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The Globe's Dividend All-Stars 2025 Dividend stocks are loved by Canadians because they have a pleasant habit of paying tax-advantaged income that tends to grow over time with the possibility of capital gains along the way. But the Canadian stock market is stuffed full of dividend stocks and it can be hard to find the best it has to offer. That's why we're pleased to present the Globe's Dividend All-Stars for 2025. It provides a wealth of data and analysis on the largest 200 dividend-paying stocks on the Toronto Stock Exchange and includes a star rating for each one. The top 20 stocks get a full five out of five stars and make it into the team of Dividend All-Stars. We're happy to say that last year's team outperformed with gains of 29.4 per cent, including reinvested dividends. Our star system grades each Canadian dividend stock using three primary criteria. It starts with a stock's yield, investigates its bargain potential, and then checks for signs of trouble. The system is based entirely on the numbers and the idea is to favour stocks with healthy yields that trade at bargain prices and are in stable or improving trends. We believe the Dividend All-Stars method offers an objective take on the largest 200 dividend-paying common stocks on the TSX. Mind you, we skip over newly listed companies with less than 12 months of trading history and try to avoid those that are in the process of being taken over because they are better addressed by merger specialists. We hope you enjoy the Dividend All-Stars for 2025. You can learn more about how we grade each stock and the 20 five-star stocks in this year's team below. Grading Dividends We start our analysis of each stock with its dividend yield and assign more stars to stocks with generous dividend yields. After all, income investors love it when an avalanche of dividends flows into their accounts on a regular basis. But companies can also reward their shareholders by buying back their shares. That's why we consider a stock's buyback yield, which we measure using the percentage change in a company's share count over the past four quarters. The idea is to pay attention to the impact of the combination of share repurchase programs and the issuance of new shares to management and employees. We like to see a company's shares outstanding decline, rather than grow, over time. (In a closely related concept, shareholder yield represents the combination of dividend and buyback yields.) Next we weigh up each stock's merit as a value investment and prefer stocks with low prices in comparison to their earnings and cash flow. Our bargain hunting starts by favouring stocks with modest price-to-earnings ratios (P/E) because such stocks have performed well, as a group, over the long term. Similarly, we're also keen on buying lots of cash flow from operations for a reasonable price and favour stocks with low price-to-cash-flow ratios (P/CF). Our star system is fortified with measures of safety. After all, a company that recently ran into trouble might seem to offer a high yield, or trade at a low P/E, while suffering from a particularly dire outlook. Two safety measures are employed in an effort to weed out problem cases. First, we reward stocks on the upswing with high total returns over the past six months relative to their peers. The idea being to avoid stocks the market has soured on, which might have encountered issues that have yet to appear in their financials. Second, more stars are awarded to steady performers with modest volatilities over the prior 260 days than haven't startled their shareholders in recent times. We combine all of our yield, value, and market measures to grade the largest 200 dividend stocks on the TSX. The top 20 get a full five out of five stars and form the Dividend All-Stars portfolio. The Winning Team We're pleased to say that our Dividend All-Stars outperformed in their first year at The Globe and Mail. The portfolio gained an average of 29.4 per cent from Feb. 15, 2024, through to Feb. 13, 2025. In comparison, the Canadian stock market, as represented by the S&P/TSX Composite Index, advanced by an average of 24.7 per cent over the same period. (The data herein comes from Bloomberg and includes dividend reinvestment, but not fund fees, commissions or other trading costs. The portfolios are equally weighted.) In addition, we back-tested our star system to see how it performed over the longer term. The 20-stock Dividend All-Stars portfolio gained an average of 16.4 per cent annually over the 25 years to the end of January, 2025, when