There’s mounting evidence that a portfolio laden with dividend-paying stocks does indeed pay off.

Around 2006, indexing portfolios to dividend payments rather than market capitalization became all the rage. In fact, in this same column in the September 2006 issue of Investment Executive, a list of what a dividend-weighted Canadian index might contain was published. It showed 30 stocks with the largest annual total-dollar payouts among Canadian companies.

That portfolio has gained an average of 1% to September 2012, adjusted for stock splits and takeovers. For contrast and comparison, the capitalization-weighted S&P/TSX 60 index, which contains large-caps, gained 4.4%.

That sounds goods for the latter until you measure performance by the average change in each stock in the S&P/TSX 60 index as it stood in September 2006. On an individual basis, the average price change has been a drop of 28%. That’s not so good.

In 2006, the S&P/TSX 60 in-dex contained such names as Research in Motion Ltd. (RIM), Nortel Networks Corp. and Yellow Pages Income Fund. None of which was in the dividend list.

RIM, which never paid a dividend, has dropped by 93% in price since. Bankrupt Nortel traded at 19¢ before it was delisted. Yellow Pages, now called Yellow Media Inc., stopped paying a dividend and has dropped by 99.5% in price.

The dividend-weighted group has no such huge losers. Life insurance stocks have lost the most as a result of the drop in short-term interest rates to almost invisible levels. Case in point: Manulife Financial Corp. dropped by 67% and Sun Life Financial Inc. fell by 50% — but both still pay a dividend.

It’s worth noting that a significant number of stocks on both the original dividend list and the large-cap index disappeared from the market between 2006 and 2012 through takeovers. These include: Ace Aviation Holdings Inc., Alcan Aluminium Ltd., ATI Technologies Inc., Cognos Inc., Falconbridge Ltd., Glamis Gold Ltd., Inco Ltd., Ipsco Inc., Nova Chemicals Corp., Novelis Inc. and Petro-Canada. Others, such as Abitibi-Consolidated Inc. and Domtar Inc. have been squeezed through reorganizations and a name change.

One positive change since 2006 has been the increase in the number of dividend-paying companies listed on the Toronto Stock Exchange. The count now is 364 stocks that pay regular dividends, up from 232. These companies’ indicated annual dividend payments total $49.6 billion. That compares with $22.6 billion in 2006. The current yield on these firms’ total market value is 3.15%.

In comparison, the yield on the S&P/TSX 60 index is 3.09%, with the index’s indicated annual dividends totalling $33.8 billion. The S&P/TSX 60 annual dividend total of six years ago was $17.5 billion.

Of the 364 dividend-paying stocks, 25 are duplicates — companies with two classes of common shares trading. The list excludes preferred shares, real estate investment trusts and income trusts, closed-end funds, split-share income funds and foreign stocks.

The accompanying table shows each stock’s share of total common-stock annual dividend payments. Because the Toronto Stock Exchange stopped publishing weightings of individual stocks in its indices this year, the table shows the rank each company holds in the S&P/TSX composite index.

One-third of the stocks in the 2006 list of top dividend-payers did not make 2012’s top 30. Four companies have disappeared through takeovers, while Telus Corp., Imperial Oil Ltd., Brookfield Asset Management Inc., Loblaw Cos. Ltd., TransAlta Corp. and George Weston Ltd. have dropped in rank.

New to the top 30 are Crescent Point Energy Corp., Rogers Communications Inc., Suncor Energy Inc., Canadian Oil Sands Ltd., Cenovus Energy Inc., Penn West Petroleum Ltd., Potash Corp. of Saskatchewan Inc., Teck Resources Ltd. and Canadian Natural Resources Ltd.

As the list focuses on individual stocks rather than related companies, all four companies in the Power Corp. of Canada family made the dividend list.

If the Power group’s representation in this list is cut to just the parent company (by eliminating Power Financial Corp., IGM Financial Inc. and Great-West Lifeco Inc.), the following three stocks would fill out the list: Goldcorp Inc., Bell Aliant Inc. and Telus Corp. IE