Canadian Tire (CTC.A)
From Cabot Wealth Advisory 10/16/14 Sign up for Cabot Wealth Advisory—it’s free!
Here’s the latest idea in my series highlighting the Best Canadian Dividend Paying Stocks to Buy Now.
The stock is Canadian Tire (TSX: CTC.A), one of Canada’s largest retailers. I’m sure my Canadian readers know the company well—supposedly nine out of 10 Canadians shop there at least once a year. For my non-Canadian readers, Canadian Tire is one of Canada’s largest retail chains and a sort of national Canadian icon.
The company has 490 Canadian Tire stores across Canada, selling a unique mix of auto parts, household goods, sports equipment, tools and hardware, apparel and seasonal products. The company also owns over 380 Mark’s apparel stores, 300 Canadian Tire gas stations, and a group of sporting goods stores that control over 16% of the Canadian sporting goods retail market.
The company has paid dividends since 1999, and has increased the dividend every year since 2011. The current quarterly dividend of CAD$0.50 per share yields 1.7% at today’s prices. The payout ratio, which tells you what percentage of earnings the company pays out as dividends, has remained steady at around 20% for years, showing that the company can easily afford its dividend.
Canadian Tire’s EPS and operating income have both increased steadily every year since 2009, and the company just announced an ambitious new three-year plan for growth that was warmly embraced by investors. The plan calls for average EPS growth of 8% to 10% between 2015 and 2017, and for commensurate growth in the dividend.
The company’s commitment to the dividend and reliable earnings growth make Canadian Tire the kind of reliable income stock that is a pleasure to hold through corrections like today’s.
Canadian Tire only trades on the Toronto Stock Exchange (TSX), under the symbol CTC.A. If you can't find the stock on your broker's website, they may not support trading on international exchanges. In some cases, you may have to sign up for special permission to trade international stocks (called "International Stock Trading" at Fidelity (not available on retirement accounts) and "Global Investing" at Schwab.)
Some brokers that do let you trade Canadian stocks will list them under a 5-letter "international symbol" instead of using the symbol used on the TSX. The goal is to avoid confusion with U.S. stocks using the same symbol. For example, Gold Wheaton trades under the symbol GLW on the TSX, but GLW is also the symbol for Corning on the NYSE. So some U.S. brokers use the unique, 5-letter symbol GLDWGF for Gold Wheaton instead.
However, confusion arises because GLDWGF is also a pink sheet symbol for Gold Wheaton. So while some brokers might use it to denote buying Gold Wheaton on the TSX, in Canadian dollars, others might be referring to the shares traded on the pink sheets.
You can check you're buying the stock you want on the exchange you want by looking at the volume on the 5-letter symbol and comparing it to the volume on the actual Canadian stock. Or call your broker and ask them if the purchase will be made on the TSX, in Canadian dollars. Your broker may use the 5-letter symbol CDNAF for Canadian Tire's Toronto listing.
For more information, click here.
|Canadian Tire Corp. (CTC.A: TSX)
2180 Yonge Street
PO Box 770
Toronto, ON M4P 2V8 Canada
Index Membership: N/A
Industry: Specialty Retail, Other
Full Time Employees: 10,594