an equal-dollar amount of money was put into each stock and the portfolio rebalanced monthly. On the other hand, the market index climbed by an average of 7.3 per cent annually over the same period. Income investors can take a less-active approach because the Dividend All-Stars portfolio gained an average of 14 per cent annually over the 25 years to the end of January, 2025, when rebalanced annually instead of monthly. A cautionary tale The Dividend All-Stars, and our star ratings, provide a good beginning to a stock market adventure, but it is important to arm yourself with further research on each company, its industry and the market before heading out to conquer the market's dragons. Be aware of the strengths and weaknesses of numerical techniques because other factors can affect an investor's success. For instance, the culture and character of a company's people can elevate – or ruin – a business. Investors will encounter market monsters that come in all shapes and sizes from malevolent rulers to natural calamities that can depress the market, damage industries and destroy individual companies. Alas, investing is risky and it is nearly impossible to earn a decent return without acquiring a few scars along the way. While we believe the Dividend All-Stars have what it take to succeed, we expect the road to be bumpy, individual stocks to disappoint, and the market to crumble from time to time. We would be pleased to outperform the market index by an average of a few percentage points a year over the long term. (For the sake of disclosure, the author owns many of the stocks mentioned herein.) Watch your step when considering stocks that trade infrequently, and those with very low share prices, because they may be difficult to deal with in a timely and cost-effective way. But enjoy the adventure after mulling over all of the information at your disposal. After all, the purpose of our star system is to help you narrow in on a few dividend payers that might be worthy for inclusion in your portfolio. Meet the All-Stars These 20 stocks offer the best combination of income, value, and stability. Those marked with an asterisk are returning members from last year's team. AGF Management (AGF.B) is a Toronto-based asset manager with operations in North America and Europe. It happens to be the second smallest All-Star this year, with a market capitalization near $700-million. AGF trades at 0.6 times book value, offers a 4.3 per cent dividend yield, and raised its dividend-per-share by 4.5 per cent over the past 12 months. * ATCO (ACO.X) is a sprawling utility-heavy conglomerate with global operations that makes its home in Calgary. The company offers a 4.2 per cent dividend yield and an 8.9 per cent earnings yield based on forward 12-month earnings estimates. It also cut its share count by 1 per cent over the past four quarters to boost its shareholder yield to 5.2 per cent. Bank of Nova Scotia (BNS) is the third-largest Canadian bank by assets and the largest company in the team this year with a market capitalization of $90.5-billion. The Toronto-based company offers the largest dividend yield of the big six banks at 5.8 per cent and trades at a relatively modest 1.2 times book value. Cogeco Communications (CCA) is a Canadian telecommunications company based in Montreal, which also operates in 13 U.S. states. It pays a 5.8 per cent dividend yield and reduced its share count by 5 per cent over the past four quarters to increase its shareholder yield to 10.8 per cent. Empire (EMP.A) runs grocery stores under the Sobeys, Safeway, IGA, and other brands across the country while making its home in Stellarton, N.S. The company raised its dividend-per-share by 9.6 per cent and cut its share count by 4.3 per cent over the past four quarters. While its dividend yield is relatively modest at 1.9 per cent, its shareholder yield a healthier 6.2 per cent. Extendicare (EXE) operates long-term care homes and serves seniors across the country. The company makes its home in Markham, Ont., and pays a 4.4 per cent dividend yield in monthly instalments. Mind you, Extendicare hasn't increased its dividend in the past 10 years. Fairfax Financial (FFH) is an insurance-focused conglomerate based in Toronto, run by CEO Prem Watsa in a manner similar to Warren Buffett's Berkshire Hathaway (BRK.A). Its shares trade at 1.4 times book value and 9.1 times forward 12-month earnings estimates. It pays an annual dividend in U.S. dollars and has a modest yield of 1.1 per cent. But Fairfax cut its share count by 5.8 per cent over the past four quarters to push its shareholder yield up