Canadian Dividend All-Stars Expected To Announce Dividend Increases - Week Of July 16

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Includes: AMIVF, ANCTF, ANCUF, EIFZF, EMLAF
by: Mat Litalien

Summary

Two Canadian Dividend-All Stars are scheduled to report earnings this week.

Empire Company Ltd. raised inline with expectations.

Alimentation Couche-Tard finally came through for dividend growth investors.

It has been the typical mid-summer lull and dividend increases have slowed significantly. There are two Canadian Dividend All-Stars scheduled to report earnings this week, Exchange Income Fund (OTCPK:EIFZF)[TSX:EIF] and Atrium Mortgage Investment Corp. (OTC:AMIVF)[TSX:AI]. Neither are expected to raise dividends as both have already announced a dividend bump earlier this year. That being said, earnings are scheduled to ramp up, so let’s revisit some of the action from the past number of weeks.

LAST FEW WEEK - RESULTS

It has been a few weeks since my last update and in that time frame Empire Company Ltd. (OTCPK:EMLAF)[TSE: EMP.A]came through as expected. Likewise, investors were treated to a surprise raise by Alimentation Couche-Tard Inc. (OTCPK:ANCUF)(OTCPK:ANCTF)[TSX:ATD.B] who was at risk of losing its All-Star status.

EST

DGR

EST

Increase

ACTUAL

DGR

ACTUAL

Increase

NEW

DIV

Empire Company

4.76%

C$0.005

4.76%

C$0.005

C$0.11

Alimentation C-T

11.11%

C$0.01

11.11%

C$0.01

C$0.10

First up, Empire Company continued the recent sector trend of raising above historical averages. In the quarter, the grocery sector has been surprising to the upside with larger than expected dividend increases. Empire was no different. Its C$0.005 per share raise, or 4.67%, was double that of its previous increase and inline with my estimate. Empire now has a new quarterly payout of C$0.11 per share.

The biggest surprise came last week when Alimentation Couch-Tard surprised with an 11.11% dividend increase. The company had not raised dividends since December of 2016 and was in danger of losing its status as a reliable dividend growth company.

Back in March, I explained that Alimentation Couche-Tard had taken on a great deal of debt to make large acquisitions. For this reason, the timing of the company’s dividend was in question. However, I was spot on with my expectations for a C$0.01 per share raise and a new quarterly dividend of C$0.10 per share.

The raise extended the company’s dividend growth streak to nine years. Although the increase is welcomed, Alimentation Couche-Tard's dividend growth rate continues its downward trend. The company’s last raise was 14.5% and its previous 3-year average was 29%. Don’t be surprised to see single-digit dividend growth moving forward. The company has a growth through acquisition strategy which is at odds with a high dividend growth strategy.

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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