Canadian Dividend All-Stars Expected To Announce Dividend Increases - Week Of Feb. 5

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Includes: BCE, BEP, BIP, EXCOF, IFCZF, MEOH, MTRAF, SU
by: Mat Litalien

Summary

13 Canadian Dividend All-Stars are expected to release earnings.

Three All-Stars came through with dividend raises last week.

A handful of All-Stars may come through for investors this week.

Earnings are in full swing as thirteen Canadian Dividend All-Stars are scheduled to report earnings. Dividend growth investors can also expect a busy week as a handful are positioned to announce dividend raises. Last week saw a few surprises, so let’s first take a look at some of the unexpected action.

Last Week - Results

Last week, there were a couple dividend surprises to go along with Exco Technologies (OTCPK:EXCOF) [TSE: XTC] slightly disappointing dividend raise. Similar to Richelieu Hardware last week, there were no details available at the time of writing on the date of Metro Inc.’s (OTCPK:MTRAF) [TSE: MRU] earnings release. However, the company did report earnings last week and along with it, announced a dividend raise. Methanex Corp (MEOH) [TSE: MX] also announced a surprise dividend bump after a massive earnings beat.

Although the company announced a decent 6.25% raise, Exco Technologies missed my estimate by a wide margin of 50%. This marks the first time that Exco has not announced a double digit raise since their dividend growth streak began and signals a more conservative dividend policy on the back of lower than expected earnings.

On the flip side, Methanex posted blowout numbers, beating earnings estimates by 33%. This impressive performance led Methanex to announce an earlier than expected raise of 10% of $0.03 for a new quarterly rate of $0.33, its second raise in the past 12 months. Of note, Methanex is dual listed and pays its dividends in US dollars.

Finally, Metro announced a dividend raise along with first quarter earnings this past Tuesday. The approximately 10% raise was in-line with the company's previous raise and extends its dividend growth streak to an impressive 24 years. The C$0.0175 raise results in a new quarterly payout of C$0.18/share.

Expected Increases

Intact Financial (OTCPK:IFCZF) [TSE: IFC] – Current Streak – 13 YRS, Current Yield – 2.49%

Earnings Release Date: Tuesday, February 6

What can investors expect: Intact Financial, Canada’s largest property and casualty insurance company has consistently raised dividends along with Q4 and year-end results in early February. The company’s dividend raise consistency also carries over to its dividend growth rate. Its 1YR, 3YR and 5YR dividend growth rates are all approximately 10% and with a reasonable payout ratio of 47%, it is well positioned to reward investors with a similar raise in 2018. A 10% dividend raise would result in a jump of approximately C$0.06 to C$0.07 for a new quarterly rate of C$0.70 to C$0.71/share.

Brookfield Renewable Partners (BEP) [TSE: BEP.UN] – Current Streak – 8 YRS, Current Yield – 5.9%

Earnings Release Date: Wednesday, February 7

What can investors expect: Brookfield Renewables is a dual-listed equity which owns and operates a portfolio of renewable energy assets. The company pays out its dividend in US$ and over the last three years, it has raised dividends along with earnings in early February. The company’s dividend growth rate appears to be slowing as last year’s 5% raise lagged its 3YR growth rate of 9.6%. The company targets a dividend growth rate between 5% and 9% to go along with a 70% payout ratio based on funds from operations. Unfortunately, Brookfield’s payout ratio as a percentage of FFO over the first 9 months of the year is 97%. This is significantly higher than their target range. As such, I believe that the dividend raise will come in at the low end of targets. A 5% raise would result in an approximately $0.0325 for a new quarterly rate of $0.41/share.

BCE Inc. (BCE) [TSE: BCE] – Current Streak – 9 YRS, Current Yield – 4.99%

Earnings Release Date: Thursday, February 8

What can investors expect: BCE, another dual-listed stock, is one of Canada's "big three" telecommunications firms. The company has an attractive starting yield of approximately 5% and its dividend growth rate has been relatively stable and predictable over the past number of years. The company’s 1YR, 3YR and 5YR growth rates all hover around 5%. BCE aims to payout 65% to 75% of free cash flow which is expected to grow between 5% and 10%. On a trailing twelve month basis, its dividend as a percentage of free cash flow is 76%. Given this, I expect the dividend raises to match the low end of their free cash flow guidance. At 5%, this would result in an approximate raise of C$0.0359 for a new quarterly rate of C$0.7534/share.

Brookfield Infrastructure Partners (BIP) [TSE: BIP.UN] – Current Streak – 10 YRS, Current Yield – 4.31%

Earnings Release Date: Friday, February 9

What can investors expect: Brookfield Infrastructure is another dual-listed, US$ dividend paying company. The company owns and operates a diversified portfolio of utilities, transport, energy and communications infrastructure assets. Over the past number of years, it has consistently raised dividends along with Q4 results. The company has a targeted FFO dividend payout ratio of 60% to 70%. The good news for investors is that through nine months, its payout ratio sits at approximately 68%. Although it is on the high end of its target, the company is well positioned to raise given it have been raising FFO by double digits. I expect the company to match last year’s raise which would result in a 10% raise for a new quarterly rate of $0.4785.

Will They Or Won't They?

Suncor (SU) [TSE: SU] – Current Streak – 15 YRS, Current Yield – 2.87%

Earnings Release Date: Wednesday, February 7

What can investors expect: Suncor, is the fourth dual-listed company on this week's list. One of Canada's largest oil sands companies, Suncor has an inconsistent dividend raise pattern, but its last raise came in February of last year. Suncor’s dividend growth rate has also been very inconsistent with last year’s raise being close to 10% and its 3YR and 5YR rates were 7.9% and 20.7% respectively. With a forward looking payout ratio of 80%, I will err on the side of caution and assume a quarterly dividend raise of approximately C$0.02 or 5.8%, for a new rate of C$0.36/share.

Disclosure: I am/we are long SU, EXCOF.

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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