"Patience is a Super Power" - "The Money is in the waiting"

Sunday, June 8, 2025

Here are great Dividend paying stocks I am considering in the event of a downturn!


Here is a breakdown of 10 excellent Canadian dividend-paying stocks, ranked by attractiveness for conservative portfolios, with all key metrics included. 

1. Royal Bank of Canada (RY.TO

  • Yield/Payout: 3.3–3.7%, Payout ~43–46% 

  • Valuation: P/E ~13.9×; P/B ~2.0× 

  • ROE: Industry standard ~12–14%

  • Sharpe: ~1.1 (5‑yr)

  • Pros: Big‑5 stability, dividend safety, modest valuation, strong risk-adjusted returns

  • Cons: Growth tied to domestic economy; interest sensitivity


2. Toronto-Dominion Bank (TD.TO)

  • Yield/Payout: 4.33–4.4%, Payout ~43% Valuation: P/E ~12.7×

  • ROE: ~7.7% TTM (banks average higher) Sharpe: ~1.0

  • Pros: High yield with strong dividend growth (12‑year streak), buyback-friendly

  • Cons: Slightly lower ROE than closest peers


3. Canadian Pacific Kansas City (CP.TO)

  • Yield/Payout: ~0.9%, payout ~20–30%

  • Valuation: P/E ~18–20× (rail sector)

  • ROE: ~20%+

  • Sharpe: ~1.0

  • Pros: High efficiency, strong earnings growth, low leverage vs equity

  • Cons: Minimal income component, exposure to cyclical trade volumes


4. Manulife Financial (MFC.TO)

  • Yield/Payout: ~3.8%, ~50–60% payout 

  • Valuation: P/E ~10–12× typical for insurers

  • ROE: Strong fiscal health (leverage ~23.9%) 

  • Sharpe: Very low risk-adjusted returns

  • Pros: A-rated balance sheet, 11-year dividend hikes, Asian growth engine 

  • Cons: Underwhelming stock performance, sensitivity to credit/claims cycles


5. Fortis Inc. (FTS.TO)

  • Yield/Payout: ~3.66–3.7%, payout ~73%

  • Valuation: P/E ~19.6×, P/B ~1.2× typical for utilities

  • ROE: 7.4% 

  • Sharpe: ~0.55–0.66

  • Pros: 51-year dividend increase streak, low volatility, inflation hedge

  • Cons: Slow growth, regulated earnings


6. Pembina Pipeline (PPL.TO)

  • Yield/Payout: ~5.3–5.5%, payout ~90% 

  • Valuation: P/E ~16.8×

  • ROE: ~11.6%

  • Sharpe: ~0.35 (5‑yr), ~0.98 (1‑yr)

  • Pros: Monthly cash flow, pipeline stability, covered dividends

  • Cons: Commodity-linked cash flow; high payout


7. Enbridge (ENB.TO)

  • Yield/Payout: ~5.7%, payout ~140–142% IFF earnings 

  • Valuation: P/E ~23.6×, ROE ~9.4%

  • Sharpe: ~0.8

  • Pros: 30-year dividend growth streak, fee-based contracts, secured backlog

  • Cons: High accounting payout; exposure to regulatory, tariff risk


8. TC Energy (TRP.TO)

  • Yield/Payout: ~4.9–5.1%, payout ~88–97%

  • Valuation: P/E ~16×

  • ROE: ~13% (midstream avg)

  • Sharpe: Moderate risk-adjusted; 1-yr ~1.5, 5-yr ~0.36

  • Pros: Asset expansion in Mexico, utilities diversification

  • Cons: Capital intensity; marginal earnings coverage


9. Bank of Nova Scotia (BNS.TO)

  • Yield/Payout: ~5.6–5.9%, payout ~89% 

  • Valuation: P/E ~15.5×

  • ROE: ~7.9%

  • Sharpe: ~0.5

  • Pros: Best yield among Big‑5, international footprint

  • Cons: High payout; lower profitability


10. BCE Inc. (BCE.TO)

  • Yield/Payout: ~11–12%, payout astronomical (~600–900%+)

  • Valuation: P/E ~71× trailing, forward ~10×

  • ROE: ~15.5%

  • Sharpe: Low due to financial leverage

  • Pros: Highest yield, low beta (~0.6)

  • Cons: Unsustainable high payout; reliance on debt, free cash flow issues


How I might use these in my Conservative Portfolio

50% Core (Stability & Yield)

  • RY, TD (15% each): Diversified bank income & safety

  • FTS (10%): Low-growth anchor

  • CP (10%): Blue-chip growth with little volatility

  • MFC (5%): Insurance diversification and balance sheet strength

30% Income Enhancers

  • PPL (10%) & TRP (10%): Monthly/quarterly cash flow with pipeline leverage

  • ENB (10%): Stable, price-consensus income with growth potential

15% Income Booster (Risk Aware)

  • BNS (7.5%): Extra yield balancing banks

  • BCE (7.5%): Ultra high yield play—only in small position, tightly monitored

5% Tactical Cash Reserve

  • Hold as cash or government bonds to hedge volatility or deploy opportunistically


How This Works in a conservative portfolio

  • Yield ~4–5%: Blended yield provides solid income with reliable coverage

  • Diversification: Banks, insurers, utilities, pipelines, rail and telecom reduce correlation risk

  • Valuation discipline: P/E focused on value vs growth; banks/utilities at ~12–20×, pipelines mid-teens

  • Balanced volatility: Core holdings have Sharpe ~1; income enhancers moderate risk, tactical reserve cushions shocks


Ed Note:

Depending on Political considerations going forward, we may consider moving Enbridge up!

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