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Six TSX-listed dividend stocks with hefty share buybacks

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We are looking for Canadian companies rewarding investors with sustainable dividends – but also share buybacks

Canadian companies rewarding investors with sustainable dividends – but also share buybacks.comes on top of its recent 25.9-per-cent dividend hike.

Following a buyback of common shares, and their cancellation, fewer shares are left outstanding. That translates into higher per-share earnings, which usually lifts investor interest and, ultimately, the share price. Better still, any resulting capital gain tax for shareholders is put off until they sell. That’s distinctly different from dividend income – taxed the same year it is received.

Our search started with a list of Canadian corporations that are now rewarding shareholders with hefty buybacks. That’s in addition to offering strong – and in some cases, rising – dividends. We then applied our TSI Dividend Sustainability Rating System. It awards points to a stock based on key factors:Two points if it has raised the payment in the past five years;One point for operating in noncyclical industries;Two points for a strong balance sheet, including manageable debt and adequate cash;One point if the company’s an industry leader.

Companies with 10 to 12 points have the most secure dividends, or the highest sustainability. Those with seven to nine points have above average sustainability; average sustainability, four to six points; and below average sustainability, one to three points.

 

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