Canadian Dividend All-Stars Expected To Announce Dividend Increases - Week Of Oct. 29

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Includes: ATGFF, CGEAF, CGECF, FTS, GMICF, TFIFF
by: Mat Litalien

Summary

Four Canadian Dividend All-Stars are expected to announce a raise.

Two weeks ago, Fortis raised in line with expectations.

Last week, TFI International surprised with an earlier than expected raise.

It’s going to be a busy week with a number of Canadian Dividend All-Stars scheduled to announce earnings. Of those, four are expected to announce a dividend increase before the week is out. Prior to jumping in, let’s take a look at the action from the past couple of weeks. Of note, all figures are in Canadian dollars unless otherwise noted.

LAST WEEK – RESULTS

The last update was two weeks ago, and we have since had a couple of dividend bumps. Fortis (FTS) [TSX:FTS] came through with an as expected raise and TFI International (OTCQX:TFIFF) [TSX:TFII] announced a couple of months earlier than expected.

EST

DGR

EST

Increase

ACTUAL

DGR

ACTUAL

Increase

NEW

DIV

Fortis

5.88%

$0.025

5.88%

0.025

$0.45

TFI International

N/A

N/A

14.29%

$0.03

$0.24

Fortis was its usual reliable self as it announced a 5.88% raise in line with expectations. It was easy to anticipate the company’s raise as guidance to 6% dividend growth. Guidance which it has extended through to 2023. Fortis’ new quarterly dividend is now $0.45 per share.

TFI International’s raise caught me off guard. The company’s historical declaration dates all pointed to a mid-December announcement. This year, however, the company announced its raise along with blowout third-quarter earnings.

The company’s shares were briefly halted after-hours as operating income more than doubled over the third quarter of last year. It was therefore not a surprise that its 14.29% dividend raise was above its historical averages. TFI’s new quarterly rate is now $0.24 per share and its yield has jumped back above 2%.

EXPECTED RAISES

AltaGas Ltd. (OTCPK:ATGFF) [TSX:ALA] – Current Streak – 6 YRS, Current Yield – 10.39%

Earnings: Tuesday, October 30

What can investors expect: AltaGas has been under pressure ever since its WGL acquisition. The company took on a great deal of debt and it has struggled to reduce its leverage. To accelerate its deleveraging, the company recently announced a restructuring in which it spun-off certain Canadian assets into a new entity called AltaGas Canada Inc. Of note, it’s unclear how or if the restructure will affect the timing of its dividend announcements. Last year, the company announced an increase along with third-quarter results in October.

AltaGas has a targeted dividend payout ratio of 50-60% of funds from operations [FFO]. Through the first six months of the year, dividends accounted for 60.5% of FFO. Although this is at the high end of the range, FFO is expected to growth by 27.5% at the mid-range of guidance. As a result, the company can comfortably raise by mid-single digits and still fall within its target payout range.

EST DGR

EST INCR

EST NEW DIV

4.11%

$0.0075

$0.19

Cogeco Inc. (OTC:CGECF) [TSX:CGO] – Current Streak – 13 YRS, Current Yield – 2.48%

Cogeco Communications Inc (OTCPK:CGEAF) [TSX:CCA] – Current Streak – 14 YRS, Current Yield – 2.88%

Earnings: Wednesday, October 31

What can investors expect: Although separate publicly traded companies, Cogeco and its subsidiary Cogeco Communications release earnings in tandem. They have also been tied at the hip with respect to their respective dividend raise announcements. Both companies reliably raise dividends along with fourth-quarter results.

They also have a consistent history of double-digit dividend growth. With modest payout ratios in the mid-to-high 20s of free cash flow, the company is well positioned to continue its trend of strong dividend growth. There is a caveat with this assertion. Cogeco has guided FCF downward in 2018 due to non-recurring items. This could potentially impact this year’s dividend growth rate.

Cogeco Inc.:

EST DGR

EST INCR

EST NEW DIV

10.53%

$0.05

$0.525

Cogeco Communications Inc.:

EST DGR

EST INCR

EST NEW DIV

10.26%

$0.04

$0.43

Genworth MI Canada Inc. (OTCPK:GMICF) [TSX:MIC] – Current Streak – 9 YRS, Current Yield – 4.75%

Earnings: Wednesday, October 31

What can investors expect: Genworth operates in the much maligned Canadian mortgage industry. The company’s last number of dividend raises all came with third-quarter earnings.

Canada’s mortgage-lending industry is under considerable pressure. The federal and provincial governments have introduced several measures aimed at cooling Canada’s housing market. Although Genworth has performed well amidst the uncertainty, its dividend growth has slowed. Its 5-year and 3-year dividend growth rate averages have been in a downward trend. The company’s last dividend raise was $0.03 per share and I expect the same this time.

EST DGR

EST INCR

EST NEW DIV

6.38%

$0.03

$0.50

Disclosure: I am/we are long ATGFF, FTS.

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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