There were 4 notable dividend increases, and one company initiating a quarterly dividend, for the period ending July 6, 2018.
A&W Revenue Royalties Income Fund
|Projected Annual Dividend for 2018||$1.65000|
|Market price as of July 06, 2018||$31.84|
The A&W name is well known for its restaurants and world-famous root beer. Despite this, the A&W fund does not directly have any ownership in the A&W restaurants or soda business. Instead, it invests indirectly in the A&W Quick Service Restaurant business. The present structure gives the A&W fund 3% of top-line revenue, paid for by A&W Food Services of Canada Inc.
The fund has been paying a distribution since 2002. Of note, 2007-2010 the fund paid an extra payment per year (13 payments in 2007 and 14 payments in each of 2008, 2009, and 2010) based on the date of record. Other than that, the distributions have been relatively flat, however there has been growth since 2015. Since 2014 CAGR has been 4.0%. The fund most recently increased its distribution in March, and at the current pace is expected to increase 2.4% year over year from 2017.
|Projected Annual Dividend for 2018||$0.98880|
|Market price as of July 06, 2018||$18.13|
As one of North America’s largest home and commercial services and energy solutions companies with approximately 3,800 employees under its Enercare and Service Experts brands, Enercare is a leading provider of water heaters, water treatment, furnaces, air conditioners and other HVAC rental products, plumbing services, protection plans and related services. With operations in Canada and the United States, Enercare serves approximately 1.6 million customers annually. Enercare is also the largest non-utility sub-meter provider, with electricity, water, thermal and gas metering contracts for condominium and apartment suites in Canada and through its Triacta brand, a premier designer and manufacturer of advanced sub-meters and sub-metering solutions.
Enercare has been paying a distribution/dividend to shareholders since 2002. However, following tax changes the company converted from an income trust to a dividend paying corporation in 2009, precipitating a large drop in the cash paid out to unit holders (who became shareholders). For all intents and purposes total growth is measured since 2010 since that gives us a more meaningful comparison.
Taking that into consideration, the dividend has a CAGR of 5.29%. The firm recently increased its dividend in April, and year over year growth is projected at 3.25% higher than 2017.
|Projected Annual Dividend for 2018||$0.16|
|Record Date||September 30, 2018|
|Payment Date||October 15, 2018|
|Market Price as of July 06, 2018||$6.30|
MBN is a newcomer to the dividend space, who recently announced its inaugural dividend of $0.08/share. The corporation is the result of a merge between Globalance Dividend Growers Corp., for which Middlefield Limited is the fund manager, and MBN Corporation.
Since this is the inaugural dividend, the projected income for 2018 is $0.16/share, assuming the next record date is in December 2018 (i.e. the next quarter).
Pembina Pipeline Corp.
|Projected Annual Dividend for 2018||$2.24|
|Market price as of July 06, 2018||$46.41|
Calgary-based Pembina Pipeline Corporation is a leading transportation and midstream service provider that has been serving North America’s energy industry for over 60 years. Pembina owns an integrated system of pipelines that transport various hydrocarbon liquids and natural gas products produced primarily in western Canada. The Company also owns gas gathering and processing facilities and an oil and natural gas liquids infrastructure and logistics business. Pembina’s integrated assets and commercial operations along the majority of the hydrocarbon value chain allow it to offer a full spectrum of midstream and marketing services to the energy sector. Pembina is committed to working with its community and aboriginal neighbours, while providing value for investors in a safe, environmentally responsible manner. This balanced approach to operating ensures the trust Pembina builds among all of its stakeholders is sustainable over the long term. Pembina’s common shares trade on the Toronto and New York stock exchanges under PPL and PBA, respectively. (Sources: Company website, TSX).
Pembina has paid a distribution and/or dividend since 1997, and in October 2010 converted to a dividend paying corporation; for a meaningful comparison our basis starts in 2010. In May 2018 increased dividend by 5.56%, giving us a forward projected annual dividend if $2.24.
Richelieu Hardware Ltd.
|Projected Annual Dividend for 2018||$0.24|
|Market price as of July 06, 2018||$27.23|
I most recently covered Richeleu in this analysis at Seeking Alpha.
Headquartered in Montreal, Quebec, Richelieu Hardware Ltd. is an importer, distributor, and manufacturer of specialty hardware and related products, focused on the North American Markets. Its primary customers are split amongst retail customers vis-à-vis the residential and commercial woodworking industry, home furnishing and office furniture manufacturers, and hardware and renovation superstores.
Richelieu started paying a semi-annual dividend in the third quarter of 2002 and switched to a quarterly dividend in the third quarter of 2003. The firm also issued a 3:1 stock split in 2016 and had its most recent dividend increase of 5.82% in January of this year. Since inception, it has had a CAGR of 16.80%.
The following is a brief summary of an analysis note that I posted to Seeking Alpha. The full article may be found at this link.
Richelieu Hardware Ltd. (RCH.TO) was brought to my attention by a colleague when he was searching for stocks that he found that met Peter Lynch’s stock selection criteria. Upon first hearing about Richelieu, it seemed to hit on some of the key levers I look for in a stock:
- Small/medium capitalization
- Dividend paying, with increasing payments
- Canadian based
- A boring industry
- Focused on a tangible product/service (e.g. they make/sell things that you can “hug and hold”)
Headquartered in Montreal, Quebec, Richelieu Hardware Ltd. is an importer, distributor, and manufacturer of specialty hardware and related products, focused on the North American Markets. Its primary customers are split amongst retail customers vis-à-vis the residential and commercial woodworking industry, home furnishing and office furniture manufacturers, and hardware and renovation superstores (e.g. Home Depot, Lowes). In performing a cursory analysis of the past five years of Richelieu’s fundamentals, the company has a strong balance sheet, great profitability, and a compelling dividend. However, it is presently overpriced.
A cursory analysis shows that Richelieu appears to be a strong company based on the past five years of fundamentals. Richelieu’s fundamentals have some intriguing characteristics, but based on the most recent fiscal year it is overvalued. Based on this cursory analysis, I would rate this company a hold, pending further analysis into the fundamentals, over a larger window (e.g. 10 years vs. the 5 years used for my cursory analysis). That said, Richelieu certainly deserves a deeper analysis to establish if it is a company which should be placed on long term watch-lists, to purchase on dips.