Canadian Dividend All-Stars – Week of Dec 14

Posted on December 11, 2020 by Mathieu Litalien

Disclaimer: The writer of this article may have positions in securities listed below. Stocktrades may also be compensated via affiliate links in the post below

We are in the final stretch of the year and earnings season is winding down. This also means, that there are no more Canadian Dividend All Stars expected to raise dividends in 2020. 

Although it's possible dividend growth investors are treated to a surprise raise between now and end of year, don't count on it. With that said, let's take a look at our final weekly update of the year. 

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

Recent dividend updates

Last week, only Enbridge (TSX:ENB) was expected to raise dividends. The good news, is that Dollarama (TSX:DOL) also came through for investors with their annual raise. 

Company

EST DGR

EST Increase

Actual DGR

Actual Increase

New Div

Enbridge

4.94%-6.17%

$0.04-0.05

3.09%

$0.025

$0.835

Dollarama

N/A

N/A

6.82%

$0.003

$0.047

As expected, Enbridge released Fiscal 2021 guidance at its annual Enbridge Day. Along with fiscal guidance, the popular Canadian dividend stock also announced the annual dividend raise which came in slightly lower than expected. 

Although DCF is expected to grow by 5-7%, the company's current payout ratio is at the top end of its targeted range 60-70%.

Since the company would like to get closer to the mid-range of that target, it stands to reason that dividend growth will be lower than DCF until such time that the payout ratio gets closer to 65%. 

Although some may be disappointed by the raise, the company will officially enter 2021 with a dividend growth streak of 25 years.

Raising the dividend in this environment is a testament to the company's strong business model despite times of considerable uncertainty. 

As for Dollarama, last week's raise was a pleasant surprise. Historically, the company raised the dividend in March but given the pandemic, the company chose to keep the dividend steady. 

Last week, the company raised the dividend by 6.82% which effectively ensures that the company extends its dividend growth streak to a decade.

The company's yield (0.35%) isn't likely to get income investors too excited. However, the company is a nice option for investors looking for growth and a smattering of income. 

The year ahead

As the year comes to a close, it has been one of the most difficult for dividend growth investors in recent years. Many Dividend All Stars with established dividend growth streaks either cut or suspended the dividend, and many reliable financial stocks are being handcuffed by regulations. 

I expect a record number of All-Stars to fall off the list this year, and the total number of TSX-listed companies with dividend growth streaks of five years or more will drop below 100.

That limits the pool of reliable dividend growth payers for Canadian investors.

It hasn't been all bad, there were some clear winners this past year, and gold stocks are once again becoming reliable income plays. Several of which will actually join the All Star list next year.  

January is typically a busy time of the year for dividend growth announcements.

This means that the stage will be set early for what to expect in 2021. Until then, stay safe and enjoy the holidays.

Interested in potential value plays? Check out this piece on Nutrien (TSE:NTR), the combination of two agriculture giants.

Mathieu Litalien

About the author

Mathieu is an individual investor and has been investing part-time for the better part of the past 20 years. He is primarily interested in fundamental analysis, focusing on the long-term and his portfolio is composed primarily of dividend-paying equities. Mathieu has a moderate risk profile and also looks for growth and value. His passion for finance and the markets have led him to his MBA and writing for Seeking Alpha and Stocktrades. Mathieu also focuses primarily on stock research and content production for Stocktrades.ca Premium and the Stocktrades blog.