Canadian Dividend All-Stars review

The month of May is off to a great start for Canadian dividend stocks as the month is beginning to unfold as expected. At this time last year, we spent most of our time discussing dividend cuts. It has been several months since the last cut and Canadian Dividend All Stars have been returning to dividend growth, and as such more people are buying Canadian stocks that focus on growing shareholder income again. This week there are a couple that investors should keep an eye on. 

Before we jump into that, let’s dig into what transpired this past week. Of note, all figures are in Canadian dollars unless otherwise noted.

Recent dividend updates

There was a little bit of everything last week. Algonquin Power (TSX:AQN), Franco-Nevada (TSX :FNV), and Hydro One (TSX:H) all came through with their annual raise.

For its part, Loblaw (TSX:L) kept the dividend steady and did not return to the regular historical pattern. Perhaps a new pattern will emerge post COVID-19.

There was also a modest surprise as Telus (TSX:T) announced its annual dividend raise. I say modest, because Telus had a bi-annual raise pattern that was recently disrupted.

I had expected them to adopt an annual raise pattern, but it looks like they are returning to raising bi-annually. 

Company	EST DGR	EST Increase	Actual DGR	Actual Increase	New Div
FNV*	15.38%	$0.04	15.38%	$0.04	$0.30
AQN*	10%	$0.0155	10%	$0.0155	$0.1706
H	5.01%	$0.0127	5.01%	$0.0127	$0.2663
T	N/A	N/A	1.61%	$0.005	$0.3162

*Of note, FNV and AQN pay their dividend in USD

Let’s start with the two easiest predictions. Franco-Nevada made their 15% raise to the dividend official. They had pre-announced it at their annual meeting in April, but it was not officially declared until this past week.

Algonquin Power also announced in December that it was well capitalized to reward investors with a 10% dividend raise in 2021. It did just that this past week and remains one of the best utilities for outsized dividend growth.

Speaking of utilities, Hydro One also came through with a raise inline with historical patterns. Since the company became publicly listed, the annual dividend growth rate was around 5%. This time was no different.

Finally, the 1.61% raise from Telus is a little light but expect the company to come back with a higher raise later this year. The company has had a 7-10% targeted dividend growth rate through the end of 2022. It has been issuing dividend guidance for years now and it has yet to miss guidance.

Upcoming dividend raises, cuts or suspensions

Finning International (TSX:FTT)

Current Streak: 19 years

Current Yield: 2.55%

Earnings: Monday, May 10

Finning International (TSX:FTT) 5 year total return

What can investors expect:

Finning International is tied for the 15^th longest dividend growth streak in the country. It will be looking to expand that streak to 20-years as it reports first quarter results.

Despite owning one of the longest streaks, the timing of Finning’s announcements has fluctuated wildly. There is no pattern, and since the company kept the dividend steady last year, it has been eight consecutive quarters since the company last announced a raise.

That came with Q1 results in May of 2019. As a result, Finning is now on the clock and it has until end of year to announce a raise before it loses All-Star status. Given the strong results posted by peers, I fully expect the company to come through for investors.

Once they do – don’t expect much. Finning has averaged low, single-digit dividend growth and that raise in 2019 came in at 2.50%.

EST DGR	EST Increase	New Div
4.76%	$0.01	$0.022

ONEX Corp (TSX:ONEX)

Current Streak: 8 years

Current Yield: 0.51%

Earnings: Friday, May 14

ONEX Corp (TSX:ONEX) 5 year total return

What can investors expect: ONEX is an asset management firm with approximately $44 billion in assets under management. With a yield below 1%, the company isn’t likely to attract many income-seeking investors. 

Prior to the pandemic, it had consistently raised the dividend along with first quarter results. However, the dividend was kept steady for the balance of 2020.

Much like Finning, it has been eight consecutive quarters since ONEX last raised the dividend. The company’s last raise was around 14% and historically it had averaged growth in the low to mid-teens.

Now that the economy is opening up, will it return to historical averages? While it performed quite well in 2020, this is still a company that bought WestJet just before the pandemic hit.

That being said it is highly diversified and I expect the company to come through for investors, but at a rate slightly below historical average.

EST DGR	EST Increase	New Div
10.00%	$0.01	$0.11

Check out this next piece covering a Canadian bank stock earnings overview, are they buys?