There were some interesting dividend announcments this week. No increases, but on a year over year basis two companies are projected to exceed their 2017 dividends.
Loblaw Companies Limited
|Projected Annual Dividend for 2018||$1.16|
|Record Date||September 15, 2018|
|Payment Date||October 1, 2018|
|Market price as of July 26, 2018||$69.63|
|CAGR (since 2011)||4.65%|
|CAGR (since 1986)||9.68%|
Loblaw Companies Ltd is a retailer of food products that also provides drugstore, general merchandise and financial products and services. The company operates corporate-owned stores as well as franchised stores. (Source: TSX)
Loblaw has been paying a dividend for over 30 years (our history only goes back to 1986), and has an impressive 9.68% CAGR since we began recording. The dividend has only been increasing in earnest the past 5 years. However, even over that period the CAGR is a healthy 4.65%.
Waste Connections (Canada) Inc.
|Projected Annual Dividend for 2018||$0.56|
|Record Date||August 7, 2018|
|Payment Date||August 21, 2018|
|Market price as of July 26, 2018||$101.32|
|CAGR (since 2010)||35.25%|
Waste Connections Inc is a solid waste services company in North America. The company provides waste collection, transfer, disposal and recycling services in mostly exclusive and secondary markets in the United States, and Canada. Source: TSX.
Waste Connections is an interesting company to look at. For one, its dividend is paid in US dollars, so unless you are keeping your holdings in a US account, you will be susceptible to USDCAD currency exchange rate fluctuations. More interesting however, is that this company—in its Canadian form—has only existed since 2016. The dividend history, which stretches to 2010, is based off of the US parent company. The Waste Connections listed on the TSX is the child of acquisitions. That said, the growth is impressive (exceeding 35%), and if you are willing to deal with the low yield, this may be a worthwhile addition to your portfolio.
|Projected Annual Dividend for 2018||$0.50|
|Record Date||September 21, 2018|
|Payment Date||October 1, 2018|
|Market price as of July 26, 2018||$15.30|
|CAGR (since 2007)||19.57%|
Aecon Group Inc and its subsidiaries provide construction and infrastructure development services to private and public sector customers throughout Canada. It also provides services to the energy sector as well as to mining sector. Source: Company Website
I’m not quite what sure to do with Aecon. I own it, and it has been a bit of a roller coaster this year. It was to be acquired which shot the stock up, but then the Canadian government cancelled the buy-out, and the stock fell back to earth. That said, CAGR is almost at 20%, and the yield is decent. However, there has not been a dividend increase since 2017 Q1. Unless Aecon increases their Q4 dividend this year, they will end up going three years of no dividend growth.
Back in May I wrote a review on Aecon Group, and recommended it as a buy. Following my own advice, since then I have been purchasing shares on dips in both my TFSA and corporate accounts. It seems that I wasn’t the only one that thought Aecon was under valued, and a worthy investment, because CCCC International Holding Limited (CCCI) has offered to purchase Aecon Group at a price of C$20.37/share!
From the Aecon Group press release:
- All-cash consideration of $20.37 per share; 42 per cent premium to unaffected share price
- Aecon gains access to new platforms and partnerships for continued growth in Canada and abroad; CCCI advances its global growth strategy
- New growth and employment opportunities expected as Aecon gains significant capabilities and financial strength by joining the world’s largest network of engineering and construction companies
- Aecon will retain its name, continue to be Canada-headquartered and led by its Canadian management team
- Aecon and CCCI share a strong commitment to maintaining customer service excellence and a safety-first culture
- Aecon board of directors unanimously recommends transaction to shareholders
This is great news for me. My adjusted cost basis is $16.67, and with an offering price of $20.37 that nets me a healthy 22.20% gain!
I had originally purchased Aecon for its strong dividend growth—21% compounded annually since 2007—and great underlying fundamentals, and I will be sad to see a solid dividend payer go away. However, given the capital gains attached to the sale, this is a great win. What makes things even better is that half of my holdings are in my TFSA, which means that the 22.20% gain is tax-free.
All in all, a great way to end October; this was certainly a treat!