Canadian Dividend All-Stars Expected To Announce Dividend Increases - Week Of Aug 6

|
Includes: CPXWF, EQGPF, KEYUF, RBA, SAPIF
by: Mat Litalien
Summary

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

Equitable Group surprised with another raise, its fourth straight quarter of dividend growth.

This week, there are three All-Stars expected to raise dividends.

With July behind us, the pace of dividend growth is expected to ramp up and it all begins this week. As Canadians come back from the Civic Holiday weekend, three Canadian Dividend All-Stars are expected to raise dividends in this short week. Before we look at what the coming week has to offer, let’s analyze last week’s results. Of note all figures are in Canadian dollars unless otherwise noted.

Last Week – Results

Last week, the lone All-Star expected to raise dividends, Capital Power Corp (OTCPK:CPXWF)[TSX:CPX], came through as expected. Another All-Star, Equitable Group (OTC:EQGPF)[TSX:EQB] continues to surprise investors by announcing yet another raise.

EST

DGR

EST

Increase

ACTUAL

DGR

ACTUAL

Increase

NEW

DIV

Capital Power

7.28%

$0.0325

$0.0325

7.28%

$0.48

Equitable Group

N/A

N/A

$0.02

6.45%

$0.33

It wasn’t a great quarter for Capital Power as earnings of $0.14 missed by $0.22 and revenue fell 1% year over year. Despite this, the company raised inline with its targeted 7% growth rate. The $0.0325 per share raise leads to a new quarterly dividend of $0.48 per share.

The biggest news of the week was Equitable’s strong showing. The company posted blowout numbers and its stock jumped by almost 15% on earnings. Likewise, it raised dividends by $0.02 per share or 6.45%, the fourth straight quarter in which it announced a dividend increase.

The alternative lender also increased its targeted annual dividend growth ratio to 20%, up from 10% previously. Back in January, I explained how Equitable Group was a hidden gem, trading at a significant discount to its peers and historical averages. Since then, the company’s stock has gained 41% touching record highs.

It is quickly become one of the best dividend growth stocks in the country.

Expected Increases

Keyera Corp (OTC:KEYUF)[TSX:KEY]

  • Current Streak: 8 years
  • Current Yield: 5.37%
  • Earnings: Tuesday, Aug 6

What can investors expect: Keyera is a midstream oil & gas company with a questionable dividend growth streak. Although it has paid out more every year over eight straight years, its pattern is unreliable.

The company pays out its dividend monthly. Last year, it kept its dividend steady for 15 straight months before announcing a dividend raise last August. Now that it has maintained the same dividend for a year, will it announce a raise?

Keyera has a declining growth rate, with five and three-year averages of 8.9% and 6.9%. Last August, the company raised dividends by 7.14%, but on an annualized basis it only represented about 5% growth. Should the company announce a dividend raise, I expect no more than a penny raise which is inline with last year’s bump.

EST DGR

EST INCR

EST NEW DIV

6.67%

$0.01

$0.16

Ritchie Bros. Auctioneers (RBA)[TSX:RBA]

  • Current Streak: 16 years
  • Current Yield: 2.02%
  • Earnings: Thursday, Aug 8

What can investors expect: Ritchie Bros is a dual-listed company and one of North America’s leading auction companies. Despite its lengthy growth streak, Ritchie Bros almost lost its All-Star status last year.

Before raising its dividends last August, it had kept its dividend steady for eight consecutive quarters. Of note, although it did not raise dividends for more than a year, last year’s announcement came along with second quarter results. This is consistent with the company’s historical announcements.

Given this, should a raise be announced this year, it will likely come next week. The last three dividend raises were exactly a penny per share. Given the expectations for declining YOY earnings, I estimate that the dividend raise should be around the same this year.

EST DGR

EST INCR

EST NEW DIV

5.56%

$0.01

$0.19

Saputo (OTCPK:SAPIF)[TSX:SAP]

  • Current Streak: 19 years
  • Current Yield: 1.65%
  • Earnings: Thursday, Aug 8

What can investors expect: Saputo produces, markets and distributes dairy products which include cheese, fluid milk, extended shelf-life milk and cream products, cultured products and dairy ingredients. Sitting just outside of the top 10, its 19-year dividend growth streak is one of the longest in the country.

Saputo is as reliable as it gets. The company has consistently raised dividends along with first quarter earnings in early August.

Unfortunately, Saputo’s dividend growth rate has been slowing. Its five-year average is approximately 8%, while its three-year average dips to 7%. Last year, the company announced a lower than expected 3.12% raise.

Will the downtrend continue? The good news is that Saputo’s dividend is safe with a low payout ratio of approximately 34%. Unfortunately, the company has been struggling and last quarter’s poor results send its stock crashing by double-digits.

The company is one of those rare stocks that prioritizes both acquisitions and the dividend. Over the past couple of years, it has completed more than $3 billion in acquisitions. So long as the company is in aggressive growth mode, I expect dividend growth to be muted.

EST DGR

EST INCR

EST NEW DIV

3.03%

$0.005

$0.17

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.

Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.