They are usually established blue-chips that aren't growing as fast as their smaller counterparts

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THE CANADIAN PRESS

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CALGARY - Companies with a track record of paying steady dividends are a smart choice for risk-wary investors, portfolio managers say.

"I think dividends are certainly important. They're more important than most investors give credence to," said John Stephenson with First Asset Investment Management in Toronto.

"I think a strong record of increasing the dividend or at least maintaining it is an extremely positive sign ... and I think investors should be considering having a good slate of their income coming in the form of dividends."

Stephenson said he looks for companies that can sustain their payouts over the long term.

For example, Calgary-based pipeline operator and gas distributor Enbridge Inc. (TSX:ENB) has had a 50-year history of maintaining or raising its dividend.

Stephenson also likes Emera Inc. (TSX:EMA) and Inter Pipeline Fund(TSX:IPL.UN), which, like Enbridge, are not nearly as exposed to commodity price swings as other energy companies.

Dividend-paying companies are usually established blue-chips that aren't growing as fast as their smaller -- but potentially more exciting -- counterparts.

"It's never going to be twice as big a company next year as it is this year. But you didn't buy it for that. You bought it because it was stable and solid and secure and you maybe make a little bit of money on the units or the shares," Stephenson said.

But lately some companies have resorted to suspending or cutting their dividends in order to pay down debt.

"That's usually a last resort and companies do not like to suspend or reduce their dividend payouts simply because it does not instill a high level of confidence in their stock. What it does is it sends a signal that 'hey, you're in a bit of trouble right now," said Andrew Beer, manager of strategic investment planning for Investors Group in Winnipeg.

Beer sees Canadian financials -- banks and insurance stocks -- as good choices right now, even though they have been suffering "guilt by association" because of the myriad troubles amongst their American peers.

"We've seen no signs that our banks are going to be cutting dividends and it's not to say that they couldn't, the longer this recession goes on. But so far everything has been quite stable," Beer said.

Many Canadian income trusts, which avoid paying corporate taxes by doling out their cash to investors, have been cutting their payouts -- known as distributions, rather than dividends.

"Most corporations will do back flips to try to prevent cutting their dividends, whereas income trusts cut their distributions with impunity," said James Cole, senior vice-president and portfolio manager for AIC.

Canadian Oil Sands Trust (TSX:COS.UN), Paramount Energy Trust (TSX:PMT.UN), Trilogy Energy Trust (TSX:TET.UN), Baytex Energy Trust(TSX:BTE.UN) and Penn West Energy Trust (TSX:PWT.UN) are some of the Canadian oilpatch trusts to cut their distributions over the past few quarters, due mainly to languishing natural gas and oil prices.

"We haven't seen the end of the pain in income trusts for the energy sector," said Cole.

Even though Canadian Oil Sands Trust has recently cut its distribution, Cole continues to own that stock because he believes its payout is sustainable at current oil prices.

He also likes CML Healthcare Income Fund (TSX:CLC.UN), which he expects to raise its distribution next month.

On the dividend-paying side, one of AIC's biggest holdings is in Thomson Reuters Corp. (TSX:TRI).