Canadian Dividend Kings List: 50+ Years Dividend Increase! (2024)

Investing in Canadian Dividend Kings (often called Dividend Aristocrats) is always a popular strategy when high-flying assets get pulled back down to Earth. I bet there are a lot of Tesla and Shopify shareholders right now that like the sounds of stable, dependable profit growth!

On the other hand, it’s not quite as easy to keep that conviction when you see an innovative stock like Nvidia go stratospheric. The challenge of being a dividend investor is to remain consistent in all market conditions. Click here to jump directly to my 2024 picks.

So far, 2024 hasn’t exactly been a banner year for Canadian dividend kings. If we use the S&P/TSX Canadian Dividend Aristocrats Index as our measuring stick, we see that it is about even on the year so far. That said, the dividend yield on that index is about 4%, so we’re still “in the black”. The S&P/TSX Composite Index has done slightly better so far this year, as it’s up about 3%.

This probably isn’t a big shock to most dividend investors, as high interest rates continue to drag down a lot of the sectors that we like to choose from. Telecoms, pipelines, banks, and utilities would all benefit from a reduction in interest rates over the rest of 2024, as their relatively high debt loads lead to decreased profit margins during higher-interest rate times.

That said, for companies with the long-term track record of Dividend Aristocrats or Dividend Kings, interest rate gyrations are nothing they haven’t managed through before. With interest rates now set to trend downward in 2024 and 2025, I’d argue that it’s a pretty logical conclusion that we’re likely to see outperformance by these stocks.

When you compare the best Canadian dividend stocks or dividend kings with the high-flying US tech stocks that have produced eye-popping returns the last couple of years, it’s important to take valuation into consideration. Nvidia, Apple, Microsoft et al., are all amazing companies – that’s not up for debate. They will certainly continue to churn out profits. But the real question for investors is how much you want to pay for those future profits – because right now, you have to pay a very steep price.

Valuations in the “boring” dependable world of Canadian dividend stocks are much more reasonable. If the market goes “sideways” for a while without massive share price returns, consistent dividends will look pretty good in hindsight.

Top Canadian Dividend King Pick for 2024: National Bank

When I made my 2024 Canadian dividend king pick back in January here’s what I thought I’d be getting:

• A strong regional bank
• A growing dividend
• A strong balance sheet
• A focus on the Quebec and wealth management markets
• A good chance at outsized growth versus the “Big 5 Banks”

Those are the main reasons I chose National Bank. I was quite familiar with the stock after making it my #1 pick in both 2022 and 2023 – and I saw no reason why it would reverse the trend in 2024. With many other dividend aristocrats suffering from high debt loads, National Bank continued to look like a good bet!

What I didn’t think I’d be getting was a stock that would go on a bit of a tear, going up nearly 20% when you considered dividends at one point in 2024. I also didn’t think I’d see National Bank make an aggressive acquisition move. In case you missed it, National Bank made big headlines over the last couple of weeks as it announced an offer to buy Canadian Western Bank for $5 Billion.

A lot of investors weren’t happy with the news, and shares sunk about 5% on the day. These detractors are not wrong in pointing out that National Bank paid a pretty penny for the 8th largest bank of Canada. In order to convince shareholders to sell, National Bank had to offer more than double the current value of the stock (“a 110% premium).

National Bank doesn’t have a lot of experience running retail operations outside of Quebec, and so if you want to see the glass as half empty, you could certainly stare at this acquisition until that reality appeared.

On the other hand (and I should admit my bias upfront, as I definitely fall into this camp), this deal has a very high probability of paying off in the long run for National Bank shareholders. Sure, the one-time price is high, but we’re talking about securing a large piece of the fastest growing part of Canada (Alberta). That makes a whole lot more sense to me than tossing capital at risky banking markets all over the world that have a ton of competition.

In one fell swoop National Bank lands a ton of commercial clients that they can cross-sell other products to, as well as an instant presence outside the relatively small market that they have saturated over the last decade. Furthermore, National Bank completed the deal without taking on much debt. Given the high-interest rate environment, that’s a key factor.

