On Monday, National Bank released its updated 2019 Dividend All-Stars portfolio. In early February, the company published its recommended list of 24 dividend securities to own in 2019. Over the past six months, the portfolio has performed relatively in-line with the S&P/TSX Composite Index. The Dividend All-Stars portfolio has delivered a total return (including the yield) of 4.2 per cent compared to a total return of 4.6 per cent reported by the S&P/TSX Composite Index.
Since the initial report was published, four securities have been removed from the portfolio while three stocks were added.
Looking at the deletions, Fiera Capital Corp. (FSZ-T) was removed from the portfolio due to a pause in its dividend increases. On the second quarter earnings call held on Aug. 14, chief financial officer Lucas Pontillo stated, “We announced that the current annualized dividend rate of 84 cents per share would remain unchanged until further notice.”
High Arctic Energy Services Inc. (HWO-T) was also removed from the portfolio due to “political uncertainty in Papua New Guinea.” Pattern Energy Group Inc. (PEGI-T) was deleted from the portfolio given the stock’s strong performance with the share price rallying over 20 per cent over the past six months. It was also noted that volatility in the share price has increased due to speculation that the company may be acquired. Lastly, Transcontinental Inc. (TCL-A-T) was removed from the All-Stars portfolio after the analyst downgraded his recommendation to a ‘sector perform.’
Turning to the three stock additions, Toronto-based Cineplex Inc. (CGX-T) is a new entry. Cineplex is Canada’s largest theatre operator with 165 theatres and 1,695 screens as of June 30. For the first half of 2019, the company noted that it had a box office market share of 76 per cent. Analyst Adam Shine noted that the second quarter of 2019, “Marked the first time since Q4/17 [fourth quarter of 2017] that Cineplex was able to produce revenue growth across each of its units.” Mr. Shine believes the stock price will rebound and has a target price of $29.
Intertape Polymer Group Inc. (ITP-T) was also added to the portfolio. Headquartered in Montréal and Sarasota, Fla., the company manufacturers products such as tapes (e.g. packaging sealing), protective packaging (e.g. bubble cushioning) and films for its industrial and packaging distributor customers. Intertape has 22 facilities across North America, three in Asia, and one in Europe. Analyst Zachary Evershed has a target price of $22.50 and highlights the company’s strong free cash flow, “We see $95-105 million in free cash flow (pre-working capital) handily covering the 4.3 per cent dividend yield at a 30-35 per cent payout ratio.”
Pason Systems Inc. (PSI-T) was the final addition to the All-Stars portfolio. Analyst Greg Colman has a $21 target price on this energy services stock. Mr. Colman anticipates, “Pason generating over $100-million in free cash flow in 2020, resulting in an estimated [roughly] 60 per cent payout ratio, which we view as sustainable in the long run.” He added, “PSI is well positioned to weather substantial sector volatility with zero debt and an enviable cash balance ($189-million exiting Q2), which can be leaned on to support the dividend should industry conditions worsen substantially (which management has been comfortable with doing historically).”
Listed below in alphabetical order are the 23 stocks in National Bank’s updated All-Stars portfolio.
1. AG Growth International (AFN-T). Analyst Greg Colman has a target price set of $63. Yield 5.6 per cent.
2. Brookfield Infrastructure Partners LP (BIP-UN-T). This leading global infrastructure company is a high-yield pick by analyst Rupert Merer. He has maintained his target price at US$45.50. Yield 4.3 per cent.
3. BSR Real Estate Investment Trust (HOM-UN-T). The REIT owns a portfolio of multi-family residential properties across U.S. states in the Sunbelt region. Analyst Matt Kornack has a target price of US$12.50. Yield 4.5 per cent.
4. Capital Power Corp. (CPX-T). Headquartered in Edmonton, this North American power producer is recommended by analyst Patrick Kenny who has a target price of $39. Yield 6.3 per cent.
5. Chemtrade Logistics Income Fund (CHE-UN-T). Toronto-based Chemtrade is a leading North America’s supplier of industrial chemicals. Analyst Endri Leno has a target price of $11. Yield 11.6 per cent.
