4 Canadian Dividend Stocks with High Sustainable Growth Rates

The Canadian dividend stocks on our list can all finance their own expansion

SmallCapPower | May 25, 2018: Today we have identified four Canadian dividend stocks that have strong sustainable growth rates. Defined as the rate at which a company can grow without seeking outside funding, it is calculated as the earnings retention rate, multiplied by the return on equity. These companies can all self-fund growth of at least 15% per year.

Chorus Aviation Inc. (TSX:CHR) – $7.67

Chorus Aviation is a Canada-based airline operator. It is the parent company of Jazz Aviation LP (Air Canada Express), Voyageur Aviation Corp. and Chorus Aviation Capital Corp. In September, CHR completed a $100M bought deal public offering that will allow the company to invest in further growth opportunities. Chorus has a sustainable growth rate of 51%.

  • Market Cap: $1,064.1 Million
  • Sustainable Growth Rate: 50.9%
  • YTD Total Return: -19%

Norbord Inc. (TSX:OSB, NYSE:OSB) – $53.26
Forest & Wood Products

Norbord is a global manufacturer of wood-based panel products and Oriented Stand Board (OSB) for residential and light commercial construction. The Company operates 15 OSB mills and two U.K. based plants that produce particleboard and other value-added products. Norbord’s current strategy focuses on margin improvement, having delivered $331M of margin expansion over the past 14 years. It also intends to diversify into specialty products to reduce earnings volatility and reliance on the residential housing market. Norbord has a sustainable growth rate of 40%.

  • Market Cap: $4,609.4 Million
  • Sustainable Growth Rate: 40.1%
  • YTD Total Return: 27%

Pollard Banknote Ltd. (TSX:PBL) – $21.35
Casinos & Gaming

Pollard Banknote is a supplier of instant lottery tickets to over 60 lottery and charitable gaming organizations around the world. The company also provides support to customers in the form of market research, ticket validation, social media expertise and digital strategies. According to Pollard, only two other large competitors exist in their market, with Pollard being the clear leader. PBL has a sustainable growth rate of 26%.

  • Market Cap: $546.8 Million
  • Sustainable Growth Rate: 25.5%
  • YTD Total Return: 23%

NFI Group Inc. (TSX:NFI) – $55.00
Heavy Machinery & Vehicles

NFI is a bus and parts supplier that was founded in 1930. It has an installed base of more than 70k vehicles, produced in 32 facilities. NFI considers its products to be “workhorses” and produces buses that use a range of different fuel types. The Company is investing heavily in new technologies such as clean diesel, electric and fuel cell compatible engines. NFI’s sustainable growth rate is 19%.

  • Market Cap: $3,464.2 Million
  • Sustainable Growth Rate: 18.9%
  • YTD Total Return: 2%

Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.

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