Canadian Dividend All-Stars

It’s been a few weeks since our last All-Star update. Not that big of a surprise as September and October are typically slow months for raise announcements from Canadian dividend stocks.

While there were a few raises that we’ll get to first, this coming week there are four Canadian Dividend All Stars on tap to raise dividends. This is the beginning of what should be a busy earnings season.

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

Recent dividend updates

Since our last update, we had two of the most reliable utility companies announce their annual raise. As expected, Emera (TSE:EMA) came through for investors, while Fortis (TSE:FTS) also extended its dividend growth streak.

Company	EST DGR	EST Increase	Actual DGR	Actual Increase	New Div
EMA	4-5%	$0.025-$0.035	3.94%	$0.025	$0.6625
FTS	5.94%	$0.03	5.94%	$0.03	0.535

Emera is one we discussed, and the 3.92% dividend raise was inline with expectations. The company is targeting 4-5% annual growth and the 2.5 cent raise per share came in a hair below that mark.

As for Fortis – it also delivered inline with its targeted dividend growth rate. Arguably the best dividend growth stock in the country, Fortis extended its streak to 48 years with its 5.94% raise to the dividend.

Worth noting, Fortis typically raises along with its annual shareholder meeting, but this year, it chose to make the announcement independent of that event. This caught me off guard a little, but not to worry as it came through like clockwork and inline with its targeted range.

Upcoming dividend raises, cuts or suspensions

First National Financial (TSX:FN)

Current Streak: 9 years

Current Yield: 5.19%

Earnings: Wednesday, October 27

What can investors expect: I know what you are thinking – how can a financial company raise dividends this year when most are prohibited from doing so thanks to the OSFI. Simple, First National (TSE:FN) much like other specialty lenders does not fall under the purview of the OSFI. That means they are free to raise dividends, much like they did last November.

Last year, First National surprised investors with an 11.9% raise to the dividend – much higher than its low, single-digit average. What will the company do this year? The company’s payout ratio is approximately 63% which is at the low end of its historical average.

Taking this into account, I’d expect the company to raise inline with expected EPS growth rates which is in the mid-to-high single digits.

EST DGR	EST Increase	New Div
8.57%	$0.015	$0.19

Waste Connections (TSX:WCN)

Current Streak: 11 years

Current Yield: 0.62%

Earnings: Wednesday, October 27

What can investors expect: One of North America’s largest waste disposal companies, Waste Connections (TSE:WCN) has reliably raised the dividends along with third-quarter results. Of note, the company is dual-listed and pays out the dividend in U.S. dollars.

Over the course of its streak, Waste Connections has averaged double digit dividend growth. Unfortunately, it has been slowing. Last year’s 10.8% raise was lower than expected, and below the company’s historical average of about 15%.

Given the pandemic, there are likely many factors that played into the lower raise last year. Will the company maintain its double-digit rate this year? I believe so.

Waste Connections’ payout ratio is only 33%, which is down from the 94% it was last year. Not surprisingly, earnings were impacted in a material way last year, and we are now seeing earnings normalize.

All in all, it would be disappointing if the company didn’t announce another double-digit raise this year.

EST DGR	EST Increase	New Div
12.20%	$0.025	$0.23

Agnico Eagle (TSX:AEM)

Current Streak: 5 years

Current Yield: 2.51%

Earnings: Wednesday, October 27

What can investors expect: Agnico Eagle (TSE:AEM) was one of the first gold stocks to achieve Dividend All Star status since all but one (Franco Nevada) cut or held their dividends steady after the gold bear market of the 2010s.

At today’s gold prices, gold companies are raking in the cash. They’ve pared back their high-spending days. They are much leaner and can generate significantly more free cash flow in today’s environment. This is why you are seeing big raises across the board.

The only reason why Agnico may not raise, is due to the impending merger with Kirkland Lake Gold (TSE:KL). It is not out of the ordinary for companies to hold off raising the dividend while they are in the midst of a major M&A deal.

That being said, if the company does announce their annual raise it’ll likely be hefty one. Last year it raised by 75% and while that level of a raise is unlikely this year, don’t be surprised if another strong raise is in the cards.

EST DGR	EST Increase	New Div
14.29%	$0.05	$0.40

TFI International (TSX:TFII)

Current Streak: 10 years

Current Yield:  0.78%

Earnings: Thursday, October 28

What can investors expect: TFI International (TSE:TFII) is a leading trucking and logistics company. Last year, the company achieved a decade’s worth of dividend growth. At this point, there is no reason not to expect that streak to be extended along with third quarter results this week.

Over the course of its growth streak, TFI International has achieved dividend growth in the low teens. Considering the company’s low payout ratio (~16%) and strong earnings profile, a double-digit raise is almost a guarantee.

In fact, we believe the company’s strong performance may lead to a higher-than-average raise this year. There is plenty of room for the company to deliver a raise in the mid-to-high teens.

EST DGR	EST Increase	New Div
15-20%	$0.0435-0.06	$0.335-0.35

Next lets look at similar details for Canadian Dividend All-stars during the week of November 1st 2021.