Canadian Dividend All-Stars Expected To Announce Dividend Increases - Week Of June 3

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Includes: BMO, CBWBF, LRCDF, NTIOF
by: Mat Litalien
Summary

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

There are no All-Stars scheduled to announce a dividend increase this coming week.

All three banking All-Stars, plus a fourth, came through for investors last week.

As the busy bank earnings season has ended, the next Canadian Dividend All-Star expected to announce a dividend is not for another week. With that in mind, let us recap all the action from last week. Of note, all figures are in Canadian dollars unless otherwise noted.

Last Week’s Results

Last week was another reliable one as all-three banking All-Stars came through with a dividend increase. Likewise, a fourth - Canadian Western Bank (OTCPK:CBWBF) [TSX:CWB] - also raised dividends. Before writing my article last week, the TMX had Canadian Western Bank scheduled to release earnings the week of June 3rd. However, the company released second-quarter results this past week.

EST

DGR

EST

Increase

ACTUAL

DGR

ACTUAL

Increase

NEW

DIV

Bank of Montreal

4.00%

$0.04

$0.03

3.00%

$1.03

National Bank

4.62%

$0.03

$0.03

4.62%

$0.68

Laurentian Bank

1.54%

$0.01

$0.01

1.54%

$0.66

Canadian Western

N/A

N/A

$0.01

3.85%

$0.27

It was an eventuality. Since I first began this weekly series on Seeking Alpha more than two years ago, I have never missed to the downside on my Big Bank estimates. That is until this past week when the Bank of Montreal (BMO) [TSX:BMO] announced a $0.03 per share raise. This was a penny shy of my expectations and lighter than its last quarterly raise.

The bank usually raises by the exact same dollar amount until it resets its growth rate upwards. This time was different. As such, it is likely that BMO will focus on a percentage moving forward, which may lead to varying dollar amounts.

On the flip side, National Bank of Canada (OTCPK:NTIOF) [TSX:NA] and Laurentian Bank of Canada (OTCPK:LRCDF) [TSX:LB] both raised in line with expectations.

National Bank raised dividends by $0.03 per share (4.62%) for a new quarterly rate of $0.68 per share. Along with its dividend, it announced its intentions to repurchase approximately 1.8% of its shares outstanding.

As warned last week, Laurentian Bank is Canada’s cheapest for a reason. It continues to struggle with costs as it works through its digital transformation. On the bright side, shareholders benefit from the highest yield in the sector as they wait for the company's fortunes to shift. The company raised dividends by a penny (1.54%) for a new quarterly rate of $0.66 per share.

Which banks own Canada’s longest dividend growth streak? That distinction belongs to Canadian Western Bank. It owns the fourth-longest dividend growth streak in the country at 26 years.

There was a time when the oil crash almost put a halt to the company’s dividend growth streak. However, the company navigated the crisis well and the bank once again started raising dividends twice a year in 2017.

Canadian Western has a targeted payout ratio of 30%, and as of writing, it is sitting around 37%. This is in line with where it was about a year ago. As such, investors can expect raises of a penny a share until its payout ratio drops to the targeted range.

Disclosure: I am/we are long BMO. 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.