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December 4, 2020

Canadian Dividend All-Stars – Week of Dec 7

Disclaimer: The writer of this article may have positions in the securities mentioned in this article. The fact they hold positions in securities has had no impact on the production of this article

By Mathieu Litalien

December 4, 2020

After a strong bank earnings season in which the Canadian banks did quite well, the pace of earning results is about to slow dramatically.

Between now and end of year, there is only one Canadian Dividend All Star on watch to raise the dividend. Before we jump into that, let’s review what happened this past week.

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

Recent dividend updates

Good news! Tecsys (TSE:TCS), the lone All-Star which was expected to raise dividends last week came through for investors.

There was however, some bad news.

Although not an All-Star, when a behemoth and blue chip Canadian dividend stock like RioCan REIT (TSE:REI.UN) announces a 33% cut to the dividend, investors should take notice.

It appears to be a proactive move, and one that signals tough times ahead for the retail industry.

Company

EST DGR

EST Increase

Actual DGR

Actual Increase

New Div

Tecsys

8.33-16.67%

$0.005-01

8.33%

$0.005

$0.0065


As mentioned last week, Tecsys is one of only four TSX-listed technology companies that have achieved All-Star status.

The company’s 8.33% raise was in line (but at the low end) of my expectations. The raise effectively extends the company’s dividend growth streak to 12 years.

Upcoming dividend raises, cuts or suspensions

Enbridge (TSE:ENB)  

  • Current Streak: 24 years
  • Current Yield: 7.69%
  • Enbridge Day: Tuesday, December 8

What can investors expect:

Next week is Enbridge Day and it will be one of the most anticipated annual meetings of the year.

Why? The company is expected to announce 2021 fiscal and dividend guidance.

When the company rolled up its subsidiaries into the Enbridge parent company, it had guided to 10% dividend growth through the end of 2020.

It has made good on said promise, and now the company is expected to raise dividends inline with distributable cash flow (DCF).

The company’s targeted payout ratio is 60-70% of DCF and the company is expected to exit the year with $4.65 of DCF. That would place the dividend payout ratio at 69.7% - right in line with the current target.

The question is – by how much will DCF grow in 2021?

At last year’s Enbridge day it guided to DCF growth of 5-7% post 2020. Given this, investors can expect dividend growth in the mid-single digits.

EST DGR

EST Increase

 Est New Div

4.94%-6.17%

$0.04-0.05

$0.85-0.86

* Mat Litalien is long Enbridge. Follow me on Twitter @matlitalien to get my latest updates on Canadian dividend stocks.

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Mathieu Litalien


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, Motley Fool and Stocktrades. Mathieu also focuses primarily on stock research and content production for Stocktrades.ca Premium and the Stocktrades blog.

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