Today, I have ten dividend increases that I tracked over the last week. The count for this year is up to 55 companies with dividend increases. The ratio of dividend increases to decreases on the TSX is at least 10 to 1 so far this year if not more, although I haven’t been tracking every dividend cut.
In addition to the ten, I have added at the bottom of the table the increase from First National (FN.TO) a few weeks ago. I consider First National to be a top pick, so much so that it’s on my own portfolio and I wouldn’t sell even though I’m up over 50% in a year. The reason is clear: FN.TO has a fantastic yield, P/E, payout ratio and three dividend increases in the last 18 months.
|Ticker||Name||Dividend Increase||New Yield||P/E||Payout||1 Year Return|
|INE.TO||Innergex Renewable Inc||3.5%||6.0%||23||138.5%||2.1%|
|CNQ.TO||Cdn Natural Resources||12.5%||2.2%||21||44.4%||31.3%|
|AKT.A||AKITA Drilling Ltd||6.3%||2.1%||11||22.5%||45.3%|
|HPS.A||Hammond Power Solns||20.0%||3.2%||11||36.2%||-23.0%|
|RPI.UN||Richards Packaging Fund||12.7%||7.6%||25||189.3%||35.3%|
|FN.TO||First National Financial||7.1%||6.0%||9||54.5%||53.6%|
About The Increases
Innergex Renewable (TSE: INE) is a smaller utility company with renewable power assets in North America. I’ve been tracking them for a while due to their higher yield. They are starting to turn a net profit, so while still expensive, the small dividend increase is perhaps a sign that they are becoming a better investment.
Canadian REIT (TSE: REF) is on my radar once again. A true dividend achiever, they increased their dividend twice last year and now have their first increase this year. They now have 13 consecutive years of annual dividend increases. Canadian REIT is a top REIT pick for me. For non-REIT real estate companies, I continue to hold First Capital Realty (FCR.TO) and Killam Properites (KMP.TO).
Gibson Energy (TSE: GEI), a North American energy company, has another dividend increase. The yield is good as are the increases, but the third factor in my initial screening process – the dividend payout ratio – is a little high for me.
Canadian Natural Resources (TSE: CNQ) has its second dividend increase in as many quarters. In fact, their dividend is up 115% in the last two years. The stock, which had been stuck around $30 for a long time, is now doing very well. My current pick in this area remains Husky Energy (TSE: HSE). All energy companies are doing well with energy prices where they are.
SNC-Lavalin (TSE: SNC) has a steady dividend increase. I haven’t considered them for an investment because revenues and earnings have been dropping along with the stock price. With a forward P/E of 20 and revenue down over 10% last quarter, I am not really looking at them.
Linamar Corp (TSE: LNR) is soaring, similar to Magna International (TSE: MG). My auto sector stock is Autocanada (TSE: ACQ), who should be reporting in the next week or so. The yield on Linamar, similar to Magna, is very low. I believe this is reflective that they could easily cut the dividend in a recession so they don’t want to commit too much money in case it happens.
AKITA Drilling (TSE: AKT.A) is an interesting oil services company. They have heavy inside ownership and very little debt. They’ve survived the low oil prices in North America quite easily for this reason while others were suffering. Of course, my oil services pick, High Arctic Energy (HWO.TO), also has very little debt. HWO reports annual results soon too.
Hammond Power Solutions (TSE: HPS.A), which has the worst 1 year return in the list, has been hit hard. But they have a good P/E on the screen, and are actually now a true dividend achiever for next year – this is the 5th annual increase since 2010. The dividend increases have been healthy in that time, rising from 10 cents to 24 cents – a 140% increase over 5 years.
ZCL Composites (TSE: ZCL) is another interesting company. I believe I mentioned them last year sometime as they have two dividend increases in the last 12 months. They might be worth investigating further as well.
Richard Packaging Income Fund (RPI.UN) is a holdover from the income trust days. While the yield is good (7.6%), and they have an increase, which indicates management confidence, the payout ratio is just quite high. I’d have to take a much closer look to see if it made sense. Investors think so though, with a 35% return in the last year.
I’m waiting for a few more annual reports from the companies in my portfolios, but so far I don’t see any major concerns that would lead me to sell shares. I like to keep an eye on them though in case I see a really good opportunity. If one comes, I’ll probably have to sell something if I want to get involved. I did take a look at the results of the last two companies I sold shares in – Wajax (WJX.TO) and Bird Construction (BDT.TO), While the companies are doing okay, I haven’t seen anything to make me want to get back in again, although both are up 4-5% since I sold.
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