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3 Picks From One of Canada’s Top Dividend Funds

When investing, finding new ideas is always tricky. One good starting place is to find funds that have a great track record and look at what they currently hold.

One such fund is the Trimark Canadian Plus Dividend Class. The fund has a five-year annual return of 19%, good enough for the top quartile among its peer group, and also good enough to beat its index. Its top three holdings thus deserve a closer look.

1. Thomson Reuters

Thomson Reuters (TSX: TRI)(NYSE: TRI) sells information software, with most of its revenue coming from its Legal and Financial segments. These businesses generate subscription-based revenues with high renewal rates, allowing Thomson Reuters to achieve high, predictable free cash flow. In fact, despite a financial crisis five years ago and various struggles thereafter, Thomson Reuters has managed to raise its dividend every year for 21 years.

The stock has surged recently, up 44% in 2013 alone. But the shares still yield a healthy 3.6%.

2. Bonavista Energy

Bonavista Energy Corporation (TSX: BNP) is one of Canada’s highest-quality energy companies. Despite being weighted 63% toward gas production, Bonavista is just as profitable as its oily competitors. This is due to its low-cost production; last year, operating costs came in at $6.65 per barrel of oil equivalent (boe) in its focus areas. These low costs have allowed the company to generate 25% annual returns to shareholders since its inception.

Like Thomson Reuters, Bonavista’s shares have surged recently. The stock is up over 45% since the beginning of November. But the shares still yield over 5%.

3. George Weston

George Weston Ltd (TSX: WN) is likely the least risky of the fund’s top three holdings. The company has a history dating back to 1882, and makes money from food processing and distribution, very stable industries. George Weston owns 63% of Loblaw Co and also makes money through Weston Foods, which specialises in baked goods.

Unlike the other two companies, George Weston’s shares have not been on such a nice run. The company’s shares are up only about 10% over the last year, generally tracking Loblaw’s. But investors still must accept a lower dividend yield, currently just over 2%.

Foolish bottom line

Each of the fund’s holdings has its pluses and minuses, but given the fund’s track record, these names should certainly be on your radar screen. And as a nice bonus, by buying the stocks themselves, you don’t have to pay the fund’s 2.56% expense ratio.

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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Benjamin Sinclair holds no positions in any of the stocks mentioned in this article.

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