Seeking Alpha

Canadian Dividend All-Stars Expected To Announce Dividend Increases

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Includes: BNS, CBWBF, FTS, SISXF
by: Mat Litalien
Summary

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

Two All-Stars surprised with dividend raises last week.

There are no more All-Stars expected to raise dividends in September.

September is typically one of the slowest months for Canadian Dividend All Stars. Last year, there was only one All-Star that raised dividends in September. Last week, however, we saw two Canadian Dividend All-Stars raise dividends. Although the dividend raises themselves were no surprise, it was the timing that was unexpected.

Looking forward, there are no more All Stars expected to announce a dividend raise until October. With that in mind, let's recap what has transpired over the past few weeks. Of note, all figures are in Canadian dollars unless otherwise noted.

Last Week - Results

A few weeks ago, two of Canada's banking All-Stars, Bank of Nova Scotia (BNS) [TSX:BNS] and Canadian Western Bank (OTCPK:CBWBF) [TSX:CWB] were expected to raise dividends. They did not disappoint.

As alluded to earlier, this past week also saw Savaria Corp. (OTCPK:SISXF) [TSX:SIS] and Fortis Inc. (FTS) [FTS] extend their dividend growth streaks.

EST

DGR

EST

Increase

ACTUAL

DGR

ACTUAL

Increase

NEW

DIV

Bank of Nova Scotia

3.45%

$0.03

$0.03

3.45%

$0.90

Canadian Western

3.70%

$0.01

$0.01

3.70%

$0.28

Savaria

N/A

N/A

$0.0033

9.43%

$0.03883

Fortis

N/A

N/A

$0.0275

6.11%

$0.4775

Let's start with the banks who both came through with dividend raises in line with expectations.

The Bank of Nova Scotia had last raised dividends by $0.02 but my instinct was correct - it reverted to $0.03 per share. Combined with its raise from earlier this year, the bank has raised dividends by 5.88% in 2019.

For its part, Canadian Western shook off the oil patch woes and extended its industry-leading dividend growth streak to 28 years. The company raised dividends by a penny for a new quarterly rate of $0.28 per share.

Savaria, a personal mobility company, pays out its dividend monthly. I have written about this before, but the timing of dividend announcements for monthly dividend payers are at times, very difficult to predict. I had Savaria on my radar, but not until the end of the month. Last year, the company raised dividends near the end of September.

Savaria has a modest seven-year dividend growth streak and its 9.34% raise was significantly lower than the 30% it has averaged over the past five years. The lower rate is not surprising. The company has made several large acquisitions and has had some operational issues integrating its latest purchase. This has led to lower margins and has been a hit to profitability.

It is important to also note that the company yields a decent 3.77%. With a yield that high, I would not expect a 30%+ dividend growth rate. A rate around 10% is probably what investors can expect over the next few years.

Finally, one of the best dividend growth stocks in the country also announced its yearly raise this past week. The announcement was a surprise. Fortis has typically raised dividends along with its investor day in mid-October. At least, that has been the norm over the past few years.

This year, however, Fortis announced its raise in early September. Fortis's 6.11% increase extends its dividend growth streak to 46 years. This is the second-longest dividend growth streak in the country.

There are rarely any surprises with Fortis. As a long-time shareholder, I have been following the company for some time. It has for the most part always had a dividend growth target, a target it has never missed. Through 2022, the company expects to grow dividends by an average of 6% annually.

Don't expect any more or any less. Fortis is as reliable and consistent as it gets.

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