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Number Cruncher

Delving deeply into dividend growth rates Add to ...

What are we looking for?

Stocks that are most likely to raise dividends using Bloomberg's dividend projection formula.

More about today's screen

We do this screen every couple of quarters. Bloomberg has a formula that it uses to try to predict annualized dividend growth rates for the next three years.

The formula takes into account such factors as company guidance, industry analysis, historical trends and analyst estimates. It also factors in some esoteric measures, such as option market implied dividends and historical regression analysis of fundamentals compared with dividends.

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Finally, Bloomberg calculates something called the Bloomberg Dividend Directional Thermometer (DDT) score.

It's a reading from -100 to +100 using various fundamental, credit rating and company health data.

A negative score indicates a company might cut its dividend, while a positive score notes the potential for an increase. A score must be above +50 to be conclusive about a potential dividend hike.

A high DDT score doesn't always mean a big dividend increase is coming, however.

For instance, a company might have a high DDT score but indicate it is about to execute a large share buyback, which would lower its projected dividend increase rate. That's why Bloomberg takes into account more than just the DDT score when making its projections.

We'll sort stocks in the S&P/TSX composite by the highest projected dividend growth rate by Bloomberg.

What did we find out?

A lot of names at the top of the list are resources companies and several had to cut their dividends in the last five years.

None of the Big Five Canadian banks appear on this list, as their dividend growth is predicted in the single-digit per cent annualized for the next three years. The highest amongst the banks is Toronto-Dominion Bank at 8.5 per cent annualized growth.

Stock's mentioned in this screen include Teck Resources , Magna International , Goldcorp , Cash Store C, Total Energy , Hudbay Minerals , Innergex Renewables , Dundee Wealth , Pan American Silver , Yamana Gold , Linamar Corp. , Fairfax Financial , First Quantum Minerals , Cogeco Cable , Niko Resources , West Fraser Timber , Eldorado Gold , Tim Hortons , Westshore Terminals , Corus Entertainment , Suncor Energy , Alamos Gold , Canadian Tire , Centerra Gold , Silvercorp Metal , AgnicoEagle Mines , Canadian Natural Resources , Manulife , Cameco Corp. and Major Drilling .

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