First things first, if you are interested in dividend investing, I strongly suggest you to download your free copy of Dividend Investing: How To Build a Never Ending Cash Distributor from The Dividend Guy Blog. I’ve also created a unique resources about Canadian Dividend Stocks.

On the Canadian stock market, we find a lot of great dividend paying companies. Considering the economic context, I would rather invest in a Canadian corporation than any other companies. Since the banking system has proven to be as solid as rock, Canadian stocks have their feet on solid ground enabling them to jump even higher. If you had missed yesterday’s post, you will find the top 10 Canadian dividend stocks. In order to build the top 10 Canadian Dividend Stocks, we used some severe criteria (such as a minimum dividend growth requirement and dividend payout ratio under 70%).

Unfortunately, 10 Canadian dividend stocks might not be enough to build a solid dividend portfolio. In order to find more high quality dividend stocks, I have changed some of my search criteria. Here’s how I have created the best 20 Canadian Dividend Stocks:

–          Dividend minimum yield: 3%

–          Dividend maximum yield: no maximum

–          Dividend payout ratio: under 80%

–          P/E ratio: under 20

There are obviously some overlaps with the top 10 but it still gives you more options with softer search criteria. The goal of this list is to include stocks that might be overpriced or having a higher dividend payout ratio due to specific and known situations. This can enlarge your scope and give you more options to include Canadian dividend stocks in your portfolio.

***last edit May 11th 2012***

 

Ticker	Name	Price	Dividend Yield	Payout Ratio	PE_RATIO
SCU	Second Cup Ltd/The	7.29	8.23	11.17	5.4
CHW	Chesswood Group Ltd	7.31	8.21	34.02	13.05
CFX	Canfor Pulp Products Inc	12.31	7.15	58.67	12.19
TA	TransAlta Corp	16.58	7	66.9	13.93
SPS/A	Sportscene Group Inc	8.75	6.86	64.49	10.29
DH	Davis & Henderson Corp	19.28	6.43	69.59	11.98
WJX	Wajax Corp	50.82	6.38	55.78	13.44
PWT	Penn West Petroleum Ltd	17.08	6.32	79.31	12.47
RSI	Rogers Sugar Inc	5.55	6.13	73.98	18.5
COS	Canadian Oil Sands Ltd	23.05	6.07	46.59	9.64
AD	Alaris Royalty Corp	19.5	5.85	51.53	19.9
GNV	Genivar Inc	26.5	5.66	78.62	13.87
MIC	Genworth MI Canada Inc	20.58	5.64	33.65	6.53
BCE	BCE Inc	40	5.43	71.03	12.66
FRC	Canyon Services Group Inc	11.4	5.26	0	7.55
PM	Prism Medical Ltd	6.05	5.25	47.43	10.8
CF	Canaccord Financial Inc	7.67	5.22	19.58	11.45
CET	Cathedral Energy Services Ltd	5.92	5.07	32.58	8.97
TCL/B	Transcontinental Inc	11.44	5.05	40.1	5.75
CFN	Carfinco Financial Group Inc	8.35	5.03	68.99	11.88

The first thing I liked when I pulled out the top 20 dividend paying stocks is that they are all over 3% (which is about the rate for a 5 years certificate of deposits). But what is even more interesting is that dividend income is less taxed than interest income. Therefore, the 3% dividend yield worth a lot more than the 3% from a CD.

Top Canadian Dividend Stocks = Financial Sector

Among the top 20 Canadian Dividend Stocks, you find a lot of financials. It is normal as the financial sector represent more than 20% of the Canadian Stock Market. Canadian Banks are heavily regulated and evolve in a ogopoly. These 2 factors contribute to make them some of the best Canadian Dividend payers on the stock market. Overtime, they have built a reputation of dividend stocks and now most Canadian investors count on banks in their portfolio to bring both capital growth and dividend growth. If you are looking to build a Canadian Dividend portfolio, Canadian banks should be place at the core of your investment account.

There are more to the Top 20 Canadian Dividend Stocks

However, you are also able to find other solid companies paying great dividends. After the 2008 stock market crash, others companies have proven that they are as solid as a rock. Communications and medias seem to be the next big dividend payer in Canada. They actualy evolve in a similar type of market as banks since they don’t have much competitors. Therefore, each of them have their fair share of the market and generate enough cash flow to constantly increase their dividend payouts. This is why they are among the best 20 Canadian Dividend Stocks.

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