Canadian Dividend All-Stars – Week of 02 08

We are in the thick of earnings season and as we discussed last week, the pace of dividend growth is ramping up for Canadian dividend stocks. 

February is the busiest month of the year for Canadian Dividend All Stars, and this week there are five companies expected to raise dividends. So, if you’re someone who is looking to buy Canadian stocks for dividend growth, this will be an exciting time for you.

That number would have been eight, but more on that later. First, let’s take a look at all the action from last week.

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

Recent dividend updates from Canadian Dividend All-Stars

This past week a trio of All-Stars were expected to raise dividends and the good news is, they all came through for investors.

BCE (TSX:BCE), Brookfield Property Partners (TSX:BIP.UN)(TSX:BIPC) and Brookfield Renewable Partners (TSX:BEP.UN)(TSX:BEPC) all announced their annual dividend raise. 

Exco Technologies (TSX:XTC) also came through for investors as it reported earnings later than we had initially expected. 

Company	EST DGR	EST Increase	Actual DGR	Actual Increase	New Div
BCE	~5%	$0.042	5.11%	$0.0425	$0.875
Brookfield Infrastructure	~7.00%	N/A	5.15%	$0.025	$0.51
Brookfield Renewables	~5.00%	N/A	5.11%	$0.0148	$0.3038
Exco Technologies	N/A	N/A	5.26%	$0.005	$0.10

First up we have BCE, which is one of the most reliable income stocks on the Index. The company came through with its usual 5% raise and extended its dividend growth streak to 13 years. For their part Brookfield Infrastructure and Brookfield Renewables both raised inline with guidance – although BIPs came in slightly lower than expected. Of note, last week I made the mistake of not adjusting the dividend for post-split impacts. So the estimated increases were incorrect.Worth noting, BEP and BIP pay out their dividend in US dollars. Likewise, the dividend is the same for both the funds (BIP.UN & BEPC.UN) and the corporations (BIPC & BEPC).In terms of Exco Technologies, we had expected earnings in January but the company announced in early February. No worries, the company came through for investors with a 5.26% raise which extends its dividend growth streak to 16 years.

Upcoming dividend raises, cuts or suspensions

Let’s start with some bad news. This week, Manulife Financial (TSX:MFC), Intact Financial (TSX:IFC) and Great West Lifeco (TSX:GWO) would all be on tap to raise the dividend.

If you’ve been following along over the past year, you know that neither of these insurers will announce a raise.

If you don’t know why, the reason is simple – the Office of the Superintendent of Financial Institutions (OSFI) which has oversight over federally regulated financial institutions has put halt on dividend raises in light of the pandemic.

The OFSI’s reach is broad and includes oversight of “federally regulated entities include all banks in Canada, and all federally incorporated or registered trust and loan companies, insurance companies, cooperative credit associations, fraternal benefit societies and private pension plans.”  

Notice the term ‘insurance companies’. The three listed above all fall under this category and as such, will be keeping their dividend steady until the OFSI gives them the go ahead.

When will that be? It is not yet know but it likely won’t be until the second half of 2021 at the earliest.

Now onto the good news.

Restaurant Brands International (TSE:QSR)

Current Streak: 6 years

Current Yield: 3.61%

Earnings: February 8, 2021

What can investors expect: Restaurant Brands International is one of Canada’s largest quick-service restaurant stocks.

With brands like Tim Horton’s, Burger Kind and Popeye’s leading the way, QSR has established itself as a reliable income stock. Since the company’s streak began, it has consistently raised in early February.

It will be interesting to see what Restaurant Brands International does with the dividend this week. Last year’s 4% raise was far below its historical average north of 30%.

Since the pandemic is still raging and the company is still faced with many lockdowns across North America, there is a real risk the company does not raise the dividend.

If it does choose to raise, I’d expect it to be inline with last year’s low-to-mid single digit bump.

EST DGR	EST Increase	New Div
~5%	$0.01-$0.02	$0.54-$0.55

FirstService Crop (TSE:FSV)

Current Streak: 6 years

Current Yield: 0.48%

Earnings: Tuesday, February 9

What can investors expect: FirstService is a property management firm that operates in both the U.S. and Canada. Since the company’s current dividend growth streak began, it has consistently raised along with fourth quarter and year-end results.

Let’s face it – FristService’s yield isn’t going to wow income investors. On the bright side, the company does a have decent dividend growth rate.

Last year, the company raised the dividend by 10% which was inline with its historical average. Expect much of the same in 2021.

EST DGR	EST Increase	New Div
~10.00%	$0.017	$0.1872

Toromont (TSE:TIH)

Current Streak: 31 years

Current Yield: 1.44%

Earnings: Wednesday, February 10

What can investors expect: Toromont Industries is one Canada’s largest Caterpillar (CAT) dealers and owns the third-longest dividend growth streak in Canada. The company typically raises the dividend along with fourth quarter and year-end results.

Toromont’s dividend growth rate has been difficult to predict. It varies considerably and the only consistency is that the raises are usually in the double-digits. Last year’s raise came in at around 15%.

Toromont has been growing earnings at a pretty healthy clip which has supported these impressive dividend growth rates.

 Unfortunately, the pandemic hurt profitability and the expectation is that the company will post negative earnings growth to close out the year.

Will this impact dividend growth? We are in uncharted territory here, but the company is likely to take a cautious approach – like most All Stars have. That being said, it has ample room for growth in the low teens.

EST DGR	EST Increase	New Div
12.90%	$0.04	$0.35

TC Energy (TSE:TRP)

Current Streak: 20 years

Current Yield: 5.91%

Earnings: Thursday, February 11

What can investors expect: TC Energy is one of the nation’s largest midstream companies and one of the most reliable income investments. Last year the pipeline hit 20 years of dividend growth and the company looks to extend its streak this coming Thursday.

Not only has the timing of TC Energy’s raise been consistent, so too has the dividend growth rate.

Over the past three- and five-year periods, the rate has consistently been between 8-10%. This also happens to be the targeted dividend growth rate through 2021.

The company has had this targeted rate since 2015 and has since reiterated dividend guidance. All things considered, there is no reason to expect anything less. Regulated utilities is another industry that contains reliable income plays. We looked over Emera (TSX:EMA).

EST DGR	EST Increase	New Div
8.64%	$0.07	$0.88

Brookfield Asset Management (TSE:BAM.A)

Current Streak: 9 years

Current Yield: 1.24%

Earnings: Thursday, February 11

What can investors expect: On Thursday, the last of the Brookfield companies reports as parent company Brookfield Asset Management announces fourth quarter results. Much like the family group of Brookfield companies, BAM’s dividend is paid in USD.

Brookfield’s growth rate has been fairly steady in the 7% range. This is inline with the targeted dividend growth rates posted by several of the Brookfield companies.

That being said, Brookfield Asset Management announced its intentions to take over subsidiary Brookfield Property Partners (TSX:BPY). BPY has been struggling as of late, and the deal is a pretty big one.

Will the deal impact dividend growth? Unlikely, I believe the company should come through with a raise inline with historical averages which is mid-to-high single digits.

EST DGR	EST Increase	New Div
5.56%	$0.01	$0.19

*Mat Litalien is long XTC and MFC