3 Canadian Dividend All-Stars That Raised Their Dividend In June

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Includes: ADWPF, EMLAF, KEYUF
by: Mat Litalien
Summary

Andrew Peller, Keyera Corp and Empire Company all raised their dividends in June.

Value is difficult to find as all appear fairly to overvalued.

All three are trading at premiums to historical P/E, PEG ratio and to their Graham Number.

Dividend growth investors, such as myself, look for quality companies who have a history of raising their dividends on a regular basis. Although not as comprehensive as the U.S. Dividend Champions list, Canada’s dividend-paying companies also present investors with dividend growth opportunities and have thus far received limited coverage on SA. This is the sixth of a monthly series that identify the most recent dividend increases of the Canadian Dividend All-Stars, companies that have raised their dividend for at least 5 consecutive years.

Of note, U.S.-based investors should be aware that they are subject to a 15% withholding tax on dividends paid within a taxable account. On the other hand, should U.S.-based investors hold their Canadian dividend-paying stocks in their retirement accounts, there are no withholding taxes on dividends paid due to our mutual tax treaty.

JUNE’S UPDATES

Last month was a slow month as only three Canadian Dividend All-Stars raised their dividends in the month of June, which coincided with slow number of earnings reports. These companies are: Andrew Pellter [TSE:ADW.A], Keyara Corp [TSE: KEY] and Empire Company [TSE: EMP.A].

Ticker

Company

Date

Yiled

Old

New

Inc.

(OTC:ADWPF)

Andrew Peller Ltd.

June-07-17

1.54

$ 0.0375

$ 0.0408

10.30

(OTC:KEYUF)

Keyera Corp.

June-12-17

4.16

$ 0.1325

$ 0.1400

5.66

(OTCPK:EMLAF)

Empire Company Ltd

June-28-17

2.52

$ 0.1025

$ 0.1050

2.44

Of Note, all companies on this list payout their dividends in Canadian funds.

VALUATIONS

Value is hard to find in today’s market as the majority of these companies are either trading in line with fair value or appear to be over valued based on a number of metrics. Below is a quick snapshot of each of the three companies that raised their dividends in June.

Andrew Peller Ltd – Sector: Consumer Defensive: Industry: Beverages – Wineries & Distilleries

(Streak: 11 Years)

Andrew Peller is a Canada-based company which produces and markets wines under the Peller, Red Rooster and Wayne Gretzky brands among others. The company has distilleries in British Columbia, Ontario and Nova Scotia.

Why do they appear overvalued? For starters, Andrew Peller is currently trading significantly above their historical P/E averages (see F.A.S.T. Graph below). Likewise, they are trading at a significant premium to their Graham number of C$7.47 and are trading significantly above their 5YR price to cash flow (P/CF) ratio (18.24 vs 15.24) and price to book (P/B) ratio (2.63 vs 1.79). Finally, they are trading at a 6.5% premium to Morningstar’s fair value price of C$10.28/share.

Keyera Corp – Sector: Energy: Industry: Oil & Gas Midstream

(Streak: 6 Years)

Keyera Corp operates in the oil and gas in both upstream and downstream sectors. The company is structured in two business units: Gathering and Processing Business Unit and Liquids Business Unit.

Why do they appear overvalued? Once again, the company is currently trading above their historical P/E averages (see F.A.S.T. Graph below). Likewise, they are trading at a significant premium (133%) to their Graham number of C$17.47. When looking at analysts growth forecasts, Keyera’s PEG ratios is currently 1.53 and a PEG over 1.0 typically signifies that the company's earnings are not keeping up with the company's share price and as such can be considered overvalued . Finally, they are trading at a 27.5% premium to Morningstar’s fair value price of C$32.00/share.

Empire Company Limited – Sector: Consumer Defensive: Industry: Grocery Stores

(Streak: 22 Years)

Empire is one of Canada’s longest serving Dividend All-Stars having raised dividends for 22 consecutive years. The company breaks down its operations into three business segments: Food Retailing, Investments and Other Operations. The Food Retailing segment consists of its subsidiary Sobeys Inc., which owns, affiliates or franchises over 1,500 stores under the retail banners that include Sobeys, Safeway, IGA, FreshCo, Thrifty Foods and Lawton’s Drugs.

Why do they appear overvalued? Continuing the trend, the company is currently trading significantly above their historical P/E averages (see F.A.S.T. Graph below). Likewise, they are trading at a significant premium (65%) to their Graham number of C$13.43. When looking at analysts growth forecasts, Empire’s PEG ratio is negative which signifies that the company's earnings are not keeping up with the company's share price and as such can be considered overvalued . Finally, the company is trading at a premium to their 5YR historical P/B ratio (1.65 vs 1.02) and P/CF ratio (8.49 vs 6.55).

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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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.

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