6. Chorus Aviation Inc. (CHR-T). Analyst Cameron Doerksen has maintained his target price at $9. Yield 6.5 per cent.
7. Cineplex Inc. (CGX-T). Analyst Adam Shine has a target price of $29. Yield 7.4 per cent.
8. CT Real Estate Investment Trust (CRT-UN-T). Toronto-based CT REIT has a portfolio of properties located across Canada with Canadian Tire being the REIT’s main tenant. Analyst Tal Woolley raised his target price to $16.50 from $14.50 set back in February. Yield 5.3 per cent.
9. Dream Global REIT (DRG-UN-T). Analyst Matt Kornack’s mid-cap high-yield security recommendation is Dream Global REIT. Dream Global REIT’s portfolio consists of office, industrial and mixed-used properties located in western Europe with core regions being Germany and the Netherlands. Mr. Kornack increased his target price to $18 from $15.50 set back in February. Yield 5.6 per cent.
10. Enbridge Inc. (ENB-T). Enbridge has an energy infrastructure network of crude oil, liquids and natural gas pipelines across North America. Analyst Patrick Kenny has a target price of $59, which is unchanged from February. Yield 6.7 per cent.
11. Exchange Income Corp. (EIF-T). Winnipeg-based EIC is a company whose management team is focused on acquisition growth. It has two core operating segments: aerospace and aviation, as well as manufacturing. Analyst Cameron Doerksen has a target price of $46, up from $42 reported earlier in the year. Yield 6 per cent.
12. Genworth MI Canada Inc. (MIC-T). Through its subsidiary, the company is a leading Canadian private residential mortgage insurer. Analyst Jaeme Gloyn lifted his target price to $54 from $51 reported in February. Yield 4.1 per cent.
13. H&R Real Estate Investment Trust (HR-UN-T). H&R REIT has ownership interests in office, retail, industrial and residential properties across North American. Analyst Matt Kornack’s has a target price of $28, up from $26.50 reported in February. Yield 6.1 per cent.
14. Innergex Renewable Energy Inc. (INE-T). Innergex is an independent renewable power producer with global operations in countries including Canada, the U.S., France, and Chile. Analyst Rupert Merer has a target price of $18.50. Yield 4.7 per cent.
15. Intertape Polymer Group Inc. (ITP-T). Analyst Zachary Evershed has a target price of $22.50. Yield 4.4 per cent.
16. Keyera Corp. (KEY-T). Calgary-based Keyera is an integrated midstream operator. Analyst Patrick Kenny has a target price of $44, up from $40 reported in February. Yield 6 per cent.
17. NFI Group Inc. (NFI-T). Winnipeg-based NFI is a leading global bus manufacturer with over 50 facilities worldwide. Analyst Cameron Doerksen expects the share price may rebound to $37, which is down from his target price of $46 reported in February. Yield 6.1 per cent.
18. Northland Power Inc. (NPI-T). Northland Power is an independent power producer. Analyst Rupert Merer has a price target of $27. Yield 4.7 per cent.
19. Pason Systems Inc. (PSI-T). Analyst Greg Colman has a $21 target price on this energy services stock. Yield 4.9 per cent.
20. Pembina Pipeline Corp. (PPL-T). Calgary-based Pembina is a transportation and midstream service provider serving the North American oil and gas industry. Analyst Patrick Kenny has a target price of $60. Yield 5.1 per cent.
21. SmartCentres Real Estate Investment Trust (SRU-UN-T). SmartCentres owns a portfolio of primarily Walmart-anchored retail properties. Analyst Tal Woolley has a $34 target price. Yield 5.7 per cent.
22. Sun Life Financial Inc. (SLF-T). Analyst Gabriel Dechaine has a $59 target price. Yield 4 per cent.
23. Telus Corp. (T-T). Vancouver-based Telus is a leading telecommunication company in Canada. Analyst Adam Shine has a $53 target price, up $3 from his target price of $50 reported in February. Yield 4.8 per cent.