Canadian Century Club Dividend Stocks

Canadian Stocks That Have Paid Dividends For Over 100 Years

 

About a month ago I wrote an article titled, “Century Club Dividend Stocks,” highlighting a very impressive list of companies that have continuously paid out dividends for at least one hundred years. Just think about what that means. These companies have been able to pay out a part of their earnings to shareholders during the depression, two World Wars, natural disasters, terrorist events and other economic downturns. As a follow up to the original article, I would like to highlight a smaller, yet no less impressive, list of Canadian century club dividend stocks.

 

First on the list is Bank of Montreal (BMO). BMO is a Canadian retail bank that offers personal banking products and services. Currently yielding a high 4.00% with a moderate payout ratio of 52.3% BMO has paid dividends every year since 1829. Offering a low PE of 12.56 this stock might be considered relatively cheap for the market today.

 

Next up is The Bank of Nova Scotia (BNS). Based in Toronto, Canada, BNS provides banking services in Canada and internationally that include personal, commercial and corporate lending. Currently yielding a generous 3.60% with a moderate payout ratio of 51.2% this stock has paid a dividend every year since 1832. Another low valuation financial stock with a current PE of 13.5, BNS is another relatively cheap stock in today’s high priced market.

 

Another Canadian century club dividend stock is The Toronto-Dominion Bank (TD). TD has paid a dividend every year since 1857 and currently yields a favorable 3.40% with a payout ratio of 47.5%. Having a slightly higher PE than the previous two stocks mentioned, TD still is far less than its peers and the S&P at only 14.8. I think I see a trend here with regard to which sector has been paying out dividends for well over one hundred years.

 

The next one hundred plus year dividend payer is Canadian Imperial Bank of Commerce (CM). A diversified financial institution, CM offers many of the same banking services the other Canadian banks have as well as credit, capital market and investment banking services. CM has been paying a dividend since 1868 and currently offers a high yield of 4.10% with a moderate payout ratio of 50.4%. With a PE of 12.1, CM’s valuations is well below its peers and the market as a whole.

 

Finally, rounding out our impressive list is Royal Bank of Canada (RY). Headquartered in Toronto, Canada, as most large Canadian banks are, RY currently offers a 3.80% yield with a payout ratio of 51.4%. Paying out dividends since 1870, RY has a current PE of 13.89 also putting it below many of its peers and the S&P.

 

One interesting thing to note about this list is that all of the Canadian century club dividend stocks are in the financial sector and specifically banks. They also all offer, very attractive to relatively high yields, and low PEs and moderate payout ratios. In fact, the average yield of this group of stocks is a generous 3.78% while all have an average current PE of 13.37.

 

Of course past performance is never an indicator of future results, but when dealing with the large relatively conservative Canadian banking stocks, it’s probably a low risk bet that these companies will continue to pay out a dividend for the next one hundred years.

 

Are any of these large Canadian banks in your portfolio? I’d love to hear from some of the Canadian bloggers out there.

 

Disclosure: Long NONE

50 thoughts on “Canadian Century Club Dividend Stocks

  1. DivHut,
    I held BMO in my 401k, but ended up selling it because Merrill Lynch was taking out 15% for Canadian withholding tax. That would knock down a 4% yield to 3.4% which isn’t bad, but I thought that I could do better. I think it was DGI who wrote that an agreement between the government here in the States and the Canadian government waived the withholding for tax deferred accounts, in which case ML screwed up. Otherwise, Canadian banks do look attractive.
    Thanks,
    KeithX

    • Hi KeithX,

      As I have been replying to others, I was very surprised to learn about how robust many of the Canadian banking stocks are. I guess living in the U.S. you mostly hear about BAC, WFC, USB C, etc. and don’t hear much about the quiet, conservative, dividend friendly, well run banks to the north. It’s nice to read that several of the other bloggers own or have owned the names mentioned in this blog post.