This deal is going to eventually boil down to how stable western Canada’s commercial growth is (as CWB was much more of a commercial bank than retail bank), as well as how well NB’s management team is able to squeeze the juice out of adding to many new customers to their broader banking ecosystem. I think it’s a pretty good bet on both accounts.

I also think that investing in Canada – land of banking oligopolies – offers much more stable growth trajectory than investing in developing countries or trying to face off against large American competitors.

So while the price tag was notable – it’s a one-time deployment of capital that should offer substantially increased profits going forward.

Even with National Bank shares taking a bit of a hit with the acquisition news, the stock is still up 6% on the year – outpacing its banking competitors, other Canadian dividend kings, and the broader S&P/TSX Composite Index. That comes on the heels of an incredible total return of nearly 20% in 2023!

With, higher-for-longer interest rates and increased loan-loss provisions slimming back down again over the next couple of years, profit margins should begin to rise back up. I wrote more about the loan loss provisions that the financial institutions were setting aside in my investing in Canadian bank stocks article.

Out of all the Canadian banks, National bank has been the most generous with its dividend raises over the last 3- and 5-year periods – BUT even with all that dividend generosity, it still has a fairly low payout ratio. That bodes well for the long-term, and certainly means there is no dividend cut in store for 2024. I predict an 8-9% increase in the dividend for 2024.

The banks should continue to benefit from the growing interest rate spreads, and their cautious building of reserves is the exact reason why they are such solid long-term investments.

My insights on National Bank – as well as the 2024 Canadian Dividend Kings list below – are based on my own research, but also relied heavily on the advice and tools provided by Dividend Stocks Rock. DSR not only provides excellent written advice, but also a ton of free webinars, and ideal tools for analyzing both the Canadian and American dividend markets.

Read my DSR review for an in-depth look at just why I’m such a big fan of what fellow Canadian Mike Heroux has put together.

Here are Mike’s thoughts on where my favourite Canadian Dividend King (National Bank) stacks up against other Canadian dividend stocks for 2024.

Dividend Aristocrats and Dividend Kings Offer Stable Growth

In fact, many studies (such as Vanguard) have proven that dividend growers are likely to outperform the market and do it with less volatility. Dividend growers such as the best Canadian dividend aristocrats will continue to increase their dividend in 2024.

Canadian companies with a long history of dividend growth will generally show a strong business model and robust financials. They have gone through many recessions and never stopped increasing dividend payments. In times of confusion and fear, you can go back and look at how companies went through the past crisis and kept their dividend streak alive.

I use Canadian dividend investing for my leveraged portfolio, significant portions of my RRSP and TFSA portfolios, and our corporate portfolio. We currently collect $78,800 per year in dividends, and you can read more about that in my most recent net worth update if you’re interested.

In the past, I’ve written a number of articles on dividend growth stocks, I’ve never properly categorized them. Here are the most common dividend terms as they relate to the U.S. stock market:

• ADividend Achieveris a company that has increased its dividend at least10 years in a row;
• A Dividend Contender is a traded company that has raised dividends for 10 to 24 consecutive years.
• A Dividend Champion is a company that has increased its dividend at least 25 years in a row (regardless if it is part of the S&P 500 or not);
• ADividend Aristocratis a company that is part of the S&P 500 and that has increased its dividend at least25 years in a row;
• ADividend Kingis a company that has increased its dividend at least50 years in a row. The true cream of the crop.

Dividend Aristocrats and Dividend Kings in Canada

Here in Canada, we have a relatively small market and an even smaller list of quality dividend stocks.In a previous article about the top Canadian dividend growth stocks, you will see a number of dividend achievers (10 years+ ), a handful of dividend aristocrats (25 years+), and FINALLY for the first time ever, we have an official “dividend king” (using the US-based definition) in Canada and it’s Canadian Utilities (CU) which officially has a 50-year streak of not cutting their dividends!Congrats CU!

