Canadian Dividend All-Stars – Week of Mar 1

February came and went and while the month got off to a strong start, the month ended with mixed results. All things considered, it was a decent month for Canadian dividend stocks which did not have it easy in 2020.

This week, there are once again several more expected raises. But before we get into that, let’s dig into all the action from last week. Of note, all figures are in Canadian dollars unless otherwise noted.

Recent dividend updates

It was a mixed week as only three of the five Canadian Dividend All-Stars scheduled to announce a raise did so. Coming through for investors were CCL Industries (TSX:CCL.B), Stantec (TSX:STN), and Maple Leaf Foods (TSX:MFI). The two that didn’t were Transcontinental (TSX:TCL.A), and Innergex Renewables (TSX:INE), which chose to keep the dividend steady. These weren’t exactly surprises, but disappointing for those counting on a raise.

Two more All-Stars, Quebecor (TSX:QBR.B) and Tomson Reuters (TSX:TRI) also came through for investors with their annual raise. At the time of writing last week’s article, I did not have the expected earning dates.

Company	EST DGR	EST Increase	Actual DGR	Actual Increase	New Div
CCL.B	11%	$0.02	16.67	$0.03	$0.21
MFI	6-10%	$0.01-0.015	12.50%	$0.02	$0.18
STN	6-10%	$0.01-0.015	6.45%	$0.01	$0.165
QBR.B	N/A	N/A	37.50%	$0.075	$0.275
TRI	N/A	N/A	6.58%	$0.025	$0.405

Let’s start with those we missed. First up, Tomson Reuters extended its impressive dividend growth streak to 28 years. It has one of the longest growth streaks in the country and the 6.58% growth is inline with mid, single-digit averages.

Quebecor keeps reminding investors that it is among the best dividend growth stocks on the index. While the 37.50% raise was less than last year’s double, it is still the second highest among all those which raised in 2021. The raise extends the growth streak to seven years.

Turning our attention to CCL Industries and Maple Leaf Foods, both surprised to the upside. CCL’s 16.67% raise was impressive, and well above last year’s 6% raise. Despite the challenging year, Maple Leaf’s two cent raise was also ahead of expectations and extends the streak of raising the dividend in the low teens. 

Finally we have Stantec, which delivered a penny raise – inline with expectations. The raise extends its dividend growth streak to a decade. 

Upcoming dividend raises, cuts or suspensions

Chartwell Retirement Residences (TSX:CSH.UN)

Current Streak: 6 years

Current Yield: 5.58%

Earnings: Thursday, March 4

What can investors expect: Chartwell (TSX:CSH.UN) is an owner and operator of retirement and long-term care properties. It is a newer Canadian Dividend All Star and typically announces a raise to the dividend in early March.

Historically, the company has raised dividends in the low single-digits. In fact, it has raised the monthly divided by approximately $0.001 every year throughout the streak.

Given this, investors should not expect anything more than another $0.001 per share monthly raise. This is especially true given our current environment. Long-term care homes and retirement residences have been particularly hard hit by the pandemic.

In some areas, the spread of COVID-19 within these types of communities has been devastating.

In December, the company provided an update in which it has pulled fiscal guidance. Likewise, occupancy rates have been hovering between 81 and 82% over the past year. On the bright side, it has collected “substantially all November and December rent and service charges”.

Through the first nine months of 2020, FFO dropped by 17.6% and the dividend accounted for ~80% of FFO primarily as a result of higher costs. While the dividend is covered by this metric, there is reason for concern.

All things considered, I would not expect anything more than a $0.001 per share and there is a strong possibility that the dividend is kept steady.

EST DGR	EST Increase	New Div
1.96%	$0.001	$0.052

Canadian Natural (TSX:CNQ)

That being said, I would expect a more cautious approach and for the raise to be in the mid, single-digits. Of course, given the considerable uncertainty the industry is still facing, if the company kept the dividend steady it certainly would not be a shocker.

Current Streak: 20 years

Current Yield: 4.66%

Earnings: Thursday, March 4

What can investors expect: All eyes will be on one of Canada’s largest oil producers as Canadian Natural (TSX:CNQ) is expected to announce quarterly results this coming Thursday. Last year, the company raised the dividend pre-pandemic and achieved 20 consecutive years of dividend growth.

What will happen this year? It’s anyone’s guess. Canadian Natural is one of Canada’s lowest cost producers and quite simply a best-in-class oil stock. When notable peers such as Suncor (TSX:SU) were slashing the dividend, CNQ stayed the course.

Now that prices have rebounded in a significant way, talks of a dividend cut have subsided and we can now turn our attention to dividend growth. Canadian Natural has averaged around 13% dividend growth over the past few years.

Can this be sustained in 2021? Surprisingly, the company still has respectable payout ratios against cash flows, a benefit of being a low cost producer.

EST DGR	EST Increase	New Div
5.88%	$0.025	$0.45

Parkland Fuel (TSX:PKI)

Current Streak: 8 years

Current Yield: 3.11%

Earnings: Thursday, March 4

What can investors expect: Parkland Fuel (TSX:PKI) is one of the industry’s leading consolidators and has become one of North America’s largest fuel and lubricant distributors. The company pays out monthly and typically announces a raise along with fourth-quarter and year-end results.

Don’t expect high divided growth from Parkland. This is a high-growth company that invests heavily in acquisitions. So long as it can find takeover opportunities, expect dividend growth to remain in the low single digits.

It is also worth noting, that Parkland is yet another company that has been materially impacted by the pandemic. Revenue in the second and third quarters have dropped considerably YoY and while it is starting to rebound, there is no question that the pandemic has hit the top line.

The good news for dividend investors, is that cash flows remained strong. Over the last 12 months, the dividend accounted for only 22% of FCF and through the first nine months of the year, the dividend accounted for only 37% of adjusted free cash flow.

Despite the headwinds, it appears Parkland is still well positioned to grow that dividend. Especially considering it only raises by the low, single-digits. If you’re looking to buy stocks on the economic rebound, it looks attractive.

EST DGR	EST Increase	New Div
~2%	$0.03	$1.24 (annual)

*Mat Litalien has no positions in any of the companies mentioned.