      Regarding taxes, as you pointed out, even with a withholding the yields on all of these stocks is still relatively high. I guess that goes with the territory if wanting to own other great foreign stocks like TOT or UN (I know we can choose UL) or with Shell for that matter. As always, I appreciate your words.

    • Hi R2R,

      I totally agree with you on those points. It’s funny how prior to writing this article I never even considered any Canadian bank. I was too narrowly focused on WFC and USB but after seeing the long histories and relatively high yields they all offer I know I have to at least consider one. Thanks for commenting.

  2. Hi divhut,

    Great post, I am very hopeful on Canadian banks, I have a position in BNS and intended to increase it but it got quite pricey for me. I knew about their recent dividend track record, but I was not aware that they consistently payed dividends for more than 100 years. I was also interested in BMO, but ended up not going through with it, because it didn’t seem as promising as BNS. What’s your personal preference of all these banks?

    regards,
    Dividend Venture
    Dividend Venture recently posted…Dividend Growth Investment WalmartMy Profile

    • Hi DV,

      Thanks for stopping by and commenting. Personally, I never even considered any Canadian banks prior to writing this post. I must say that after doing a little digging around I was quite impressed with this list. I had no idea that there were so many well run Canadian bank stocks. I guess the same conservatism and prudence that WFC and USB have made these Canadian banks weather the financial turmoil quite well five years ago. That being said, I only own WFC in my portfolio and was considering adding USB but a lot of these Canadian banks possess the same high quality traits I look for in my long term holdings. My personal preference is that these banks seem like solid investments even in today’s high priced market. I guess that’s the silver lining with writing this blog… you sometimes get introduced to some pretty awesome stocks that never even make your radar.

    • Hi J,

      You sound just like me. I was surprised to learn of the many high quality Canadian banking stocks out there too. Of course, a little more digging around is required but my preliminary scouting has found quite a few worth considering. Thanks for stopping by.

  3. I’ve owned TD and BNS for a few years and have been quite pleased. Solid dividend growth, solid valuations, and none of these companies cut dividends during ’08/’09. I’m still not daring enough to start a stake in a large American bank. I figure it’s only a matter of time till they blow up again. It’s just crazy how American banks conduct business! If I did go American I’d choose WFC, but I simply feel more comfortable with banks based in Canada even though I’m American myself.

    I do fear housing prices may come back to bite some of the Canadians at some point (they aren’t bulletproof). We’ll see. TD does a lot of business in the U.S. and has to compete with the crazies. As long as they stick to their Canadian roots I think they’ll be fine.

    Even with stock prices rising these banks still have value left. Unfortunately allocations prevent me from adding at the moment. Otherwise I’d consider a purchase. I’d own RY too if I had room.

    Furthermore I put Canadian companies in my ROTH IRA to avoid dividend withholding taxes altogether. Easy trick to get the full dividend payment!
    CI recently posted…Weekly Purchase – DEMy Profile

    • Hi CI,

      Thanks for sharing your Canadian bank holdings. I happen to agree with you about the American banking landscape and the crazy “rules” they operate under. For my part I only own WFC but I really think I should consider these Canadian banks as well. They just seem to provide solid and conservative growth and are very dividend friendly which is the main reason we are all here.

      Regarding, Canadian housing, I couldn’t believe the prices and insane demand in places like Vancouver. It reminds me of the pre-2008 collapse we experience here in the U.S.A.

      Since I own only one U.S. bank in my portfolio I have been seriously considering adding a Canadian bank as well. Appreciate your comments!

    • Hi LAH,

      Neither did I. Personally, I wouldn’t even look for small cap Canadian banks. With so many high quality, high yielding, low PE major banks why bother with the smaller ones?

    • Hi MRtWaF,

      Thank you for stopping by and commenting. As I replied to others, I’m very much in the dark about Canadian stocks but after writing this blog post I have found a new affinity for this sector. Those long paying dividends coupled with very attractive yields make these bank stocks very desirable, especially in this high priced market.

