Canadian Dividend All-Stars Expected To Announce Dividend Increases - Week Of May 8-12, 2017

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Includes: AGU, ALARF, BPZZF, CIFAF, CPXGF, EMRAF, ENB, FINGF, FNV, GAPFF, HLF, LBLCF, LSDAF, TU
by: Mat Litalien

Summary

Loblaws came through as expected, while Cineplex and Enbridge announced surprise dividend increases last week.

Five companies are expected to announce dividend raises with earnings this week.

Four others are questionable and of those, three are in danger of losing their status as a Canadian Dividend All-Star.

It will be another busy earnings week (May 8-12) as 21 Canadian Dividend All-stars as expected to report earnings. The good news for dividend growth investors is that a number of them are expected to announce dividend increases while a slew of others could also come through. Let's take a look at their streaks and estimate what their raise will be.

LAST WEEK - RESULTS

Before we get to this week's anticipated dividend raises, last week I estimated that Loblaws (OTCPK:LBLCF) and Franco Nevada Corp (NYSE:FNV) would both announce a dividend increase and that Agrium (NYSE:AGU) could also announce an increase. Last week did not go exactly as planned as both Franco Nevada and Agrium failed to announce an increase. On the other hand, Loblaws did deliver as expected and two other Dividend All-Stars surprised with increase of their own. Here are my estimates vs actuals:

Once again, Loblaws increased their quarterly dividend by C$0.01/share continuing their dividend growth rate downtrend. Franco Nevada on the other hand did not announce their dividend during the first week of May, the first time they have failed to do so since they moved to a quarterly dividend in 2014. That being said, Franco Nevada is scheduled to announce earnings this week, so investors should get their dividend news this week at the latest. With no raise, Agrium has now kept their dividend steady for 9 straight quarters. As mentioned last week, this is not entirely surprising as their fundamentals have deteriorated over the past years. That being said, they still have two more quarters to raise dividends and keep their status as a Canadian Dividend All-Star.

Dividend investors were also treated to a couple of surprises last week. Cineplex (OTC:CPXGF), which has raised their dividend mid-May for the past 5 years, announced slightly earlier than expected. On May 2nd, Cineplex rewarded investors with a C$0.005/increase to their monthly dividend. However, the biggest surprise was that Enbridge (NYSE:ENB) raised their dividend for the second consecutive quarter. After raising their dividend by 10% in January, Enbridge raised their quarterly dividend by an additional 4.6% for a new quarterly dividend of C$0.61/share.

EXPECTED INCREASES

Aimia Inc (OTCPK:GAPFF) [TSE: AIM] - Current Streak - 6 YRS, Current Yield - 9.05%

Earnings Release Date: Wednesday, May 10

Aimia is a data-driven marketing and loyalty analytics company. Most notably, they own and operate the Aeroplan, Nectar and Air Miles Middle East loyalty programs. Since 2011, Aimia has consistently raised dividends along with earnings during the month of May.

What can investors expect: An immediate red flag is raised when looking at Aimia's current yield of 9.05% and I question whether such a high yield is sustainable. The good news is that Aimia's free cash flow more than covers their current dividend which represented 58% of free cash flow as of end of 2016. Since they began raising their dividend, they have consistently raised their quarterly dividend by C$0.01/share and I expect Aimia to do the same this time around. Such a raise would equate to a 5% raise for a new quarterly rate of C$0.21/share.

CI Financial Corp (OTCPK:CIFAF) [TSE: CIX]- Current Streak - 7 YRS, Current Yield - 5.2%

Earnings Release Date: Thursday, May 11

CI Financial is a Canada-based wealth management and investment fund company. Since 2013, CI Financial, a monthly dividend payer, has consistently raised their dividends in the month of May.

What can investors expect: CI Financial has an impressive starting yield which current sits at 5.2% and they have been fairly consistent raising their dividends over the years. The downside is that their dividend growth rate has been in decline. While their 3YR and 5YR dividend growth rates hover around 9%, their most recent increase was approximately 5%. This is a direct result of maintaining the same monthly dollar increase of C$0.005/share YOY. With a yield above 5%, there is no reason to believe that this trend won't continue and I expect another C$0.005/share increase for a new monthly dividend of C$0.12/share, a 4.2% increase.

Emera Inc. (OTCPK:EMRAF) [TSE: EMA] - Current Streak - 10 YRS, Current Yield - 4.41%

Earnings Release Date: Thursday, May 11

Emera is a utility services company which invests in electricity generation, transmission and distribution, gas transmission and utility services. Their primary operations in Canada are on the east cost under the banner of Nova Scotia Power and have operations in both the U.S. (Maine, Florida, New Mexico) and the Caribbean (St. Lucia). Since 2007, Emera has never gone more than 4 straight quarters without raising their quarterly dividend and over the years they have announced multiple increases within a single year. With last quarter's dividend declaration, Emera has kept their dividend steady for four straight quarters and as such I believe they will announce an increase next week.

