Canadian Dividend All-Stars

WRITTEN BY Mathieu Litalien | UPDATED ON: June 22, 2021

canadian dividend stocks

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Earnings season is beginning to slow. For Canadian dividend stocks that means dividend growth announcements are few and far between. That being said, there is one company on tap to raise dividends this coming week.

There was also a good news, bad news situation with respect to Canada’s banks and we’ll dig into that right after we take a look at results from last week.

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

Recent dividend updates

It was a quiet week, and one that unfolded as expected. Andrew Peller (TSX:ADW.A) came through with its annual dividend raise, putting an end to a prolonged period of dividend stagnation.



EST Increase

Actual DGR

Actual Increase

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On Wednesday last week, Andrew Peller announced a 10% raise to the dividend. While this was slightly below my estimates for 15%, it did deliver on double-digit growth.

The raise was long overdue as the company had kept the dividend steady for eight consecutive quarters. Unlike some of its fellow All-Star peers such as Finning International (TSX:FTT) and Onex Corp (TSX:ONEX) which had similar periods of stagnation, Andrew Peller delivered this time around.

With the raise, Andrew Peller will have effectively extended its dividend growth streak to 16 years.

News from the OFSI

This past week, there was also some important news to come out of the Office of the Superintendent of Financial Institutions (OSFI). On Thursday, the OSFI announced that the Domestic Stability Buffer (DSB) would rise to 2.5% from 1% currently.

Why is this important? The DSB forms part of the CET1 Ratio – a core bank capital measure. In essence, banks are required to hold a certain percentage of capital against risk-weighted assets to ensure we don’t suffer another Financial Crisis.

While a higher capital buffer means less cash to distribute, it has proven to be an effective measure to keep our banks well-funded. The move is also not all that surprising. In fact, it was expected.

The DSB was lowered to 1% from 2.25% at the height of the pandemic given the uncertainty faced by financial institutions. The increase, which is to take effect in October, is effectively 0.25% higher than it was pre-pandemic.

This is by no means a deal breaker, especially since all of Canada’s banks currently have CET1 ratios well above 10.5%.

More importantly, it signals a recognition by the OSFI that the economy is normalizing and that the banks have navigated the pandemic extremely well. In my opinion, a return to a normalized CET1 ratio is the first step towards lifting the cap on the current dividend freeze.

Stay tuned, dividend growth from Canada’s banks and other financial institutions such as insurers may be just around the corner.

Upcoming dividend raises, cuts or suspensions

Empire Company (TSX:EMP.A)

Current Streak: 26 years

Current Yield: 1.22%

Earnings: Wednesday, June 23

What can investors expect:

Empire Company (TSX:EMP.A) is one of Canada’s leading grocers and at 26-years, it is tied for the seventh longest dividend growth streak in the country. Like clockwork, the company typically announces a raise along with fourth quarter and year-end results.

Empire was also one of the first companies to raise the dividend during the pandemic. While many fellow All-stars were either cutting the dividend or staying put, Empire announced its usual, mid-single digit raise.

I would not expect much else from the company. Over the past three, five, and ten year periods, Empire’s dividend growth rate hovered in the 5-9% range. I’d expect nothing different this time around. 


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