  4. Hi Divhut,

    Canadian banks evolve in a quasi monopoly under the federal government protection and regulation here in Canada. It makes them very stable investments.

    Over all of these I’m interested in holding TD and RY which are, in my opinion, the best banks out there. I plan on buying shares of these banks pretty soon and add them in my Tax free saving account.

    I use to hold a good number of National bank shares in 2005 but sold them to buy something useless… Stupid me ahah!

    Great post!
    Allan recently posted…Wide moat stocks in the S&P500 Dividend AristocratsMy Profile

  5. DivHut,

    Nice rundown. I’m a pleased shareholder thus far with BNS and TD. Love owning a stake in companies that have been paying dividends for more than 100 years, with really good odds of paying them out for another 100! 🙂

    Cheers.
    Dividend Mantra recently posted…Recent BuyMy Profile

    • Hi DM,

      I was very surprised to learn about the number of Canadian banks that have been paying dividends for 100+ years. I did not expect to find as many as I did nor did I expect the relatively high yields they all offered. As you know, of late I have been very interested in financial sector stocks with my recent purchase of AFL, CB and WFC the past several months but after seeing the history and valuation and yields of some of these Canadian stocks I really have to seriously consider them as well. Thanks for commenting.

    • Hi AG,

      I’m so glad I wrote this post as I was introduced to the Canadian banking sector through it. I had no idea how solid these banks are and how dividend friendly they are as well. My only bank is WFC and after reading the comments and writing this post I will seriously consider these banks for my ROTH. Thanks for commenting.

  6. Gotta love the Canadian banks! Im happy to own shares in 4 of the 6 big banks and most likely going to purchase a few more shares of one of them as well! So far having only held some of them a few months they’ve all gone up between 9.3%-16%!!
    Dividend Wisp recently posted…Next Buy WatchlistMy Profile

    • Hi DW,

      Thank you for stopping by and commenting. The consensus is definitely positive for the large Canadian banks. I am very certain to be adding them to my ROTH portfolio in the coming months after a bit more research.

    • Hi DGJ,

      It is an impressive list to say the least whenever you have any company paying dividends for over 100 years without interruption. I don’t recall seeing that you own any Canadian banks. I am seriously considering adding some to my ROTH account after writing this post. Thank you for stopping by.

    • Hi DD,

      Fair enough. It’s true that you can get too heavy in any particular sector but I have to admit, I was quite impressed with the history of all these banks featured. I’m defintely going to look into adding some to my portfolio as I only own WFC. Thanks for stopping by.

      • OK, I stand corrected, I own three of them and have done quite well since Jan 2012:

        TORONTO-DOMINION BANK TD 200 38.5040 55.95 7,700.80 11,190.00 3,489.20 45.31%
        ROYAL BANK OF CANADA RY 130 52.7100 79.31 6,852.30 10,310.30 3,458.00 50.46%
        BANK OF NOVA SCOTIA BNS 130 51.9900 73.30 6,758.70 9,529.00 2,770.30 40.99%

        This does not include dividends totaling $2221.30 as well as follows:
        TD $725.00
        RB $ 804.70
        BNS $691.60
        debt debs recently posted…Preferred Shares – Time to Spend Some MoneyMy Profile

        • Hi DD,

          That’s awesome. Right now each of those banks are at their 52 week high but valuation wise and dividend wise they look very compelling to me. I have added five Canadian banks to my watchlist and will keep an eye out and try and buy on a dip or perhaps just start really small and nibble on a couple with $400 – $500 to start. Thanks for commenting.

  7. Nice article DivHut. I found it interesting that all five Canadian stocks mentioned were banking stocks. From reading your past articles, I recall that you’ve been high on the financial sector, and for obvious reasons based on the results of this article. It apparent that banking has been a very solid play in Canada for many years. 🙂

    Just curious…if you could only pick two from the above list to buy and hold forever, which two would you choose?

