Undoubtedly, many of your clients are anxious for income, and you are probably buying dividend-paying stocks for them. Thus, it’s a good time to see how dividends add to investors’ return — the measurement known as “total return.”

To compare major stocks, Investment Executive has sifted through the total returns of 56 companies for the 10 years ended Dec. 31, 2009. IE found that the average price change for these stocks from yearend 1999 to yearend 2009 was 145%. The average dividend return — dividends paid during the period — was 36%. That made the average total return 181%. This is not bad for what many analysts view as the first decade of a secular bear market.

The IE survey considered only stocks that paid dividends in Canadian dollars in every one of the 10 years.

The Big Six banks have been the popular dividend stocks. No wonder: they are the biggest source of dividends in Canada and are notable for their frequent dividend increases. However, the leading total-return gainers came from elsewhere in the market. (See accompanying tables.)

As well, a young competitor (as banks go) of the Big Six beat its big rivals handily. Canadian Western Bank had a 415% total return, including its 47% dividend return.

In the top five stocks, as ranked by total return, the financial sector is represented by one real estate company (Melcor Developments Ltd.). Among the remainder in the ranking, two are natural resources companies (Cameco Corp., Canadian Natural Resources Ltd.), one is a consumer stock (Reitmans Canada Ltd.) and the big winner — SNC-Lavalin Inc. — is an engineering/construction company with infrastructure investments.

Of the five companies providing the best dividend return since yearend 1999, only one is a bank: National Bank of Canada. Two others come from the top five in total returns: retailer Reitmans and real estate developer Melcor. Pipeline operator Transcanada Corp. and telecom utility Manitoba Telecom Services Ltd. fill out the top five in dividend returns.

Note the wide range in dividend returns: from 82% by Manitoba Telecom to 161% for Reitmans.

Dividend returns for the decade are uniform in the utilities sector, with the exception of Atco Ltd.’s low percentage — which is the result of its low dividend payout ratio. Among the other steady dividend payers — telecoms and pipelines — dividend returns varied considerably.

Price returns over the decade were negative for five companies in the survey — BCE Inc., Bombardier Inc., Gennum Corp., Loblaw Cos. Ltd. and Telus Corp. But, thanks to dividends paid, Loblaw and Telus provided positive total returns. This is how dividend returns can offset or soften the effect of negative price action of a stock over time.

Dividend return also made a difference for mining company Teck Resources Ltd., which had the fifth-greatest price appreciation, 442%. Teck failed to make the list of the five stocks with the greatest total return, though.

From companies in industries other than the financial, utilities, telecom and pipeline sectors, dividend returns were high for: Accord Financial Corp. (61% return), Leon’s Furniture Ltd. (57%), Andrew Peller Ltd. (52%) and Akita Drilling Ltd. (51%). IE