Close behind, you’ll see Fortis is about to meet the criteria for becoming an official dividend king as well. That said, I think it’s important to contextualize that Canada just doesn’t have as many big international companies as the USA, so just because something isn’t officially a “dividend king” in the American sense of the word, doesn’t mean it’s not a worthy, high-quality dividend stock.

As of September 2024

Canadian Dividend Aristocrat Definition

While I used the terms dividend achievers and dividend aristocrats for the Canadian stock market in the previous section, I must highlight that the official definition of the Canadian dividend aristocrat differs from the one established in the U.S.

In order to be considered as a S&P Canadian Dividend Aristocrat, the company must have increased its dividend payout every year for five years – Therefore, we are looking at stocks that have a good potential for raising its dividend but still pretty far away from 25 consecutive years.

Dividend Kings List

In a few years, we will be able to have a shortlist of Canadian dividend kings (including Fortis and Canadian Utilities). In the meantime, where do we find these elusive dividend kings? You’ll have to look at the biggest market in the world – the US! In the US, there are 30 dividend kings that have increased their dividend at least 50 years in a row.

Here is a table supplied byDividend Stocks Rock:

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Here is the same table sorted by yield:

As you can see from the list, some of these names are very recognizable with global brand awareness and long term competitive advantage. Names such as Procter & Gamble, co*ke, Johnson & Johnson, 3M, Colgate, and Lowe’s.

You will also notice that most of them show a low dividend yield. The dividend king average yield is 2.74% with an average dividend growth of 6.50%. This shows you that one must pay for the quality. Finally, most dividend growers will not only reward shareholders with dividend increases, but also with steady capital appreciation.

As a disclaimer, I hold the following dividend kingswithin my RRSP: Procter & Gamble; 3M; Emerson Electric;Coca-Cola; Target; and,Johnson & Johnson. Also, this post is not meant to provide recommendations for your portfolio, but a starting point for your research.

Dividend King Investments for Canadian Retirees

Canadian retirees love collecting stable, dependable Canadian dividends.It makes sense that amongst those who prioritize stability and income flow, Dividend Kings and Dividend Aristocrats are in the highest demand.

In addition to the obvious reasons for retirees to love Canadian blue chip companies with strong balance sheets, there is a bit of a hidden reason as well: the tax advantages.Canadian dividend income is actually taxed at a negative rate until you hit the $40,000-$50,000 range (exact figure depends on which province you live in).

This means that a retired couple can earn close to $100,000 in Canadian dividend income before they pay a dime in income tax!At lower income thresholds, that negative tax rate can actually help offset income tax owing from part-time work or CPP/OAS payments.

Of course, it should be pointed out that one must hold these Canadian dividend stocks outside of their RRSP and TFSA in order to benefit from this tax treatment.It’s also important to understand that this advantageous tax treatment only pertains to Canadian stocks, and not to American or other international stocks.Dividends generated by those companies will almost assuredly be hit with a withholding tax before you get the money in your brokerage account.

Given the tax benefits and relative stability (still more risky than a Canadian GIC) it’s no wonder that Canadian Dividend King stocks are a hit with retirees.It is key to remember though, that diversity is your investing friend.It can be easy to become too focused on one specific type of company within the Canadian market.

Canadian Dividend King FAQ

Canadian Dividend King 2024 Outlook

Investing in dividend kings isn’t about trying to make a quick buck using speculative investment strategies such as momentum trading or anything like that.

It’s simply about selecting companies that have shown the discipline and management efficiency that is necessary to grow a dividend over a long period of time.

If you are willing to be patient, and focus on long-term durable competitive advantage, then Canadian dividend kings are very likely to reward you given their long-term track record, as well as Canada’s overall growth.

My main source for Canadian dividend news (as well as news on American Dividend Aristocrats) is Mike Heroux’s “Dividend Stocks Rock” platform. Mike’s detailed analysis and personal transparency are second-to-none. His exclusive webinars containing up-to-the-minute information offer incredible investor value.