One thing all investors can agree on is that stock prices fluctuate. Markets rise and fall for all sorts of reasons.
Another thing you can count on is that dividend-paying stocks have historically outperformed non-dividend-paying stocks. Therefore, one of the better ways to earn good returns is to own industry-leading companies with sustainable dividends. Here are five such examples that are all timely picks for income investors today.
1. Imperial Oil
Imperial Oil (TSX: IMO)(NYSEMKT: IMO) has paid a dividend to shareholders every year since 1891, earning it a spot as one of Canada’s dividend aristocrats. Imperial has a strong balance sheet as it is one of the least leveraged companies in the oil and gas sector. The company pays out just 11% of its net income, which means more dividend hikes could be on the way.
2. Tim Hortons
Tim Hortons (TSX: THI)(NYSE: THI) is Canada’s largest coffee and doughnut chain. Since the company went public in 2006, Tim Hortons has tripled the size of its dividend and repurchased 25% of its outstanding shares. Today, the stock yields 2.2%.
BCE (TSX: BCE)(NYSE: BCE) is one of the leading companies in the telecom industry when it comes to profitability, with a net margin of 10.3%. Over the past decade, the telecom giant has increased shareholder value by steadily raising its dividend. BCE has managed to increased its payout at an 8.6% compounded annual clip over the past five years. Today, the company pays an annual dividend of $2.48 per share and the stock yields 5%.
4. Royal Bank of Canada
Royal Bank of Canada (TSX: RY)(NYSE: RY) is one of the most reliable dividend payers in Canada as the company has made a distribution to shareholders every year since 1870. Today, it pays an annual dividend of $2.84 per share and the stock currently yields 3.6%. As a market leader with almost $900 billion in assets, Royal Bank of Canada should be able to increase its dividend for years to come.
5. Canadian National Railway
Canadian National Railway (TSX: CNR)(NYSE: CNI) has increased its dividend every year since going public in 1996. The company has a strong balance sheet, with one of the lowest debt-to-equity ratios in the railroad sector. Canadian National only pays out 30% of its earnings as dividends, which is reasonable given the huge amounts of capital required in this industry. Today, the company pays an annual dividend of $1.00 per share and the stock yields 1.35%.