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

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Includes: ATGFF, CBYDF, CDNAF, CGEAF, CGECF, FNLIF, GMICF, HLNFF, IPPLF, MALJF, SUMXF
by: Mat Litalien

Summary

Six Canadian All-Stars are expected to raise dividends this week.

Last week saw mixed results as AltaGas disappointed.

Last week also saw First National end its streak of dividend stagnation.

Earnings continue to ramp up and it should be a rewarding week for income investors. Six Canadian Dividend All-Stars are expected to announce a dividend increase before the week is out. This makes it the busiest week for dividend announcements since early August. Before we get into what’s expected, let’s delve into last week’s results. Of note, all figures are in Canadian dollars unless otherwise noted.

LAST WEEK – RESULTS

Last week saw mixed results. Cogeco Inc (OTC:CGECF)[TSX:CGO], Cogeco Communications Inc (OTCPK:CGEAF)[TSX:CCA] , and Genworth MI Canada Inc (OTCPK:GMICF)[TSX:MIC] all came through with a dividend raise as expected. First National Financial (OTCPK:FNLIF)[TSX:FN] ended its streak of dividend stagnation with a surprise raise and AltaGas Ltd (OTCPK:ATGFF)[TSX:ALA] disappointed investors.

EST

DGR

EST

Increase

ACTUAL

DGR

ACTUAL

Increase

NEW

DIV

Cogeco

10.53%

$0.05

10.53%

$0.05

$0.525

Cogeco Comm

10.26%

$0.04

10.26%

$0.04

$0.43

Genworth

6.38%

$0.03

8.51%

$0.04

$0.51

First National

N/A

N/A

2.68%

$0.0041

$0.1583

Cogeco and its subsidiary Cogeco Communications continued their streak of reliable dividend growth. Both companies raised dividends by double-digits, inline with historical averages. Cogeco and Cogeco Communication’s new quarterly dividends are $0.525 and $0.43 per share.

Genworth surprised to the upside with a $0.04 per share raise. The 8.51% raise was slightly above historical rates reversing a five-year downtrend. The company’s new quarterly payout is $0.51 per share.

AltGas posted less than impressive third-quarter results. It was thus not surprising that the company kept its dividend steady. The thesis that supported a dividend raise was completely wiped out this quarter. In the quarter, dividends accounted for 122% of funds from operations (FFO). Through the first six months, this payout ratio hovered around 60%. To make matters worse, the company guided FFO growth down to 10% from 26%. As mentioned, last week, the company has a targeted FFO payout of 50-60%.

AltaGas can keep its position as a dividend growth payer so long as it raises by end of next year. To do so however, it will have to pull off quite the turnaround. At this point, a dividend cut is looking more likely.

On the flip side, First National Financial ended its string of disappointment. On October 30th, the company announced a new yearly dividend of $1.90 per share. This works out to a monthly dividend of approximately $0.1583. The 2.68% raise enables it to keep its status as a dividend growth company after 20 months of dividend stagnation. As an added bonus, the company also announce a special dividend of $1.00 per share.

EXPECTED RAISES

Magellan Aerospace (OTCPK:MALJF)[TSX:MAL] – Current Streak – 5 YRS, Current Yield – 1.80%

Earnings: Monday, November 5

What can investors expect: Magellan is one of the newest additions to the All-Star list. It has thus far been quite reliable as it has announced a dividend raise in early November since its streak began.

Magellan’s five-year dividend growth rate has also remained quite steady hovering around 18%. With a payout ration in the low 20s, there is no reason to expect Magellan to deviate from this trend.

EST DGR

EST INCR

EST NEW DIV

17.65%

$0.015

$0.10

High Liner Foods Inc (OTC:HLNFF)[TSX:HLF] – Current Streak – 10 YRS, Current Yield – 6.83%

Earnings: Thursday, November 8

What can investors expect: High Liner has been one of the worst performing All-Stars losing 40% of its value this year. As a result, its yield has ballooned to 6.83%. Over the past three years, the company has announced its dividend raise along with third quarter results.

