Earnings season is wrapping up, and as such companies are making the last of their dividend announcements alongside their quarterly results. At the Dividend Gangster blog we monitor a large selection of companies on the Canadian exchanges, which have a solid history of dividends. For the week ending June 2, 2017 there were five notable companies that announced dividends, where their dividend increased year over year from F2016. There was also one runner-up, whose dividend is in line with F2016, but over the past 10 years has increased their dividend; that said, they still have one more fiscal quarter to increase their dividend to keep up their streak.
Of the five companies (discussed below in alphabetical order) who increased year over year, the average year over year increase was 3.71%. Moreover, three of the five, and the runner up, are all from the Financial Sector. Here are some stocks for your consideration, if you are looking for new companies to add to your portfolio.
Since 1947, CAE Inc. (CAE.TO) has been providing training and simulation services and equipment to a number of industries, with a focus on the civil aviation, defence and security, and healthcare sectors. While they are a Canadian firm, they are a global organization, with branches and services offered in over 35 countries (either independently, or through joint ventures).
CAE’s most recent dividend pushes it to a $0.32 annualized dividend, which is 3.23% over its F2016 annual dividend of $0.31. At $0.32, its yield is 1.46% based on the June 2, 2017 closing price of $21.93.
Laurentian Bank of Canada
Laurentian Bank (LB.TO) is the smallest bank that announced this week, and being the eighth largest by market cap. In business for over 150 years, it is a mainstay—albeit a smaller one—in the Canadian market, with a focus on small and medium businesses, as well as retail clients. Like most fully integrated firms, it offers a broad suite of services for different customer markets:
- Retail banking
- Business banking
- Capital Markets
- Financial services (e.g. investment advisors)
Moreover, it has a wholly owned subsidiary—B2B Bank—which focuses on providing banking products to a wide network of financial advisors and brokers.
Laurentian’s most recent dividend of $0.62 pushes it to $2.46 annualized for F2017, which represents a 4.69% yield over the June 2, 2017 closing price of $52.40, and a 4.24% increase over the F2016 dividend of $2.36.
National Bank of Canada
National Bank (NA.TO) is the first bank after the Big Five, as measured by market capitalization. The bank has four key lines of business:
- Personal and Commercial Banking (e.g. retail, small business, etc.)
- Wealth management
- Financial markets
- US and International Speciality Finance
Like many of the key banks in Canada, it has a national presence, with branches in most provinces. However, one of its key areas of focus is in the Quebec market, where it works with many small and medium size businesses through the Commercial component of its Personal and Commercial Banking line of business.
With the recent dividend announcement of $0.62, its forward yield is 4.55% based on the June 2 closing price of$54.05, which represents an annual $2.30 annualized dividend. Its fiscal 2016 dividend was $2.20, and as such the $2.24 dividend is a 4.55% increase over the previous year.
In business for over 50 years, Saputo (SAP.TO) is a key player in the national and international dairy markets, and manufacturers and distributes a number of dairy based products, including cheese, milk, cream, and cultured products. It is in one of the top four firms engaged in the dairy market in each of Canada, Australia, and Argentina.
From a yield perspective, Saputo is the weakest of all companies reviewed in this article, with a yield of only 1.34%, based on the June 2, 2017, closing price of $44.64. However, its announced dividend of $0.15 for the quarter equates to $0.60 annualized, which is a 5.26% increase over its F2016 dividend of $0.57. That said, based on yield and growth alone, what you an investor loses in yield, potentially makes up for in year over year growth.
Scotiabank (aka The Bank of Nova Scotia)
Of the banks discussed in this article, Scotiabank (BNS.TO) is the only one that falls into the Big Five category of Canadian banks. Its lines of business are split between Domestic (i.e. Canadian) and International Markets:
- Retail and small business
- Commercial banking
- Wealth management
The bank also has a global banking and markets (GBM) line of business which works with corporate, government, and institutional clients. GBM offers commercial/institutional products and services such as trade and/or cash management, corporate lending, underwriting, research, commodity and foreign exchange trading, etc.
The banks recently announced dividend of $0.76 equates to a $3.02 annualized dividend, representing a 4.86% increase over the F2016 dividend of $2.88. Based on the June 2, 2017 closing price, the dividend yields 3.94%, which is the lowest of the banks reviewed in this article which had a year over year increase. However, the low yield is compensated for in the year over year increase, which is the highest of the banks discussed, and second only behind Saputo.
Runner up: Canadian Western Bank
As illustrated previously, Canadian Western Bank (CWB.TO) is the seventh largest financial services firm in Canada, measured by market capitalization. The bank is unique in that it is the only Schedule 1 bank which specializes in mid-market commercial banking, and have a number of key lines of business, including:
- Speciality business banking services for small- and medium-sized companies
- Industrial equipment financing and leasing solutions for companies with requirements between $100,000 and $50 million
- Franchise Finance to help growth of franchisees and franchisors in the hospitality and restaurant industries
- Commercial equipment leasing with deals ranging $5,000 to $2 million
- Structured loans and customized leasing
- Wealth and investment management
The most recent dividend of $0.23 equates to $0.92 annualized, which is in line with its F2016 annual dividend. However, as CWB has increased their dividend every year for the past 10 years, it is highly likely that they will increase their dividend next quarter, to keep up their streak.
The following table summarizes the above discussion:
For income oriented investors who are looking for new companies to broaden their portfolio, any of the five companies mentioned above would be worthy additions. With consistent dividend growth over the past 10 years, except for our runner up stock (Canadian Western Bank), all four companies would be great hedges against inflation, whilst helping to provide a steady stream of income.
Notes & Disclosures
- All figures in Canadian dollars.
- Long BNS.TO, CAE.TO