I like to divide the Canadian stock market into two groups, at least in my own mind.
The first group is filled with stocks I’m simply not interested in. Included would be marijuana producers, gold miners, and most oil companies. I think that, long term, each of these companies will end up being a slave to a commodity price I just can’t predict. There are also countless other companies included in this group that I think are just crummy businesses.
That leaves me with a relatively small universe to invest in. I further separate the second group into rock-solid companies that pay predictable dividends. One funny thing about this group is the names don’t seem to change over time. Many of these companies have been portfolio stalwarts for years.
In fact, most of Canada’s strongest companies have been solid performers for decades, with some even tracing their histories back into the 1800s. There are also a select few Canadian stocks that have paid dividends for at least that long, too.
That’s the kind of stability I want in my portfolio. Let’s take a closer look at three businesses that have pulled off this amazing feat.
BCE
BCE (TSX: BCE)(NYSE: BCE) was founded in 1880, shortly after Alexander Graham Bell invented the telephone. It paid its first dividend to investors in 1881 and hasn’t missed a single payment since. That’s nearly 140 years of consecutive dividends.
Some folks are bearish on the telecoms, saying communication is evolving and telecoms won’t be able to keep up. This is an argument that companies like BCE have shrugged off for more than a century now. They figure out what direction society is going and make adjustments accordingly.
Remember, BCE doesn’t just own telecom assets. It’s also a major player in media, operating many of Canada’s top television channels. It owns Crave, one of Canada’s top streaming services. And the company also owns major chunks of Canada’s top sports franchises like the Toronto Maple Leafs, Toronto Raptors, and Montreal Canadiens.
BCE shares currently pay a 4.9% dividend — a payout that has increased consistently every year for a decade now.
Imperial Oil
In 1880, 16 oil refiners got together and created Imperial Oil (TSX: IMO)(NYSE:IMO). By 1889, John Rockefeller’s Standard Oil came calling and bought a controlling interest in the company. Then, in 1947, Imperial Oil helped usher in the great western oil boom when it discovered oil in Leduc, Alberta.
The rest, as they say, is history. The company is now one of Canada’s top oil producers, with a focus these days on the oil sands. It also owns significant downstream assets, including refineries and some 1,800 Esso-branded service stations.
And through it all, Imperial Oil has paid dividends. It hasn’t missed a payout since 1891. The current yield is a respectable 2.7%.
If you’re looking to invest in the oil sector, Imperial Oil might be the most secure investment you can make. Its balance sheet is as solid as you can get. All those downstream operations provide steady cash flow. And shares are currently a little depressed, making today a great time to enter.
CIBC
A mere six weeks before Canada became a nation in 1867, the Canadian Bank of Commerce opened its doors in Toronto. It paid a dividend back to shareholders in 1868. Nearly a century later, it merged with the Imperial Bank of Canada to form Canadian Imperial Bank of Commerce (TSX: CM)(NYSE: CM).
Through all that time, the company still hasn’t missed a dividend. It has paid shareholders consistently for more than 150 years.
Although CIBC has fallen to only be the fifth-largest bank in Canada today, it’s still a behemoth with more than $650 billion worth of total assets. It has a solid market share in Canada, and after years of being criticized for not expanding southward, finally acquired assets in the United States.
CIBC also boasts the best dividend yield of the five largest Canadian banks, with a current payout of 5.3%. The dividend has been hiked each year since 2011, and the current payout ratio is approximately 50% of earnings. I can’t promise CIBC will be able to pay dividends for another 150 years, but the payout sure looks secure today.
