Canadian All-Star Stocks: Dividend Increases – Week Of Nov 9

Today, we start a new chapter. After approximately 4 years covering Canadian Dividend All-Stars over on Seeking Alpha, I am happy to have found a new home for this weekly series at Stocktrades.

My longstanding relationship with Dan and the team at Stocktrades made for an easy transition.

I look forward to keeping Canadian Dividend Investors informed on some of the best Canadian dividend stocks, and if you are new to the site – welcome!

Have a poke around, there is plenty of content here and if your curious, you can also subscribe to the fastest growing investment service in Canada – Stocktrades Premium.

Stocktrades and I partnered to form Premium back in 2018 and our members speak very highly of the services provided.

With that out of the way – let’s jump right into what took place last week.

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

Recent dividend updates

Last week ended up being another strong week for Canadian Dividend All-Stars.

Both companies that were due for a raise – Granite REIT(TSE:GRT.UN) and Canadian Tire Corp (TSE:CTC.A) – came through with a raise for investors.

Furthermore, Open Text(TSE:OTEX), Telus (TSE:T) and Global Water Resources (TSX:GWR) also announced their annual dividend raises.

Company	EST DGR	EST Increase	Actual DGR	Actual Increase	New Div
Canadian Tire	~5%	$0.0625	3.3%	$0.0375	$1.175
Granite REIT	~5%	$0.013	3.31%	$0.008	$0.25
OpenText*	15.01%	$0.0262	15.01%	$0.0262	$0.2008
Global Water Res.*	N/A	N/A	1%	$0.0002	$0.2434
Telus	~7.00%	$0.0203	6.85%	$0.0199	$0.3112

*Open Text and Global Water Resources pay the dividend in USD.

Let’s start with the biggest surprise of the week. Retail giant Canadian Tire came through with a 3.30% raise last week – extending its dividend streak to a decade.

The raise came despite a very difficult environment for retailers. Although it was lower than expected, I was skeptical that the company would come through with a raise. Given this, any raise is a good raise and investors should be quite happy.

As for Granite, the 3.30% raise was once again lower than expected but inline with its low-to-mid, single-digit average.

The company has a targeted payout ratio of 80% of adjusted funds from operations (AFFO). Through the first nine months of 2020, the dividend accounted for only 76% of AFFO, down from 80% last year.

Next, let’s turn our attention to Open Text. As one of the few technology stocks that can claim All-Star status, Open Text had deviated from its normal pattern of dividend raises as a result of the pandemic.

The company typically raises the dividend in May of each year; however, it kept the dividend steady over the past two quarters. It was a sign of relief when the company announced a 15% raise to the dividend on Thursday.

This was right inline with historical averages, and the company further establishes itself as the premier income stock among TSX-listed technology companies.

Telus was another company that held the dividend steady throughout the pandemic and investors are likely quite happy with the 6.85% raise.

Of note, the company also re-instated dividend growth guidance in which it expects to raise the dividend by  7-10% annually through 2022. With the raise, Telus extends its dividend growth streak to 17-years, tops among all TSX-listed telecoms. 

As for Global Water Resources, earnings came a week earlier than expected (I had them down for November 9) but the end result is the same – another dividend raise.

Unfortunately, it was yet another token raise. The 1.00% raise matches last year’s increase and isn’t going to get many income investors excited. However, a raise is a raise and it extends the company’s dividend growth streak to seven years.

Upcoming dividend raises, cuts or suspensions

Magellan Aerospace (TSX:MAL) 

• Current Streak: 7 years
• Current Yield: 6.09%
• Earnings: Wednesday, November 11

What can investors expect: Magellan Aerospace has been one of the hardest hit companies on the TSX Index this year. Down by 51% year to date, Magellan is now yielding almost three-times its historical average of 2.25%. Since the company’s dividend growth streak began, it has consistently announced a raise along with third quarter results.

Over the course of Magellan’s streak, it has averaged double-digit growth in the mid-to-high teens. In fact, It holds one of the most impressive dividend growth averages among Canadian All-Stars.

Will that impressive streak come to end this week? It is very difficult to tell. On the one hand, the company’s current payout ration is only sitting at around 47%. On the other, the Magellan is expected to post negative earnings growth. This will lead to a payout ratio closer to 60% based on next year’s earnings.

The aerospace industry has been among the most impacted by the pandemic and there still exists considerable uncertainty. Given this, don’t be disappointed if Magellan keeps the dividend steady or comes through with a lower than average raise.

Since it is already yielding above 6%, if a raise is in store than a double-digit raise is unlikely.

If you’re looking for information on next weeks Dividend All Stars, click here!

EST DGR	EST Increase	Est New Div
~5%	$0.005	$0.11

* Mat Litalien is long Telus, Canadian Tire and Open Text. Follow me on Twitter @matlitalien to get my latest updates on Canadian dividend stocks.