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.

For many investors, the biggest obstacle to investing in stocks is fear of the unknown.

What if the market crashes? What if the company's earnings miss expectations? What if the economy implodes?

But one aspect of investing is actually quite predictable: dividends.

If you own a solid dividend-paying company, regardless of what happens to the share price you can be virtually certain you'll get paid a chunk of cash every quarter (or every month in some cases). Watching that money roll in makes it easier to deal with the inevitable ups and downs of the market.

But it gets better. Some companies are so predictable that it's possible to know, not only when the next payment will arrive, but when the company will raise its dividend.

For me, a dividend that grows steadily – along with the company's revenue and earnings – is the hallmark of a great investment.

With that in mind, I put together a list of six companies that, based on historical patterns, will almost certainly raise their dividends in the next four months. They'd better, because I own all of these stocks personally (and all but Brookfield Infrastructure and Wal-Mart are in my Strategy Lab model dividend portfolio).

Brookfield Infrastructure Partners (BIP.UN-TSX)

Yield: 4.3 per cent

Brookfield owns a global portfolio of long-life infrastructure assets – utilities, toll roads, pipelines, railways and ports – whose growing cash flows have supported double-digit distribution increases in recent years. Brookfield, which typically raises its distribution in February, said in its third-quarter results that its payout ratio of 59 per cent is "conservative versus its long-term target range of 60 to 70 per cent" – a strong hint that another increase is coming. Keep in mind that, as a limited partnership, Brookfield's distributions are taxed differently than dividends.

Coca-Cola Co. (KO-NYSE)

Yield: 2.8 per cent

Last February, Coca-Cola increased its dividend by 10 per cent – marking the soft drink giant's 51st consecutive year of increases. That's longer than I've been alive (not much longer, mind you). Coke is a company that knows how to share the wealth: It returned $9.1-billion to shareholders in 2012, comprising $4.6-billion (U.S.) in dividends and $4.5-billion in share buybacks. And there's more where that came from: The company is expected to hike its dividend by about 7 per cent in February, according to Bloomberg.

Enbridge Inc. (ENB-TSX)

Yield: 2.8 per cent

Few companies are as specific about their dividend growth plans as Enbridge. In October, the pipeline giant said it expects to increase its dividend by 10 to 12 per cent annually from 2013 to 2017 – in line with growth in earnings per share. With about $26-billion of commercially secured capital projects – and another $10-billion in unsecured investments – there's no shortage of growth ahead. Enbridge usually announces a dividend hike in early December, and Bloomberg estimates the coming increase will be about 10 per cent.

Fortis Inc. (FTS-TSX)

Yield: 3.9 per cent

Fortis is Canada's largest investor-owned utility, with about 2.4 million gas and electricity customers. Regulated operations account for 90 per cent of its assets, providing stable returns, with non-utilities – including real estate and hydro generation – making up the rest. Fortis typically raises its dividend in early December, and while the recent increases have been small – averaging about 3 per cent annually over the past three years – some analysts predict growth will accelerate thanks to $6-billion in new capital investments.

Canadian Utilities Ltd. (CU-TSX)

Yield: 2.6 per cent

Don't let Canadian Utilities' modest yield fool you: The company has been a dividend growth machine, raising its payment at an annual rate of about 8 per cent over the past five years. And it's expected to boost the dividend by a similar amount in January. Regulated utilities account for the bulk of earnings, which are poised to grow on the strength of a capital spending plan that includes $6-billion in electricity transmission investments in Alberta. I wouldn't be shocked – get it? – to see the dividend grow for years to come.

Wal-Mart Stores Inc. (WMT-NYSE)

Yield: 2.4 per cent

Wal-Mart is another company that, despite having a modest yield, has delivered solid returns for shareholders. Over the past 10 years – even as people wondered if the world's biggest retailer was running out of room to grow – its dividend rose more than fivefold. That included an increase of 18 per cent last year – one of the biggest in the company's history. Look for another increase in February, right around the time you're paying off those holiday shopping bills.

Editor's note: In the newspaper and an earlier online version, the Coca-Cola item incorrectly stated the value of share buybacks in 2012 as $4.5-million. The figure should actually be $4.5-billion.