Dividend Aristocrats are among the most sought-after dividend stocks in Canada. For those who have never heard of Dividend Aristocrats, these are simply companies that have been able to raise dividend distributions for at least five consecutive years. There are a couple of other requirements that a company must fulfill, but the dividend history is the most important factor, in my opinion.
Even though a company has a history of raising dividends, investors (and prospective investors) must always assess whether that company can continue to do so in the future.
In this article, I’ll discuss three of Canada’s top Dividend Aristocrats and discuss whether they can keep it up in the future.
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Invest in this underrated stock
Alimentation Couche-Tard (TSX:ATD) may not be one of the first companies that comes to mind when Canadians think of Dividend Aristocrats. In fact, this company may not be one of the first that comes to mind when thinking of outstanding businesses to own in an investment portfolio. However, I believe it really should be considered for those two things. Alimentation Couche-Tard is a massive company, operating more than 14,000 convenience stores across 25 countries and territories.
Regarding its dividend, Alimentation Couche-Tard has managed to gradually increase its distribution nearly every year since 2005. In fact, since 2013, Alimentation Couche-Tard’s dividend has increased more than 10-fold (this represents a compound annual growth rate of about 27%). Despite those continued increases, Alimentation Couche-Tard’s dividend-payout ratio stands at about 13%. This means that the company could continue to raise its dividend distribution for years to come.
Another great dividend payer for your portfolio
goeasy (TSX:GSY) is another great Dividend Aristocrat that Canadians should consider adding to their portfolios today. This company operates two distinct business segments. This includes easyfinancial, which provides high-interest loans to subprime borrowers, and easyhome, which sells furniture on a rent-to-own basis. Because of the nature of goeasy’s business, it has been able to record outstanding revenues and bolster its financials over the past couple of years.
goeasy is very notable for its outstanding dividend raises that have occurred over the past decade. Since 2014, goeasy has managed to raise its dividend each year. That represents nearly 10 years of continuous dividend raises. Over that period, investors have seen this company raise its distribution at a compound annual growth rate of about 31%. Today, goeasy maintains a dividend-payout ratio of 32%, which suggests that further dividend raises could be seen in the future.
One of the best dividend stocks around
Finally, investors should consider buying shares of Canadian National Railway (TSX:CNR). This is one of the largest railway companies in North America. Canadian National Railway operates nearly 33,000 km of track, which spans from British Columbia to Nova Scotia. The company also operates in the United States, as far south as Louisiana.
Like the other companies listed here, Canadian National Railway has managed to increase its dividend distribution for many years. Since 1996, Canadian National Railway’s dividend has grown at a compound annual growth rate of about 15%. Today, Canadian National Railway’s dividend-payout ratio is about 42%. In my opinion, that’s a bit on the high end, for what dividend investors should aim to look for. However, anywhere up to 55% should indicate that a company could see comfortable growth in its dividend for years to come.