What can investors expect: One of Canada's largest utility companies by market capitalization, Emera's current yield is middle of the pack when compared against other Canadian All-Star utility companies. Unlike both CI Financial and Aimia, Emera's dividend growth rates have actually increased over the past number of years. Their 1YR growth rate is 20% which is significantly higher than their 3YR and 5YR growth rates of 12.2% and 8.7%. Of note, Emera raised their dividend twice last year but their latest increase was 10%. Based on their historical trends, I anticipate that Emera will raise their quarterly dividend by approximately 10% or C$0.0522/share for a new quarterly rate of C$0.5747.

Lassonde Industries Inc. (OTC:LSDAF) [TSE: LAS.A] - Current Streak - 9 YRS, Current Yield - 0.86%

Earnings Release Date: Thursday, May 11

Lassonde is a Canada-based company which develops, manufactures and markets a range of ready-to-drink fruit and vegetable juices. Some of Lassonde's most notable brands include Oasis, Fruite, Fairlee, Del Monte and Tropical Grove. Historically, Lassonde has announced an increase in dividends during the month of May.

What can investors expect: Lassonde is Canada's lone Dividend All-Star operating in the beverages and drinks industry. Unfortunately, their yield is a miniscule 0.68% and is not particularly attractive to dividend growth investors. However, Lassonde's last raise was approximately 25% which is higher than both their 3YR and 5YR dividend growth rates of approximately 10%. Does this represent a commitment to raising dividends at a faster pace? If they can maintain their momentum from 2016, it is certainly possible. In 2016, the company raised free cash flow 22% and their dividend payout ratio as a percentage of FCF is only 12%, leaving ample room for growth. Therefore, I anticipate Lassonde will announce a quarterly increase of C$0.10/share, a 20% increase to a new quarterly rate of C$0.61/share.

Telus (NYSE:TU) [TSE: T] - Current Streak - 13 YRS, Current Yield - 4.22%

Earnings Release Date: Thursday, May 11

Telus, is one of Canada's well known "Big 3" telecommunications companies (along with Bell and Rogers). Over the past number of years, Telus has consistently raised dividends twice yearly - once in May and again in November.

What can investors expect: What is particularly attractive about Telus, aside from their attractive yield and dividend growth, is that they have a transparent dividend policy. Telus' most recent dividend policy is pretty straightforward in that they expect to grow dividends between 7% and 10% on an annual basis through 2019. Furthermore, Telus last 8 quarterly dividend increases were C$0.02/share and I expect Telus to maintain this trend and raise their quarterly dividend by C$0.02/share both next week and again in November. This would represent an 8.7% annual increase, in-line with their policy.

WILL THEY OR WON'T THEY

There are also a number of other companies who may also raise dividends this week. Here is a quick recap of each:

Alaris Royalty Corp (OTC:ALARF) [TSE: AD] - Current Streak - 9 YRS, Current Yield - 7.78%

Earnings Release Date: Monday, May 8

Alaris, a monthly dividend payer, has left their dividend unchanged for 21 straight months. Dating back to 2013, their monthly dividend raises equaled C$0.005/share and should they announce, investors could expect the same for a new monthly dividend of C$0.14/share.

High Liner Foods Inc. (NYSE:HLF) [TSE: HLF] - Current Streak - 9 YRS, Current Yield - 3.10%

Earnings Release Date: Monday, May 8

High Liner consistently pays out a higher dividend YOY, however the timing of their increases are all over the map. That being said, since 2013 they have announced an increase in May but investors need to be aware they only just raised their dividend this past November. Should they announce again, I expect their increase to be similar to that of the past few increases, that of C$0.01/share, or 7.1% for a new quarterly rate of C$0.15/share.

Finning International (OTCPK:FINGF) [TSE: FTT] - Current Streak - 15 YRS, Current Yield - 2.81%

Earnings Release Date: Wednesday, May 10

Finning has kept their dividend steady over the past 8 quarters and last raised their dividend in May of 2015. With an impressive dividend streak on the line, Finning will have to announce a dividend raise in the next few quarters in order to maintain their All-Star status. Given the pressure that their industry has been under, I anticipate that any raise be minimal. Their last raise was C$0.005 and I expect the same for their next raise. This would represent a 2.7% increase and a new quarterly payout of C$0.1875/share.

Boston Pizza Royalties Income Fund (OTC:BPZZF) [TSE: BPF.UN] - Current Streak - 5 YRS, Current Yield - 6.05%

Earnings Release Date: Thursday, May 11

Boston Pizza, a monthly dividend payer, has left their dividend unchanged for 15 straight months. Should they announce an increase, I expect it to be approximately 6% or C$0.0069 for a new monthly rate of C$0.1219.

CONCLUSION

It will be a busy week for dividend growth investors as there are potentially 9 Canadian Dividend All-Stars who may raise dividends, a tenth if you include Franco Nevada. All five companies who are expected to raise dividends are well positioned to maintain their streaks and announce dividend increases. The others are a little more difficult to predict, and aside from High Liner, on a historical basis they are all overdue to announce increases. However, they all have until the end of year to raise dividends to maintain their status as one of Canada's Dividend All-Stars. Whether they increase this week or not remains to be seen.

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Disclosure: I am/we are long TU.

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.

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