Financially Strong Canadian Dividend Growth Stocks & Their Credit Ratings

My investing plan involves buying and hopefully holding great dividend growth companies for a long period of time while collecting the growing stream of dividends that will eventually help cover retirement costs and inflation. For this strategy to work I need companies to be able to survive and thrive over the very long term. This is why, as a long term dividend growth investor, I place a lot of weight in the financial strength of a company before investing.

With that in mind I thought it would be interesting to come up with a laundry list of Canadian dividend growth stocks that exhibit signs of financial strength.

As a starting point I used the May 31, 2016 version of the Canadian Dividend All-Star List which is an excel spreadsheet of Canadian companies that have increased their dividend for five or more consecutive years in a row. Currently there are 88 companies in the list with a dividend streak of 5 years or more. I decided to make one exception and added Bank of Montreal [BMO.TO Trend] into the mix, bringing the total to 89.

We in Canada are known for

… Continue reading Financially Strong Canadian Dividend Growth Stocks & Their Credit Ratings

Financial Strength: A Key Element in High Quality Dividend Growth Stocks

Lifter

“Financial strength is the key requirement of a high-quality stock. [...] Remember, you’re buying a piece of a business here, one that you want to live with for a long, long time.” (Miller, 2006)1

I recently read Lowell Miller’s The Single Best Investment: Creating Wealth with Dividend Growth. I would make this book required reading if I were teaching a course on dividend growth investing. What I like about this book is that it gives specific criteria to look for when trying to find a good dividend growth candidate. While the version I read was written in 2006, a lot still applies today.

The concept of the book is that high quality + high current dividends + high growth of the dividend = high total returns. A key element of a high quality company is financial strength. Today I’ll be sharing a few of the author’s different ways to identify financial strength.

Low debt

As a long term investor it is important to me that the company still exists in 10 years, 20 years, 30 years … well you get the idea. For a company to stand the test of time they have to be able

… Continue reading Financial Strength: A Key Element in High Quality Dividend Growth Stocks