CI Financial Corp., which last raised its dividend in March, could announce another payout increase as early as next February, its chief executive officer said Tuesday.
“Certainly the stage has been set for a dividend increase,” Stephen MacPhail told analysts during a third-quarter conference after the markets closed.
“We are just probably erring on the side of caution right now. ...We have got the U.S. election, and we are in the middle of that. They still have to address that fiscal cliff at the end of the year.”
Unless the U.S. Congress can reach a deal after the election, the so-called fiscal cliff of about $600-billion (U.S.) in government spending cuts and higher taxes to kick in next year could push the U.S. and global economy into recession.
The hesitation in raising the dividend immediately, which had been hotly debated during a CI board meeting, is not related to cash problems, Mr. MacPhail said. “From a cash flow earnings perspective, we are in a good position to do it.
“If we continue to see positive growth in our assets, then the stage is certainly set where we should be able to reward investors with a dividend increase come February.”
CI currently pays an annual dividend of 96 cents (Canadian) a share.
Toronto-based CI reported that rising stock markets, cost controls and improved fund sales helped the wealth management firm to report a marginally higher third-quarter profit over a year ago.
Net fund sales, which include retail and institutional assets, totalled $358-million in the latest quarter against net redemptions of $91-million in the same period a year ago. For the first nine months of this year, net sales stand at $249-million.
Mr. MacPhail described the asset increase in the third quarter and in the month of October as “encouraging.” Financial markets improved on the hope that quantitative easing, an open-ended asset purchase program launched by the U.S. Federal Reserve Board, would stimulate the economy. The lack of any significant deterioration in the European debt crisis also helped reduce volatility.
Third-quarter profit rose to $91.3-million, or 32 cents a share, from $90.8-million, or 32 cents a share, a year earlier. Total revenue, however, dipped to $361.5-million from $367.4-million.
CI’s assets under management for the quarter ended Sept. 30 climbed 3 per cent to $73.9-billion from a year earlier. While the increase in assets has boosted CI’s earnings, the trend toward lower-fee fixed-income products has offset the gains of the past year, the firm said in a statement to shareholders.
Revenue at its Assante financial planning unit fell slightly year over year even as administered assets held fairly steady. Lower levels of sales commissions on both fund and insurance products contributed to the lower top line.