
Canadian All-Star Stocks: Dividend Increases – Week Of Oct.…

We are in the heart of earnings season and dividend growth is starting to ramp up. Not only are Canadian Dividend All Stars coming through for investors, but many in the gold industry are rapidly growing the dividend.
In one of my past updates, I wrote about the unappreciated dividend trend in the gold industry. They are quickly becoming relevant income plays, and are worthy of dividend investors’ attention.
Before we jump into what to expect this coming week, let’s recap the action from last week.
Of note, all figures are in Canadian dollars unless otherwise noted.
Recent dividend updates
Last week was the best week in terms of dividend growth since the pandemic began. First National Financial Corp. (OTCPK:FNLIF)[TSX:FN], Cogeco Communications Inc. (OTCPK:CGEAF)[TSX:CCA], Cogeco Inc. (OTC:CGECF)[TSX:CGO] and Waste Connections (WCN)[TSX:WCN] all announced a raise to their respective dividends.
Also last week, Brookfield Business Partners (BBU)[TSX:BBU.UN] announced it would acquire All Star Genworth MI Canada (OTCPK:GMICF)[TSX:MIC] at a price of $43.50 per share. Of note, Genworth is scheduled to release quarterly results on November 3, not October 27th as I had originally anticipated.
EST DGR |
EST Increase |
ACTUAL DGR |
ACTUAL Increase |
NEW DIV |
|
First National |
3.08% |
$0.005 |
7.69% |
$0.0125 |
$0.175 |
Cogeco |
10.00% |
$0.0475 |
14.74% |
$0.07 |
$0.545 |
Cogeco Comm. |
10.34% |
$0.06 |
10.34% |
$0.06 |
$0.64 |
Waste Connections |
13.50% |
$0.025 |
10.81% |
$0.02 |
$0.205 |
Let’s start with First National which not only surprised with a raise more than double its historical average, but also announced a special dividend of $0.50 per share.
Last week I questioned if the Office of the Superintendent of Financial Institutions (OSFI) – which asked banks not to raise – made the same request of other financial institutions. It does not appear that way which bodes well for dividend growth investors. It may also mean the OFSI has relaxed their stance, a rumor that was making the rounds after the banks last reported.
Cogeco and Cogeco Communications came through with their annual double-digit raises. The hostile takeover did not phase them, and Cogeco even came through with a larger than expected bump.
For its part, Waste Connections 10.81% raise was slightly lower than expectations. However, it does extent the company’s streak of raising by double-digits to 11 years.
Finally, SmartCentres REIT (OTCPK:CWYUF)[TSX:SRU.UN] – which we have been waiting on for a couple of weeks – kept the dividend steady. This was inline with our expectations as the retail industry has been one of the hardest hit during this pandemic. It is also why this week’s crop of All Stars are likely to deliver mixed results.
Upcoming dividend raises, cuts or suspensions
Granite REIT (GRP.U)[TSX:GRT.UN]
- Current Streak: 9 years
- Current Yield: 3.93%
- Earnings: Wednesday, November 4
What can investors expect: A rare dual-listed REIT, Granite’s focused on industrial, warehouse and logistic properties. The company usually announces an increase to its annual distribution along with third quarter results.
Granite is looking to extend its dividend growth streak to a decade. Over the course of the streak, the dividend growth rate has hovered in the low-to-mid single digits. At times, it has also been complemented with a special dividend.
The good news for Granite investors, is that the company operates in one of the few real estate industries that is doing quite well during this pandemic.
The company has a targeted payout ratio of 80% of adjusted funds from operations (AFFO). Through the first six months of the year, its payout ratio sat at 78% down from 83% over the first six months of 2019 thanks to strong AFFO growth (12.6%). Given this, the company is well positioned to raise the dividend next week.
EST DGR |
EST INCR |
EST NEW DIV |
~5% |
$0.013 |
$0.255 |
Canadian Tire Corp (OTCPK:CDNAF)(OTC:CDNTF)[TSX:CTC.A]
- Current Streak: 9 years
- Current Yield: 3.07%
- Earnings: Thursday, November 5
What can investors expect: Canadian Tire is one the country’s largest and most respected retailers. It has consistently raised dividends with third quarter results which will be released before the bell on Thursday.
Canadian Tire’s dividend growth rate has been on a steady decline. Last year, the company raised dividends by 9.64% which marked the first time dividend growth dropped to the single digits.
The question is, will the company reach a decade of dividend growth? Retail has been impacted in a big way by the pandemic, and there is a real risk of a second shutdown. If the company does raise the dividend, I’d expect another single-digit raise.
However, given the current environment it would not surprise me if the dividend was kept steady. It may be the prudent approach as retail is still facing considerable uncertainty.
EST DGR |
EST INCR |
EST NEW DIV |
~5% |
$0.0125 |
$1.20 |
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Disclosure: I am/we are long CDNTF, CDNAF. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.