Canadian Dividend All-Stars Set To Announce Dividend Increases In The Week Of March 11

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Includes: CNQ, EGHSF, PRBZF, STLJF
by: Mat Litalien
Summary

Canadian Dividend All-Stars are companies that have raised dividends for at least five consecutive years.

Enghouse Systems and Canadian Natural both raised dividends last week.

This week, there are two All-Stars expected to announce a dividend bump.

We are now into the last month of the quarter and earnings are tapering off. This week, there are two Canadian Dividend All-Stars scheduled to announce a dividend increase. What were last week's results? Let’s take a look. Of note, all figures are in Canadian dollars unless otherwise noted.

LAST WEEK – RESULTS

Last week, there were two All-Stars scheduled to announce a dividend increase. The good news? Both Enghouse Systems Ltd. (OTCPK:EGHSF) [TSX:ENGH] and Canadian Natural Resources (CNQ) [TSX:CNQ] came through for investors.

EST

DGR

EST

Increase

ACTUAL

DGR

ACTUAL

Increase

NEW

DIV

Enghouse Systems

22.22%

$0.02

$0.02

22.22%

$0.11

Canadian Natural

19.40%

$0.065

$0.04

11.94%

$0.375

Let’s start with Enghouse Systems. Last week, I correctly estimated that the company would double its dividend raise from a penny to $0.02 per share based on its most recent share split. What I failed at was the math involved. A $0.02 per share raise is equal to a 22.22% bump, not 11.11%. In effect, I forgot to double the rate on top of the dollar amount and halve the payout amount before the new raise. The company’s new quarterly dividend per share is now $0.11 per share.

Canadian Natural Resources also came through with a double-digit raise (11.94%), although much lower than forecasted. I did warn that the company’s dividend raise was difficult to predict given its volatile history. The lower raise was not surprising given results were significantly impacted by the lower prices of Canadian crude. The company’s new quarterly dividend is $0.375 per share.

Expected Dividend Raises

Stella Jones (OTC:STLJF)[TSX:SJ]

  • Current Streak: 14 years
  • Current Yield: 1.89%
  • Earnings: Friday, March 15

What can investors expect: Stella Jones, a producer of pressure treated lumber products, is one of the more reliable All-Stars. Like clockwork, it announces its dividend raise along with fourth-quarter and year-end results.

Last year, Stella Jones failed to raise dividends by double digits for the first time since its streak began. Its last couple raises were exactly $0.01 per share which has led to a declining growth rate. However, I see them bumping that up this time around.

The company has a low payout ratio (high teens) and is growing earnings by the low to mid-teens on average through 2020. My target is aggressive, and it would not surprise me in the least if Stella Jones continued its penny a share raise.

EST DGR

EST INCR

EST NEW DIV

16.67%

$0.02

$0.14

Premium Brands Holdings (OTC:PRBZF) [TSX:PBH]

  • Current Streak: 6 years
  • Current Yield: 2.59%
  • Earnings: Thursday, March 14

What can investors expect: On Thursday, Premium Brands Holdings releases fourth-quarter and year-end results. Since its six-year streak began, it has consistently raised dividends along with these results in early March.

Unlike the majority of All-Stars, Premium Brands is one of the few that has a rising dividend growth rate. Last year’s 13.10% raise was the highest since the beginning of its dividend growth streak. Thanks to the company’s impressive growth profile, its payout ratio as a percentage of free cash flow has been on the decline.

The company is expected to grow earnings by an average of 28% over the next couple of years. As such, expect continued double-digit dividend growth.

My estimate may ultimately prove to be conservative, but I am mindful that the company has a growth through acquisition strategy. This means that it must balance returning cash to shareholders and putting cash to work through additional acquisitions.

EST DGR

EST INCR

EST NEW DIV

11.58%

$0.055

$0.53

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.