Ways To Pick The Best Canadian Dividend Stocks

The Canadian economy should continue to gain strength along with a rebound in the U.S. (The U.S is by far the country’s largest export market, taking in 74.5% of the goods Canada ships out, according to the CIA World Factbook.) That’s an obvious plus for all Canadian companies, including dividend payers, but not all will benefit equally. Below are three criteria David Dittman, chief investment strategist at Canadian Edge, uses to separate the best Canadian dividend stocks—the ones with the safest payouts and the strongest potential for gains—from the pretenders.

A reasonable payout ratio. This figure is a key measure of dividend safety for investors in Canada and anywhere else. It’s calculated by dividing the indicated quarterly dividend rate by the previous quarter’s income per share. Lower percentages generally indicate a greater degree of dividend safety. A low debt-to-assets ratio. This metric compares each company’s total obligations to the value of the assets on its books. It’s calculated by dividing total debt by total assets. No dividend cuts in the past five years: As all investors know, the past five years have been some of the most turbulent in stock market history, both here and north of the border, so companies that can meet this standard are particularly worthy of your attention.

Source: Investing Daily

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