Stocks that are dividend growth champions typically have a fan base of investors that helps keep the share price on the rise.
But there are exceptions from time to time that could present a buying opportunity. Let’s see if we can find some dividend growers with weak share prices among the stocks in the S&P/TSX 60 index of big blue chips with the highest five-year dividend growth rate.
A quick example of how dividend growth helps feed share price growth: Open Text Corp.’s (OTEX-T) five-year dividend growth rate is 48.8 per cent and its five-year cumulative share price gain is 88.4 per cent. But there are several stocks with high dividend growth rates and disappointing returns on the shares. Here are some examples:
- Canadian Natural Resources Ltd. (CNQ-T): The five-year dividend growth rate was 18.4 per cent, while the five-year loss came to 27.4 per cent. The past year has been a tough one, with a loss of 31.4 per cent.
- Enbridge Inc. (ENB-T): Five-year dividend growth of 16.3 per cent and a five-year loss of 17.6 per cent. The shares are down a bit less than 3 per cent in the past year.
- Suncor Energy Inc. (SU-T): The dividend is up 14.5 per cent over the past five years, while the shares fell 11.9 per cent. The 12-month loss is almost 30 per cent.
- Bank of Nova Scotia (BNS-T): Five-year dividend growth comes in at 6.5 per cent, while the one- and five-year share price losses are 8.1 per cent and 1.5 per cent, respectively.
Another potential bargain for dividend growth hunters is Canadian Tire Corp. (CTC.A-T), which has produced five-year dividend growth of 20.8 per cent and a one-year loss of 19 per cent. The shares are up almost 33 per cent over the past five years, however.