The Canadian dividend stocks we’ve dug up have at least a 5% annual dividend yield while maintaining low debt-to-equity ratios
SmallCapPower | August 4, 2021: Investors should seek to maintain a diversified and relatively balanced portfolio. That means including dividend stocks, as well as stocks that are poised for growth with low levels of debt. During times of increased uncertainty, investors can mitigate risk by having a steady income stream from dividend stocks. While a portion of their portfolio depreciates in value, the investor can still receive cash flow. An economic downturn, however, could cause a company to cut its dividend payout. For that reason, we suggest investors look at the Canadian dividend stocks on our list, which have a relatively low debt-equity ratio. For reference, the average debt-to-equity ratio of our sample of 134 TSX-listed stocks is 172.1%.
*Share price data and other metrics as of August 3, 2021
A&W Revenue Royalties Income Fund (TSX:AW.UN) – $38.90
Restaurants
A&W Revenue Royalties Income Fund is a limited purpose trust created to invest in the securities of A&W Food Services of Canada Inc., including common shares and A&W notes. The Company owns the A&W Marks and franchises A&W hamburger quick service restaurants in Canada. The Fund is a limited purpose trust established to invest in A&W Trade Marks Inc, which indirectly owns the A&W trademarks used in the A&W quick service restaurant business in Canada. The trademarks comprise some of the best-known brand names in the Canadian foodservice industry. Trade Marks licences these trademarks to A&W Food Services of Canada Inc. in exchange for a royalty of 3% of the sales of the restaurants in the Royalty Pool.
- Market Cap: $727.2M
- YTD-Return: -15.5%
- 1-Year Share Price Return: +0.2%
- 30-Day Average Trading Volume: 2,500
- Annual Dividend Yield: 4.9%
- Long-term Debt-to-Equity: 21.4%
IGM Financial Inc. (TSX:IGM) – $44.90
Financial Services
IGM Financial is a Canadian financial services company, with $120.7 billion in total assets under management. It is a publicly-traded subsidiary of Power Corporation of Canada. The Company offers financial planning such as retirement, estate, tax planning, mutual funds and a range of other investment products and financial services. It offers brokerage services through Investors Group Securities Inc., and a full suite of insurance products, mortgages, and banking. Its activities are carried out principally by Investors Group, through a network of approximately 4,500 Consultants, by Mackenzie Financial Corporation through a diversified network of financial advisors.
- Market Cap: $10,725.5M
- YTD-Return: +30.1%
- 1-Year Share Price Return: +36.3%
- 30-Day Average Trading Volume: 226,530
- Annual Dividend Yield: +5.1%
- Long-term Debt-to-Equity: +38.4%
Atrium Mortgage Investment Corporation (TSX:AI) – $14.38
Mortgage Financing
Atrium Mortgage Investment Corp. was established in 2001 and is a non-bank lender that makes mortgage loans ranging from $300,000 to $30 million, focused primarily on real estate in major Canadian urban centres. The bank oligopoly in Canada provides safe opportunities for non-bank lenders like Atrium. As of June 30, 2021, Atrium’s mortgage portfolio was $710.6 million with stable dividends paid monthly, plus a special dividend once a year. Atrium has an uninterrupted record of dividends since its inception. The average mortgage term Atrium provides is 18 months, which allows mortgage rates to be re-priced as interest rates rise, unlike bond and fixed income funds.
- Market Cap: $613.1M
- YTD-Return: +13.7%
- 1-Year Share Price Return: +37.7%
- 30-Day Average Trading Volume: 27,360
- Annual Dividend Yield: +6.4%
- Long-term Debt-to-Equity: +52.6%
Algoma Central Corporation (TSX:ALC) – $15.75
Marine Shipping
Algoma Central owns and operates a fleet of dry and liquid bulk carriers on the Great Lakes – St. Lawrence Waterway in Canada. The Company operates in six segments: Domestic Dry-Bulk, Product Tankers, Ocean Self-Unloaders, Global Short Sea Shipping, Investment Properties, and Corporate. It operates 12 self-unloading bulk carriers and 8 gearless bulk carriers; and owns and manages eight double-hull product tankers for the transportation of liquid petroleum products throughout the Great Lakes, the St. Lawrence waterway, and the Atlantic Canada regions. The Company also owns eight ocean-going self-unloading vessels that carry coal for power generation, crushed aggregates for construction, gypsum for wallboard manufacturing, iron ore for the steel industry, and salt for winter road safety.
- Market Cap: $595.4M
- YTD-Return: +13.1%
- 1-Year Share Price Return: +51.4%
- 30-Day Average Trading Volume: 7,580
- Annual Dividend Yield: 4.9%
- Long-term Debt-to-Equity: +82.4%
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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