Skip to main content
yield hog

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

Finding stocks with hefty yields isn't all that difficult. There are plenty of them. Problem is, many high-yielding companies haven't raised their dividends in years because they've hit the wall growth-wise or they're experiencing financial or competitive challenges.

If you look carefully, though, you can find stocks that offer the best of both worlds: an above-average yield and a growing dividend. As U.S. portfolio manager Lowell Miller writes in The Single Best Investment (a book I highly recommend for dividend investors): "Dividend growth is the critical piece in the puzzle for creating a portfolio that will serve you over the years."

That's where today's column comes in. I've identified four Canadian stocks that yield more than 4 per cent and have a track record of raising their dividend. I expect that all four will continue hiking their payments for years to come.

Consider this list – which is not meant to be exhaustive – as a starting point for further research. Remember that all stocks come with risks so be sure to do your own due diligence before investing in any security. Also keep in mind that if interest rates rise, dividend-paying stocks – particularly those with predictable cash flows like the ones below – could take a hit to their share price.


Close: $51.87, up 14¢

Yield: 4.8 per cent

BCE recently announced third-quarter earnings that topped expectations, driven by strong growth in its wireless, Internet and Fibe TV businesses. In wireless, it added 91,000 postpaid subscribers and the average revenue per user (ARPU) jumped 5.9 per cent as people consumed more data on their smartphones. In Internet and Fibe TV, it added 50,000 and 62,000 customers, respectively. "We believe BCE has the assets and funding in place to continue to deliver mid-single-digit earnings growth, which should support its 5-per-cent dividend growth model over the next couple of years," Desjardins Capital Markets analyst Maher Yaghi said in a note. Look for another dividend increase early in 2015. (BCE owns 15 per cent of The Globe and Mail.)

Enbridge Income Fund Holdings Inc. (ENF-TSX)

Close: $30.20, up 2¢

Yield: 4.6 per cent

Enbridge Income Fund – which has interests in energy pipelines and green power generation – has raised its dividend 11 times in its 12-year history. That includes a 12.1-per-cent increase this week following its $1.76-billion acquisition, from majority owner Enbridge Inc., of a 50-per-cent stake in the U.S. leg of the Alliance Pipeline and units that provide a cash flow stream from the Southern Lights Pipeline. With further such asset "dropdowns" from Enbridge Inc. expected in the future, Enbridge Income Fund offers a combination of "above-average yield, modest growth and below-average risk," RBC Dominion Securities analyst Robert Kwan said in a note. He considers the shares "fairly valued" but expects regular dividend hikes will continue.

Emera Inc. (EMA-TSX)

Close: $37.03, up 8¢

Yield: 4.2 per cent

When a company announces a dividend increase, it's a strong signal of confidence. When it projects dividend increases several years into the future, that's even better. In September, Emera hiked its dividend by 6.9 per cent and established an annual dividend growth target of 6 per cent for the next five years. The electricity producer and distributor – its biggest subsidiary is Nova Scotia Power – has plenty of growth on the horizon, including the Maritime Link that will transmit power from Newfoundland to Nova Scotia, and generation and transmission projects in New England.

Brookfield Renewable Energy Partners LP (BEP.UN-TSX)

Close: $34.75, up 35¢

Yield: 5.1 per cent

Brookfield Renewable's shares slipped after it reported lower-than-expected third-quarter results, hit by weaker-than-average water and wind power generation. But for long-term investors, the drop creates a better entry point for a relatively low-risk stock. With about $19-billion in renewable power assets in North America, South America and Europe – about 85 per cent of its generation is from hydro – the company "provides a good shelter in volatile markets," RBC Dominion Securities analyst Nelson Ng said in a recent note. Most of its portfolio is under long-term contract, with a weighted average length of 18 years, and the company is growing organically and via acquisitions with an objective to raise its dividend at an annual rate of 5 to 9 per cent.

Disclosure: The author personally owns shares of BCE, EMA and BEP.UN, and holds BCE in his Strategy Lab model dividend portfolio.