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A-grade stocks represent our top picks—and, reflecting a challenging set of market conditions, they’re scarcer than usual. But there are many strong Bs worth a look. Here’s how we graded this year’s winners.
To compile this list of Canada’s best dividend stocks, we began with the S&P/TSX Composite Index of 225 companies. These stocks are generally the largest and most liquid in Canada. Then, we excluded the issuers that don’t pay a dividend, narrowing our list to 176 stocks.
To each of these, we awarded three scores based on publicly available data:
We then added up all three scores to determine each stock’s total score, giving a 40% weighting to each of the yield and stability scores and a 20% weighting to valuation. The data used to score the securities was collected and was current as of Nov. 30, 2023.
The full list of the Top 100 dividend stocks represents the lowest-scoring 100 stocks out of the 176 eligible. Top performers earn the lowest scores, reflecting their relative rank under each of the criteria.
From that, we derived the letter-grade system and the A-Team and B-Team of Canada’s 20 best dividend stocks, detailed in our Best dividend stocks in Canada for 2024 overview. The A-Team companies scored well for all three criteria. The B-Team represents companies also worth looking at to fill stock sector gaps in a portfolio. Companies with higher scores tended to fall short on one or more of our measurement criteria, but they still had attributes superior to those excluded from the list of 100. Keep in mind this methodology does not consider all aspects of a stock’s suitability for your portfolio. It does not take into account factors such as the quality of a company’s management, brand equity or whether the company has a competitive “moat.” These best dividend stocks we’ve identified are meant to be a starting point for further due diligence. To see how our 2023 top dividend stocks performed, check out the top dividends past performance summary.
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dont understand if a higher stability score is better or a lower one…and no where in your website or article does it explain this
Dear Nicholas,
Thanks for the question. Here is the response from Aman Raina, investing coach and founder of Sage Investors, who extracted the data:
The stability score ranks companies according to Return on Invested Capital (highest to lowest), Debt/Equity (lowest to highest), earnings growth (highest to lowest), and EPS/Dividends (highest to lowest). The higher the company ranks according to these factors, the better it is demonstrating how effective and consistent the company’s operational efficiency is in creating wealth and generating cash flow, which ultimately could flow back into dividend payouts over the long term.