Will the company’s struggles impact future dividend growth? High Liner’s current dividend payout ratio is sitting at 44%. Not bad. The concern however, is the number rises to 78% over the next twelve months as the company is expected to post negative earnings growth. Will this be enough to stall dividend growth completely? The company’s dividend growth rate has been on a downward trend with its last raise being $0.005, or 3.57%. This was the lowest in its history.

Should High Liner announce a raise next week, I don’t expect anything higher than last year’s raise.

EST DGR

EST INCR

EST NEW DIV

3.45%

$0.005

$0.15

Inter Pipeline Ltd (OTCPK:IPPLF)[TSX:IPL] – Current Streak – 9 YRS, Current Yield – 7.80%

Earnings: Thursday, November 8

What can investors expect: Inter Pipeline has been negatively impacted by Canada’s crude-bottleneck. As an income play, it is also facing pressure from rising interest rates. The company typically raises its monthly dividend in November.

Inter Pipeline is yet another All-Star whose dividend growth rate has been on downward trend. It’s 5 and 3-year dividend growth rates are 9.1% and 7.3%. Last year, the company raised dividends by $0.005 or 3.7%. Given industry pressure, expect a similar raise this year.

EST DGR

EST INCR

EST NEW DIV

3.57%

$0.005

$0.145

Canadian Tire Corp (OTCPK:CDNAF)[TSX:CTC.A] – Current Streak – 7 YRS, Current Yield – 2.38%

Earnings: Thursday, November 8

What can investors expect: It seems to be a week where underperformers take the spotlight. A usually reliable performer, Canadian Tire has lost 9% of its value and is trading near 52-week lows. Since 2015, the company has raised dividends along with third quarter results.

Don’t get too enamoured by last year’s 38% raise. It was a one-time event. The company aims to payout approximately 30% to 40% of the prior year’s normalized earnings. As of writing, the company’s payout ratio sits at 35% which is at the mid-range of guidance. Given this, investors should expect future increases to be inline with earnings growth.

In 2018, earnings per share are expected to grow by approximately 5% over last year. Its dividend raise should follow closely.

EST DGR

EST INCR

EST NEW DIV

5.55%

$0.05

$0.95

Corby Spirit and Wine Ltd (OTCPK:CBYDF)[TSX:CSW.A] – Current Streak – 7 YRS, Current Yield – 4.58%

Earnings: Wednesday, November 7

What can investors expect: Corby is one of Canada’s largest spirit and wine manufacturers and distributors. Over the past couple of years, the company has raised dividends along with third quarter results.

Corby has a history of raising dividends by mid-single digits. It’s a trend I don’t expect them to deviate from. The company has a payout ratio nearing 100% which limits the company’s ability to raise its dividend. Last year, Corby raised dividends by $0.01 per share. Expect a similar raise this year.

EST DGR

EST INCR

EST NEW DIV

4.55%

$0.01

$0.23

Supremex Inc (OTCPK:SUMXF) TSX:SXP] – Current Streak – 5 YRS, Current Yield – 0.81%

Earnings: Wednesday, November 7

What can investors expect: Supremex is a packaging and specialty products company. The company was added to the All-Star list at the beginning of this year and typically raises along with third quarter results.

Will its inclusion on the All-Star list be one-and-done? Supremex has struggled mightily this year losing 33% of its value. Its yield has skyrocketed to 8.6% and is now close to being in unsustainable territory. The company’s payout ratio is a respectable 61% so its dividend is not in immediate danger. However, its possible that the company skips this year’s dividend raise and keeps its dividend steady.

Should the company decide to raise dividends, I expect it to be no more than its last four raises which were exactly $0.005 per share.

EST DGR

EST INCR

EST NEW DIV

7.69%

$0.005

$0.07

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

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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