Canadian All-Star Stocks: Dividend Increases – Week Of January 20 No ratings yet.

Earnings season is beginning to ramp up, and it will be one of the busiest weeks of the year thus far with six Canadian Dividend All-Stars scheduled to announce earnings. Three of which are expected to announce their yearly dividend raise. First, let’s look at what was an uneventful past week.

Of note, all figures are in Canadian dollars unless otherwise noted.

Recent dividend updates

Last week unfolded as expected as Richelieu Hardware (OTC:RHUHF) [TSX:RCH] came through with its annual raise.

EST

DGR

EST

Increase

ACTUAL

DGR

ACTUAL

Increase

NEW

DIV

Richelieu Hardware

~6.00%

$0.0037

5.37%

$0.0034

$0.0667

Richelieu isn’t a stock that is going to make you rich with income. At 0.90%, it has one of the lowest yields among Canadian Dividend All-Stars. That being said, it is a reliable dividend growth company and has extended the dividend growth streak to 11 years.

The new quarterly rate of $0.0667 per share represents a 5.37% increase and in line with expectations.

Expected Dividend Raises

Canadian National Railway (NYSE:CNI) [TSX:CNR]

  • Current Streak: 24 years
  • Current Yield: 1.72%
  • Earnings: January 28

What can investors expect: Canada’s largest railway is expected to reach a quarter century of dividend growth. The milestone is an important one.

As the company is dual listed, it will also achieve Dividend Champion status in the U.S. and be added to the S&P 500 Dividend Aristocrat Index. Unlike in Canada where the Aristocrat Index tracks companies with growth streaks of five years or more, it requires 25 years of dividend growth to be included in the U.S. Aristocrat Index.

Although CN Rail’s yield won’t knock your socks off, the dividend has averaged in the mid-teens growth. Last year, the railway raised the dividend by 18%, which was slightly above average.

This year, I am not expecting as high of a raise given the company has only grown earnings in the low single digits. That being said, CN Rail has a very low payout ratio (35%) and double-digit growth should be a given. Anything else would be a disappointment.

EST DGR

EST INCR

EST NEW DIV

~13.00%

$0.0725

$0.61

Metro Inc (OTCPK:MTRAF) [TSX:MRU]

  • Current Streak: 25 years
  • Current Yield: 1.47%
  • Earnings: January 28

What can investors expect: Speaking of 25 years of dividend growth, Metro is one of only nine Canadian companies to have achieved this feat. The company typically announces the annual dividend raise along with first-quarter results.

Not only is Metro’s dividend growth streak consistent, but so too is the company’s dividend growth rate. Over the past 10 years, it has reliably raised the dividends by double digits. Given Metro’s low payout ratio (29%), there is no reason to expect any different.

EST DGR

EST INCR

EST NEW DIV

10.00%

$0.02

$0.22

Exco Technologies (OTCPK:EXCOF) [TSX:XTC]

  • Current Streak: 14 years
  • Current Yield: 4.63%
  • Earnings: January 29

What can investors expect: With a market of $323 million, Exco Technologies is one of the smallest Canadian Dividend All-Stars. However, Exco’s 14-year dividend growth streak places it among the 25 longest dividend growth streak companies.

As a small-cap autoparts manufacturer, the company has been under pressure the past couple of years. This was due in large part to the ongoing trade wars and the uncertainty around the USMCA trade deal.

As a result, the company has seen negative earnings growth over the past few years. On the bright side, it looks like the worst is over, and analysts expect a return to growth this coming year.

Since 2015, the company’s payout ratio has jumped from 23% to 55% today. Although this is still reasonable, it is not surprising that the dividend growth rate has been on a downward trend.

Given all the uncertainty around the sector, it would not surprise me if the company kept the dividend steady. If Exco does raise, don’t expect any more than last year’s $0.005 per share.

EST DGR

EST INCR

EST NEW DIV

5.56%

$0.005

$0.095

As you can see in the F.A.S.T. Graphs below, Exco Technologies is looking quite attractive from a valuation perspective. Now that earnings growth is expected to resume, now may be the time for investors to have a look at this under-the-radar dividend growth company.

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Disclosure: I am/we are long EXCOF, CNI. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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