Stocks with sustainable dividends that could be takeover targets

What are we looking for?

Sustainable dividends from stocks that have the added benefit of takeover appeal.

The screen

This week’s announcement that Canadian copper miner Teck Resources Ltd. (TECK-B-T has agreed to be acquired by global giant Anglo American PLC (NGLOY is bound to spur a hunt for the next big takeover deal. (The transaction is also likely to face a review by the Canadian government.)

As our analysts at the Successful Investor point out, prime takeover candidates typically share key characteristics – from low debt and hidden assets to an affordable stock market capitalization, making for a manageable purchase by an interested buyer.

Target companies with top-quality but underperforming assets can also attract the same acquisition interest. Firms with no major shareholder standing guard or large regulatory hurdles that can thwart a takeover plan are no less attractive.

Ultimately, however, which company will attract a takeover bid – let alone a firm offer – is largely a guessing game.

We think income investors are best to focus on sustainable dividends from quality businesses, with any chance for a takeover just adding to a stock’s appeal. We started there for this search, before homing in on companies well-positioned to receive takeover interest. From there, we applied our TSI Dividend Sustainability Rating System to evaluate those stocks. The system awards points based on these key factors:

• two points if it has raised the payment in the past five years;
• one point for management’s commitment to dividends;
• one point for operating in a non-cyclical industry;
• one point for limited exposure to foreign currency rates and freedom from political interference;
• two points for a strong balance sheet, including manageable debt and adequate cash;
• two points for a long-term record of positive earnings and cash flow sufficient to cover dividend payments;
• one point for an industry leader;
• one point for five years of continuous dividend payments;
• two points for more than five years.

Companies with 10 to 12 points have the most secure dividends, or the highest sustainability. Those with seven to nine points have above-average sustainability; average sustainability, four to six points; and below-average sustainability, one to three points.

What we found

Our TSI Dividend Sustainability Rating System generated six stocks primed for growth – and perhaps takeovers:

Corteva Inc. (CTVA-N , headquartered in Indianapolis, Ind., is a leading developer of new seeds and crop chemicals, including herbicides and insecticides, for the agriculture industry.

Oakville, Ont.-based Algonquin Power & Utilities Corp. (AQN-T has sold off assets to pay down its outsized debt and is now entirely focused on its regulated utilities, which supply electricity, gas, water distribution and wastewater collection services to customers in Canada, the United States, Chile and Bermuda.

Idaho’s Lamb Weston Holdings Inc. (LW-N is a leading producer of frozen French fries, potatoes and other packaged vegetables. Activist investors have spurred the company to conduct a strategic review of its operations. That could lead to a sale of the entire business.

South Bow Corp. (SOBO-T , headquartered in Calgary, was spun off from TC Energy Corp. in October, 2024. It’s now a pure-play pipeline stock with about 90 per cent of its cash flow coming from rate-regulated or long-term shipping contracts from oil producers.

Gen Digital Inc. (GEN-Q , based in Tempe, Ariz., is the parent company for several security-related brands, including Norton, LifeLock and Avast, in addition to Avira, AVG and CCleaner. Those strong brands could make it an attractive takeover candidate.

And finally, Chicago’s Kraft Heinz Co. (KHC-Q has announced that it will split into two separate firms: one, temporarily called Global Taste Elevation, will focus on products such as sauces, spreads and shelf-stable meals. Its top brands are Heinz, Philadelphia and Kraft Mac & Cheese. The other, called North American Grocery, will focus on frozen meat and ready-to-eat brands for North America. Its main brands are Oscar Mayer, Kraft Singles, Lunchables and Maxwell House. One or both new companies could attract takeover interest. That’s what happened when the old Kellogg Co. split into Kellanova and WK Kellogg Co. in 2023. In less than two years, both firms had agreed to takeovers.

We advise investors to do additional research on investments we identify here.

Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 11/09/25 3:58pm EDT.

Photo by omid roshan on Unsplash