    Thanks in advance for your thoughts…AFFJ
    A Frugal Family’s Journey recently posted…Stocks Added to Blog Collection (Update) – Mid-Month (July 2014)My Profile

    • Hi AFFJ,

      With a few exceptions in other sectors, the financial sector seems to have a lot of great value plays. And these picks are coming from some of the best and largest banks in their respespective country.

      To answer your question, picking only two from the list is difficult and I’d have to do more research first. Ideally, I’d like to own all five but to start I’d pick TD and RY. Thanks for commenting.

  8. I’m Canadian and like many dividend investors here, I love bank stocks. They aren’t 100% risk free but they have a solid history of paying steady, increasing dividends as you have mentioned. I own BNS and BMO. I will buy others when I can. My long term goal is to own stocks in all of them as I really think they are (for the most part) a solid investment for the long term
    Dan @ Our Big Fat Wallet recently posted…What Percentage of Income Do You Spend on Travel?My Profile

    • Hi Dan,

      Thanks for stopping by and commenting. Of course, any investment has its risks but after doing preliminary research on several of the large Canadian banking stocks I became very impressed with their growth and dividend friendliness to shareholders. Like you, I would like to own all five large Canadian banks someday. Though their share prices are all at 52 week highs these days, on a valuation metric they all look attractive. I’m looking to initiate positions in RY and TD to start. It seems that relative to the American banks, Canadian banks seem more stable and attractive. Right now I only own WFC.

  9. We hold four of the big five banks in our portfolios: TD, RY, BNS, and CM.

    BMO has had difficulty in the U.S. and have the weakest dividend growth profile going forward, in our view.

    Having personally dealt with each of the banks along with following their business prospects over many years, we feel that TD and BNS likely have the strongest opportunities to expand over time. RY has done well in the past as well and we expect that to continue.

    CM has a solid domestic franchise, but we are not expecting stellar dividend growth in the near term.

    We have as much exposure as needed at this time and aren’t adding to any positions at this time in the Canadian financial sector.

    Full Disclosure: Long TD, RY, BNS, CM.

    • Hi GRB,

      Thanks for sharing your holdings regarding the Canadian banks. I have been eyeing them for some time and finally pulled the trigger on TD, BNS and RY in early August. The overall stability of the Canadian banking sector coupled with their solid dividend histories compelled me to finally make my purchase. Prior to these buys I only held WFC in my account. I’m happy to have started my positions in the Canadian banks and hope to keep them in my portfolio for decades to come. Thank you for stopping by and commenting.

      • We’ve been the reverse… holding Canadian banks but shying away from the U.S. banks. I still have a book from the mid-2000s which discusses the “best dividend paying companies to own” and there are several American banks which subsequently slashed their dividends during the crisis. BAC was the most notable example. It’s a great reference when I need to remind myself that while it’s good to get other opinions, doing one’s own due diligence is always necessary.

        I’ll admit to now being a tad hesitant about adding to ANY financial stocks in the portfolio. The speed at which the entire system nearly collapsed around the banks truly opened my eyes to the fact that fat profits from banking come at a cost if management is asleep at the wheel and playing Keep-Up-With-The-Jones in risky assets.

        Capitalizing during the crisis was one thing amongst solid and conservative domestic plays, but having established those positions… I am content to instead just add to other sectors.

        – Ryan from GRB

        • Hi GRB,

          I have been investing as a dividend growth investor since 2007 and have only owned one bank in my entire portfolio, WFC. My only other consideration was USB which I never bought. Like you, I have been relatively averse to buying into the U.S. banking sector as I was not particularly fond of the manner at which many of the U.S. banks were run. On the flip side, the large Canadian banks have really intrigued me for some time as to the manner in which they conduct business and their long dividend histories as well. Being light in the financial sector in my own portfolio I have added TD, BNS and RY last month. Out of curiosity what sectors are you looking to boost your presence in? My two largest sector investments are in consumer staples and industrial stocks. I appreciate your comment.

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