Telus recently marked its 18th consecutive semi-annual dividend hike since 2010.Gloria Nieto/The Globe and Mail
Christmas has come early for dividend investors.
As third-quarter earnings rolled in, many companies – including several in my model Yield Hog Dividend Growth Portfolio – have taken the opportunity to hike their payments to shareholders. I welcome these “gifts," not only because they put more cash in my pocket but because they send a strong signal about a company’s financial health.
Today, we’ll look at five companies that increased their dividends in recent weeks. Investors are advised to do further research before investing in these or any securities.
Telus Corp. (T)
Price: $46.20
Yield: 4.7 per cent
Telus is coming off a solid third quarter in which it added a net 109,000 postpaid wireless subscribers. Thanks to its strong customer service and high-quality wireless network, its postpaid turnover or “churn” rate continued to lead the industry at 0.87 per cent. Where Telus really excelled, however, was in its wireline division where it added a better-than-expected 18,000 Telus TV and 36,000 high-speed internet customers, validating its fibre-to-the-home strategy. Underlining management’s confidence that growth will continue, the company hiked its quarterly dividend to 54.5 cents a share – up 3.8 per cent from the previous quarter and 7.9 per cent from a year earlier – to an annualized $2.18. It marked Telus’s 18th consecutive semi-annual dividend increase since 2010 – and it almost certainly won’t be the last.
CT REIT (CRT.UN)
Price: $12.51
Yield: 6.1 per cent
CT Real Estate Investment Trust won’t make you rich overnight. But if you’re looking for steady cash flow that grows modestly, you’ve come to the right place. Since it was spun out as a publicly traded company in 2013, the real estate arm of retailer Canadian Tire Corp. Ltd. has hiked its monthly distribution five times. That includes a 4-per-cent increase, to 75.7 cents on an annual basis, that the REIT announced this month as it reported growth of 5.2 per cent in adjusted funds from operations and unveiled six new property investments totalling $72-million. Dividend hikes run in the family: Parent Canadian Tire – which is CT REIT’s largest tenant and controlling unitholder – raised its payout by 15.3 per cent this month after reporting strong third-quarter results, including consolidated same-store sales growth of 2.5 per cent across its Canadian Tire, FGL sporting goods and Mark’s clothing chains.
Manulife Financial Corp. (MFC)
Price: $22.33
Yield: 4.5 per cent
Manulife’s shares plunged in October after U.S. short-seller Carson Block took aim at the insurance giant. But the shares have been rebounding, helped by solid third-quarter results, measures to de-risk the business and – my favourite part – Manulife’s decision to boost its dividend by 14 per cent to $1 on an annual basis. CIBC World Markets analyst Paul Holden said the stock offers a compelling valuation, as it trades at just 1.1 times book value and eight times estimated 2019 earnings. As for the lawsuit that sparked Mr. Block’s short attack – the Saskatchewan case focuses on the fine print of a 1997 universal life insurance policy – given a recent legislative update by the provincial regulator that was favourable to Manulife, “we think there is a strong possibility the case is dismissed by end of 2018,” Mr. Holden said.
InterRent REIT (IIP.UN)
Price: $12.88
Yield: 2.3 per cent
Since I first profiled apartment owner InterRent Real Estate Investment Trust in August, 2017, the units have posted a total return, including distributions, of about 72 per cent. With more than 9,000 suites in Ontario and Quebec, the growth-oriented REIT has also raised its monthly distribution twice in that time, including a 7.4-per-cent increase in October, to 29 cents annually, which marked its seventh consecutive annual increase. InterRent’s formula is simple: It acquires dated properties and invests in suite improvements and other upgrades that allow it to charge incoming tenants higher rents (or apply for increases above rent-control guidelines for existing tenants). “Rent growth is a powerful tool,” said Desjardins Securities analyst Michael Markidis, who expects that “strong fundamentals in [InterRent’s] core markets should remain a tailwind through 2019.” He has a 12-month target price of $13.50 – in line with the median projection of 13 analysts surveyed by Thomson Reuters – indicating that InterRent’s units could have more room to run even after their big gains.
Boralex Inc. (BLX)
Price: $17.49
Yield: 3.8 per cent
Shares of renewable power producer Boralex have lost about one-quarter of their value this year, hurt by weaker-than-expected hydro generation in North America and below-average wind speeds in France, where the company is the largest independent producer of onshore wind power. But despite Boralex’s third-quarter results missing expectations, Raymond James analyst David Quezada rates the stock a “strong buy," citing the company’s large development pipeline, attractive valuation, strong expected growth in EBITDA (earnings before interest, taxes, depreciation and amortization) and the likelihood – based on historical patterns – that wind resources in France will return to long-term averages. Underlining Boralex’s own confidence, the company recently hiked its dividend to 16.5 cents a quarter or 66 cents on an annualized basis – its second increase this year.
Disclosure: The author owns units of CRT.UN and shares of T and MFC personally and in his model Yield Hog Dividend Growth Portfolio. He owns IIP.UN units personally.
John Heinzl