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Enbridge predicts annual earnings and dividend growth of 12 per cent over the next five years. Expect to hear good news in December. (DAN RIEDLHUBER/REUTERS)
Enbridge predicts annual earnings and dividend growth of 12 per cent over the next five years. Expect to hear good news in December. (DAN RIEDLHUBER/REUTERS)

Strategy Lab

Six stocks that will raise their dividends in the next five months Add to ...

John Heinzl is the dividend investor for Globe Investor’s Strategy Lab. Follow his contributions here. You can see his model portfolio here.

 

One of the great things about dividends is that they’re predictable. I don’t know where stock prices are going from one minute to the next, but I do know, to the day, when dividends will arrive in my account.

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In fact, many companies are so predictable that it’s possible not only to know when they’ll pay dividends, but also when they’ll raise them. In some cases, investors can even get a good idea of the size of the increase that’s coming.

For today’s column, I dusted off my Yield Hog crystal ball and came up with six companies that will almost certainly raise their dividends in the next five months. I’ve also provided, where available, Bloomberg’s estimate of the size of the expected increase.

The following companies have such long track records of dividend growth that it would take something exceptional – another financial crisis or a major geopolitical conflict, for example – to bring the string of hikes to an end.

There are always risks with investing in stocks, of course, but I don’t think it will come to that.

That said, be sure to do your own research before investing. Disclosure: I own all six stocks personally, and the first five are in my Strategy Lab model dividend portfolio.

Enbridge

(ENB-TSX)

Yield: 2.9%

Five-year annualized dividend growth: 12.5 per cent

You won’t find many companies whose profits and dividends are as predictable as those of Enbridge Inc. With $30-billion of “secured” and “highly certain” projects on the way, the pipeline operator is predicting earnings and dividend growth of about 12 per cent annually over the next five years. Enbridge typically announces dividend increases in early December, and we don’t expect this year to be any different.

Fortis

(FTS-TSX)

Yield:3.6%

Five-year annualized dividend growth: 8.3 per cent

As Canada’s largest investor-owned utility, Fortis Inc. distributes electricity and gas to more than two million customers. Its regulated utilities – it also has unregulated power generation and commercial real estate holdings – provide predictable cash flows, which have allowed the company to raise dividends for years. Fortis usually increases its dividend in mid-December, and Bloomberg estimates this year’s increase will be 3.3 per cent.

Canadian Utilities

(CU-TSX)

Yield: 2.7%

Five-year annualized dividend growth: 7.1 per cent

The assets of this energy infrastructure company span pipelines, natural gas and electricity transmission and distribution, power generation, natural gas gathering and storage, and modular structures and logistics. Just as customers count on Canadian Utilities Ltd. to heat and light their homes, investors count on it to deliver dividend increases every January – something it’s done for 20 consecutive years. Bloomberg predicts an increase of 9 per cent on or about Jan. 14.

TransCanada Corp.

(TRP-TSX)

Yield: 4.1%

Five-year annualized dividend growth: 5.4 per cent

In recent years, pipeline operator and power producer TransCanada Corp. has been a model of dividend growth consistency. The past six annual increases have all been exactly 2 cents each on a quarterly basis, and all have been announced in February or – in a couple of cases – late January. You can be pretty sure the dividend is going up again in the New Year, probably by a similar amount.

Coca-Cola

(KO-NYSE)

Yield: 2.8%

Five-year annualized dividend growth: 8.5 per cent

Last January marked a milestone for Coca-Cola Co. – the soft drink giant’s 50th consecutive annual dividend increase. Coke is such a cash machine that it returned $8.6-billion (U.S.) to shareholders in 2011 – $4.3-billion in dividends and $4.3-billion in share repurchases. The next dividend hike is expected on or about Feb. 14, and will be 9.8 per cent, Bloomberg estimates. I’ll drink to that.

Wal-Mart

(WMT-NYSE)

Yield: 2.1%

Five-year annualized dividend growth: 13.5 per cent

Wal-Mart Stores Inc. shareholders could have used an extra-large shopping cart to take home all the cash the retailer has handed them. The company has raised its dividend every year since 1974, and in fiscal 2012 it returned $11.3-billion to shareholders through dividends and stock buybacks. With the core U.S. business performing well and international expansion driving growth, Bloomberg estimates that Wal-Mart will hikes its dividend by 10.7 per cent on or about Feb. 28.

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