Veritas Report on Dividends:
2025 Outlook
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We recently released our second annual Veritas Report on Dividends to our existing clients and are now making it available to new subscribers.
The report highlights companies best positioned to deliver robust dividend growth within each sector across our entire coverage, as well as companies with dividends we think investors should be cautious about in F25.
For the best yield and dividend growth companies, we generally look for BUY-rated stocks with meaningful yields above 3%, although there are exceptions. We also present the Energy Sector separately since the total shareholder payout yield (base dividend yield plus special dividend and share buyback yield) is more meaningful than just the dividend yield.
With the path of long-term bond yields uncertain and interest rate volatility elevated, we believe some companies still offer an opportunity to lock up meaningful and sustainable yields. Overall, we continue to focus on names that operate with strong balance sheets, reasonable payout ratios and sound capital allocation strategies that offer substantial yields and robust earnings growth potential over the medium term.
For the names that we are cautious about, we are not necessarily forecasting a dividend cut, only that investors need to be mindful of company-specific risks.
Looking back, we advised our clients to be cautious about four dividend names last year. If our clients had followed the advice, they would have avoided losses of 34.4%, 15.1%, and 7.3% for the year, plus a return of 16% that still underperformed the S&P/TSX Composite total return of 23.7%. We added one more name to our mid-year dividend report, which also underperformed the S&P/TSX Composite over the past six months.
As part of our evaluation, we use our Veritas Quality Ratings to score each company on Cash Flow Sustainability, Balance Sheet Exposure, and Accounting and Disclosure (ratings out of five versus sector peers).
The Report on Dividends for 2025 is available as part of our Base Subscription package, which is designed for financial advisors, individual investors, and others who want the benefits of independent investment research but do not need full access to everything we publish.
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The dividend report was our most-read report last year by our clients.
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We are offering our new dividend report as part of our Base Annual Subscription, designed for financial advisors and investors who don't need everything we publish (we publish about 1,000 reports, newsletters, and videos per year).
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- V-List: The V-List is a concentrated model portfolio of 12 to 25 Canadian companies recommended by our analysts as the best investment opportunities drawn from our firm's research. Stocks are selected based on their liquidity, lower volatility, and potential for long-term capital appreciation. Bottom-up fundamental analysis and a strict review of accounting and disclosure practices identify companies with defensible competitive advantages and the ability to generate meaningful cash flow. The V-List has outperformed the S&P/TSX Composite Index by 289 basis points (as of December 31, 2024, from inception on October 31, 2004). You can find more about our V-List and its track record here.
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- Journal: A Friday newsletter capping the week and highlighting key points and observations from our research from the week.
- Annual dividend report: Our Top Picks for sustainable dividend growth from our coverage list (about 85-90 companies) as well as dividend names that we are cautious about.
- Veritas Quality Ratings: Our Veritas Quality Ratings score each company out of 25 on five key risk metrics that have proven to affect stock price performance: Accounting, Business Operations, Corporate Governance, Balance Sheet Risk, and Cash Flow Sustainability. These Quality Ratings factor into our investment recommendations. Quality Ratings reports are 1-2 pages and also provide a summary of our investment thesis and valuation. You can find out more about them here.
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