to 6.9 per cent. First National Financial (FN) is an originator, underwriter, and servicer of residential and commercial mortgages that makes it home in Toronto. It pays a 6.2 per cent dividend yield in monthly instalments and trades at 10.1 times forward 12-month earnings estimates. * iA Financial (IAG) is an insurance and wealth management firm based in Quebec City with operations in Canada and the United States. It pays a 2.8 per cent dividend yield after boosting its quarterly dividend by a hefty 17.6 per cent over the past year. It also cut its share count by 7.6 per cent over the past four quarters to push its shareholder yield up to 10.4 per cent. IGM Financial (IGM) is a Winnipeg-based wealth and asset manager that happens to be a subsidiary of Power (POW), which is also a member of the All-Star team. IGM pays a dividend yield of 5.1 per cent and trades near 8.9 times trailing 12-month earnings. Laurentian Bank (LB) is a small Canadian bank based in Montreal with a market capitalization of $1.2-billion. It's been out of favour in recent years and trades at 45 per cent of book value while paying a 6.8 per cent dividend yield. Mind you, the company cut its dividend in 2020, which helps to explain why some people shy away from its shares. * Manulife Financial (MFC) provides insurance and wealth management to individuals and institutions, primarily in Asia, Canada, and the United States. The Toronto-based company grew its dividend-per-share by 9.6 per cent over the last year, pays a 3.8 per cent dividend yield, and cut its share count by 3.2 per cent over the past four quarters. It sports a shareholder yield of 7 per cent. MCAN Mortgage (MKP) is a flow-through mortgage investment company based in Toronto that invests in residential mortgages in addition to construction and commercial loans. It is the third smallest member of the team this year with a market capitalization near $710-million but it pays an 8.5-per-cent yield. PetroTal (TAL) is an oil and gas company that focuses on the development of oil assets in Peru. It is the smallest member of the All-Star team this year, with a market capitalization near $650-million. It pays a dividend yield of 11.8 per cent, in U.S. dollars, and trades at 4.6 times forward 12-month earnings estimates. * Power (POW) is a large financial conglomerate based in Montreal that focuses on financial services in North America, Europe, and Asia. It owns a 68.2-per-cent stake in Great-West Lifeco (GWO) and 62.5 per cent of IGM Financial (IGM), which also appears herein. Power trades near 0.8 times its adjusted net asset value, which includes the quarter-end market value of its publicly traded subsidiaries. It pays a 4.7 per cent dividend yield and its quarterly dividend-per-share grew by 7.1 per cent over the past year. * Suncor Energy (SU) is a large integrated oil and gas company based in Calgary with operations primarily in the U.S. and Canada. Suncor pays a dividend yield of 4 per cent and increased its quarterly dividend-per-share by 4.6 per cent over the past year. It also cut its share count by 3.5 per cent over the last four quarters to boost its shareholder yield to 7.5 per cent. Tamarack Valley Energy (TVE) is a Calgary-based oil and gas exploration and production company with operations in Alberta. It trades at 6.6 times earnings, reduced its share count by 4 per cent over the past four quarters, and sports a monthly dividend with a yield of 3.4 per cent, which puts its shareholder yield at 7.4 per cent. * Transcontinental (TCL.A) is a printing and packaging company that makes its home in Montreal with operations primarily in the U.S., Canada, and Latin America. The company pays a 5.2 per cent dividend yield while trading near 0.8 times book value and 7.0 times forward 12-month earnings estimates. Westshore Terminals (WTE) exports coal from its Vancouver-based operations to Japan, South Korea, and other countries worldwide. It is also in the process of adding facilities to ship potash through its existing terminal. The company pays a 6.1-per-cent yield and grew its regular dividend-per-share by 7.1 per cent over the last year. * Whitecap Resources (WCP) is an oil and gas company with operations in Alberta, Sask., and B.C. that makes its home in Calgary. It offers a 7.5 per cent dividend yield, paid in monthly instalments, and cut its share count by 3.0 per cent over the past four quarters to produce a shareholder yield of 10.5 per cent. Spreadsheet: The 200 Dividend Star Rankings [.xls] First published in the Globe and Mail, February 22, 2025. |
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