More than half (58%) of world market returns have come from dividends, says Fiona Wilson, portfolio manager, global investments at Guardian Capital.

This isn’t a surprise. But what is, is that Canadian investors usually stick to Canadian dividends. So it’s time to branch out and consider global opportunities, she noted during a presentation at a BMO event in Toronto.

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Why? Because global dividends can provide increased capital gains.

In Australia, investors are seeing 73% of returns from dividends, she says. In Hong Kong, that number is 65% and in the UK, it’s 63%.

When it comes to yield, Wilson shoots for 3% to 6% because that’s “the sweet spot.”

Read: Kicking the bucket strategy

But when investing in dividends, don’t just search for yield — growth is just as important. If you look at the S&P 500 and go back as far as 1972, she says, “the highest return is for companies that grow their dividends with the lowest standard deviation. So that’s your best risk-return profile.”

And that’s why dividend growth is the top factor Wilson considers when building portfolios.

She divides companies into three classes.

  1. Dividend payers: those with stable cash flow (e.g. Telco and utilities companies)
  2. Dividend growers: those that consistently grow their dividends (e.g. McDonald’s)
  3. Dividend achievers: those that are more cyclical, lower dividend yields (e.g. Emerson Electric)

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“In a normal market, we usually see a third in each bucket,” says Wilson. “In 2011, we were in the top two buckets [because] there weren’t any dividend achievers coming up. In the last six months, we’ve shifted our portfolio. We’ve taken down the dividend payers and added more dividend growers.”

When it comes to maximum position size, Wilson tops out at 5%.

“We usually go in 1% to 2%, and end that position at 5%. It’s a portfolio approach. We’re not looking for that single home run.”

She adds, “We prefer to buy three stocks at 1% in that same industry cluster, as oppose to saying, ‘We really like this stock, let’s go 10%.’ ”

Read: Looking for low volatility

And in the past, Wilson has weighted emerging markets at a maximum of 15%. At the moment, however, she’s at one of the lowest weights ever: 1%.

“This is bottom-up stock picking,” says. “We’re not seeing a lot of emerging markets coming up as buy. The volatility is very high.”