dividend weighting, and cash-flow generation with a lower emphasis on valuation. The total scores for each factor were combined to produce a total score, from which the stocks were then ranked from lowest score to highest. So companies that generate high dividends, are profitable cash-flow generating, and sell for a reasonable price will achieve a lower total score and consequently a higher overall ranking. Using this format, we can define an initial screen that are worthy for further investigation of qualitative and risk factors.”
Thanks for posting all this. It’s very useful. I follow a bunch of stocks for their dividends that are not included in your list. The best example is DFN, which paid $1.20/share in 2022 and closed at $7.84 on November 30. That’s a yield of 15.3%. How come you overlooked that stock?
Response from Aman Raina: “The evaluation was based on companies that make up the TSX/S&P Composite index. DFN is not a member of the index and so was not included in the evaluation. For arguments sake, even if you did include it, while it has posted a great yield recently, it has no long-term track record of paying increasing dividends. Also because it is essentially a mutual fund holding type company it would not generate consistent cashflow and high earnings yield. So mind-mapping it out, it’s possible DFN would potentially could score lower on these factors and not achieve a higher overall ranking. It’s important to emphasize that high dividend paying stocks doesn’t necessarily translate to high capital gain performing stocks. Dividend stocks like any other stock need to be evaluated for other core factors like profitability, competitive, risk profile, financial health, valuation etc as well as qualitative factors (management competency, strategy etc).”
It seems as though you tables won’t load
Hi Eric, We are working to have any issues resolved as soon as possible. If you can, please email us at [email protected] with a detailed description of what you see. This would help us troubleshoot. Thank you.