Hungry for dividends? Big blue chips may not be the answer

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Have any of your dividend growth stocks run out of juice lately?

It's happening with a few of the big blue chips in the S&P/TSX 60 index. Take Shaw Communications, for example. Shaw's an appealing stock for income investors because it pays dividends monthly. It was also a top dividend growth stock for many years, but not lately. Globeinvestor.com does not show a dividend increase in the past year, while noting the five-year rate is an average annual 5.2 per cent. Other dividend growth stocks that show no dividend growth over the past 12 months include Rogers Communications, Suncor Energy and Sun Life Financial.

Total return investors – they're after a blended return of share price appreciation and dividend yield – may not care about slowing dividend growth. Rogers B shares had a total return to Aug. 30 of 29 per cent and a five-year annualized total return of 11.5 per cent. But if you judge a stock by how much dividend growth it offers, Rogers bows lately to competitors like BCE and Telus.

While the Rogers dividend is unchanged over the past 12 months according to Globeinvestor, BCE's quarterly payout is up 5 per cent and Telus's dividend is up 4.8 per cent. Rogers' 6.2-per-cent five-year dividend growth rate comes in right between BCE, at 5.7 per cent, and Telus, at 9.9 per cent. You may choose to be patient with Rogers in hopes of a dividend growth resurgence, but don't let things slide indefinitely. Monitor quarterly earnings reports to see what management is saying about the dividend. Earlier this year, for example, Rogers said it would emphasize debt reduction over dividend growth. That's evidently good news for the share price, but not for investors hungering for more dividends.

Suncor's lack of dividend growth is understandable amid the current slump in oil prices. As for Sun Life, it's a tepid dividend grower at best in recent years with a compound average annual growth rate of 2.4 per cent. That's actually not bad when you consider that inflation over the past five years has averaged just 1.4 per cent. Still, the lack of recent growth is a reminder of the need to stay alert with dividend growth stocks. Buy and hold them, but don't be complacent.