Top 10 Dogs of the TSX

Top 10 Dogs of the TSX

It’s hard to go too far wrong with a portfolio crammed full of large stocks that pay generous dividends


Welcome to the inaugural edition of the Value Hunter investment blog at The focus of this blog will be on dividend investing and other conservative stock strategies. I hope it will help you become a better investor.

This week, I highlight 10 stocks that pass my take on the Dogs of the TSX strategy. They’re the highest yielding stocks in the S&P/TSX 60 index that pass a series of safety tests.

Long-time dividend investors know and love the Dogs of the TSX. But it’s also a good strategy for new investors who want to start buying stocks directly.

While investing in stocks is never risk free, it’s hard to go too far wrong with a portfolio crammed full of large stocks that pay generous dividends. I’ll be taking a closer look at some of the risks involved in future posts.

It’s a big world out there, so in addition to offering up some interesting stocks, in each post I’ll point you toward articles by some of the best and brightest investors. This week I highlight an interesting article by Patrick O’Shaughnessy in the “New & Noteworthy” section below. He examines the profitable intersection between momentum investing and value investing.

For a little fun, each post will also dish up a money-saving suggestion for those who enjoy the frugal life.  (Toothpaste is in the spotlight this week.)  Some of the tips will be useful, but you’ll find others to be laughably outrageous.

I hope you enjoy my new blog — if all goes well, a new post will arrive every other week. In the meantime, if you spot a good investment idea or want to suggest frugal living tip, don’t hesitate to mention it in the comments section below.

Safer Canadian Dogs

Investors following the Dogs of the Dow strategy want to buy the 10 highest yielding stocks in the Dow Jones Industrial Average (DJIA), hold them for a year, and then move into the new list of top yielders.

The Dogs of the TSX works the same way but swaps the DJIA for the S&P/TSX 60, which contains 60 of the largest stocks in Canada.

My safer variant of the Dogs of the TSX tracks the 10 stocks in the index with the highest dividend yields provided they also pass a series of safety tests, such as earning more than they pay in dividends. The idea is to weed out companies that might cut their dividends in the near term. Just be warned, it’s a task that’s easier said than done.

Name Price P/B P/E Earnings Yield Dividend Yield
CANADIAN OIL SANDS (COS) $24.18 2.46 14.14 7.07% 5.79%
BCE (BCE) $48.40 3.30 18.54 5.39% 5.10%
ROGERS (RCI.B) $42.94 4.49 13.63 7.34% 4.26%
NATIONAL BANK (NA) $45.26 1.85 10.43 9.59% 4.24%
CIBC (CM) $97.10 2.31 12.42 8.05% 4.12%
SHAW (SJR.B) $27.36 2.71 16.29 6.14% 4.02%
BANK OF MONTREAL (BMO) $78.58 1.71 12.09 8.27% 3.97%
FORTIS (FTS) $32.47 1.42 19.68 5.08% 3.94%
POWER (POW) $29.65 1.29 13.73 7.28% 3.91%
TELUS (T) $39.77 3.02 19.12 5.23% 3.82%
Source: Bloomberg, June 30, 2014

Price: Closing price per share
P/B: Price to Book Value Ratio
P/E: Price to Earnings Ratio
Earnings Yield: Earnings divided by Price, expressed as a percentage
Dividend Yield: Expected-Annual-Dividend divided by Price, expressed as a percentage

As always, do your due diligence before rushing out any buying any stock, including those featured here. Make sure its situation hasn’t changed in some important way, read the latest press releases and regulatory filings and take special care with stocks that trade infrequently.

New & Noteworthy

Two ways to improve the momentum strategy
In this article, well-known money manager Patrick O’Shaughnessy takes a look at combining momentum with value and quality. He provides handy 5×5 return matrices, which dramatically illustrate the power of each factor. Momentum plus value proved to be the winner with average annual returns of 18.5% from 1963 through 2013.

Just for Frugal Fun

How to save money by getting the last bit of toothpaste out of the tube
This video from BC Hydro demonstrates a simple way to get all of the toothpaste out of the tube, along with a side order of energy conservation.

Question is, are you willing to cut open the tube to get at the last bit of minty goodness? Or is it an idea that’s fit for the dustbin?

Norm Rothery, CFA, PhD, is the founder of