Even though Canadian aristocrats don’t have the pedigree or track record of U.S. Dividend Aristocrats, they are still considered significantly more dependable and reliable compared to other dividend stocks. When a company is raising dividends year after year, that means it’s trying to hold on to the investor confidence it has built over the years. And aristocrats rarely slash their payouts and tarnish their dividend streak.
But the recent economic downturn has reiterated the fact that aristocrats aren’t infallible. One of the most beloved dividend stocks, Suncor, slashed its dividends this year, killing an 18-year streak of increasing payouts. The company made a practical choice, but it reminded investors that they have to be discerning, even when choosing exclusively from the aristocrat pool.
If you are looking for three aristocrats that can sustain and survive major market crashes, you may want to consider the three companies below.
A financial aristocrat
Intact Financial (TSX: IFC) is a Toronto-based corporation with a $20.3 billion market cap. The company is the largest property and casualty insurance provider in the country and has a growing footprint in North America. It has various brands and member companies, each with its specific clientele and some with over a hundred branches in the country.
The company has a dividend-growth streak of 15 years, and it’s the second-oldest aristocrat in the financial sector. It raised its dividends through the Great Recession and hasn’t slashed its dividends in this crash either. It offers a modest yield of 2.3% at a safe payout ratio of 60%. The company’s dividend CAGR for the past decade is about 9%. It’s also a decent growth stock.
An energy aristocrat
A list of dependable Dividend Aristocrats wouldn’t be complete without Fortis (TSX: FTS)(NYSE: FTS). With its utility business, a decent geographic spread, and 3.3 million utility customers, the company is a solid dividend bet. As a utility company, Fortis is rock solid, but the company is also making efforts to fit well in a clean and green energy future.
Fortis’s dividend streak is second only to Canadian Utilities. It has been increasing its payouts for 46 years, which means it’s a Dividend Aristocrat across the border as well and on its way to becoming a dividend king. It’s currently offering a yield of 3.77%.
A telecom aristocrat
Telus (TSX: T)(NYSE: TU) is one of the three major players in the telecom sector in Canada. The three giants share about 90% of the country’s mobile consumers, which means that Telus is in a very secure sphere. It offers a wide range of telecom products and is also improving its product/service line to better position itself in the new 5G market.
Telus is one of the oldest aristocrats in the sector and has 16 consecutive years of dividend increases under its belt. It’s currently offering a juicy yield of 4.8% at a relatively dangerous payout ratio of 98%. But the company will pull through, as it did during the Great Recession, without slashing its dividends.
Foolish takeaway
Building a dividend portfolio around stocks that are most likely to continue growing their dividends, even during aggressive market crashes, requires you to make certain sacrifices. You will have to compromise on the yield a bit or buy when the stocks dip and yield goes up. Some of these aristocrats (especially if they are also decent growers) might be overvalued.
