In volatile markets there is nothing more soothing than seeing dividend payments roll in to your account each month.  According to research prepared by RBC Capital Markets, owning a portfolio of dividend paying companies can do more for your returns than acting as a security blanket.  From December 1986 until December 2010, the total portfolio return from companies that raise their dividends regularly was 12.5% a year compounded. Compare this to the TSX Composite, which delivered only 7.2% a year over the same period. Not surprisingly, non-dividend paying stocks only increased by 2.2% a year in that same period.

When a company raises its dividends, it signals to investors that it has confidence in its business as well as its ability to increase profits. Higher profits generally lead to higher stock prices, so buying companies that raise dividends regularly is the best way to grow your portfolio over time.

A number of the companies which appear in our portfolios have raised their dividends this year:

Company % Dividend Increase
Abbott Labs 9%
Archer Daniels Midland 7%
Bank of Nova Scotia 6%
Bell Canada 5%
Canadian Utilities 7%
Cineplex Galaxy 2%
CP Rail 11%
Keyera Facilities 7%
Methanex 12%
National Bank 8%
Potash Corp 100%
Rogers Communications 11%
Royal Bank 5%
Shoppers Drug Mart 11%
SNC Lavalin 24%
Suncor 10%
Talisman Energy 9%
Telus 5%
Tim Hortons 29%
TransCanada 5%

How delightful is that?

Disclosure: Baskin Financial employees and its clients own shares in the companies mentioned above.