3 Canadian Dividend Aristocrats With Double-Digit Dividend Growth

Canadian Dividend Aristocrats such as Onex Corporation (TSX:ONEX) have reliable and impressive double-digit dividend-growth rates.

| More on:
The Motley Fool

A common mistake made by income investors is to focus on yield. Although a high yield is attractive, it can also come with greater risk. Likewise, companies with a high yield tend to have lower dividend-growth rates.

Dividend-growth investors with a long-term view should focus on companies that have a history of growing their dividends. The perfect starting point is to look for Canadian Dividend Aristocrats. These are companies that have raised dividends for at least five consecutive years.

But, why stop there? Another great way to turbocharge your investment income is to look for those with higher-than-average dividend-growth rates. The three companies below are perfect stocks for millennials or dividend-growth investors with a long-term outlook.

New to the list

One of the newest additions to the Canadian Dividend Aristocrat list is Onex Corp. (TSX:ONEX). Onex is a private equity firm with over $32 billion in assets under management.

The company has raised dividends for six consecutive years. Its most recent increase of 16.67% came in May 2018. Onex has three-year and five-year dividend-growth rates of 18% and 21.2%. This is much higher than the Aristocrat average.

In 2017, the company generated over $15 per share in free cash flow (FCF). Dividends accounted for less than 1% of FCF. What does this mean? it means expected double-digit dividend growth for years to come.

Supply chain management

A little-known tech company with an attractive income profile is Tecsys (TSX:TCS). The company is engaged in the development, marketing, and sale of enterprise-wide supply chain management software.

Tecsys has an impressive 10-year dividend-growth streak. It has the second-longest dividend-growth streak in the tech sector. The company has three-year and five-year dividend-growth rates of 19.8% and 23.3%. Tecsys last raised its dividend by 11.11% in December of last year.

With a payout ratio below 40%, expect another double-digit raise this December.

Special dividend, anyone?

An income favourite, ZCL Composites (TSX:ZCL) has a seven-year dividend-growth streak. The company manufactures and supplies fiberglass-reinforced plastic underground storage tanks.

Unfortunately, the company has struggled over the past year. In the absence of a permanent CEO, the company has lacked execution. Over the past year, ZCL’s share price has tumbled 33%. There is, however, no denying it is an attractive income play.

Despite its struggles, ZCL continues to return significant cash to shareholders. In March, the company raised its quarterly dividend by 12.5%. But that’s not all. It also declared a one-time special cash dividend of $0.40 per share. This marked the third straight year the company has declared a special cash dividend.

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 Mat Litalien has no position in any of the companies listed. Tecsys is a recommendation of Hidden Gems Canada.

More on Dividend Stocks

grow dividends
Dividend Stocks

1 Cheap Stock to Turn a $20,000 TFSA Into $267,000

If you're looking to boost your TFSA, you need a cheap stock that you can hold for decades. And I…

Read more »

edit Person using calculator next to charts and graphs
Dividend Stocks

2 of the Best Monthly Passive-Income Stocks to Buy in Canada Right Now

Here are two of the best Canadian monthly passive income stocks you can consider buying right now to hold for…

Read more »

stock analysis
Dividend Stocks

3 TSX Stocks I Will “Never” Sell

Few companies offer a powerful enough combination of dividends and growth potential to deserve a permanent place in your portfolio.

Read more »

value for money
Dividend Stocks

2 Cheap TSX Stocks for TFSA and RRSP Investors to Buy Now

These stocks look attractive today to buy for a TFSA or RRSP portfolio.

Read more »

Increasing yield
Dividend Stocks

3 TSX Stocks With High Dividend Yields

These three high-yielding dividend stocks would be excellent additions to your portfolio in this volatile environment.

Read more »

Payday ringed on a calendar
Dividend Stocks

New Investors: 3 Top TSX Dividend Stocks That Pay Cash Monthly

Canadian investors looking for monthly dividends have plenty of options on the TSX. Here's three of my favourite stocks for…

Read more »

woman data analyze
Dividend Stocks

These U.S. Stocks Are No-Brainer Additions to Your Portfolio

Buy these two no-brainer U.S. stocks if you want to gain exposure to international stocks in your self-directed portfolio.

Read more »

Value for money
Dividend Stocks

1 Value Stock Every Canadian Investor Should Own

This value stock not only has a solid present, but a stable future at incredibly cheap and even oversold prices!

Read more »