After a quiet couple of weeks, dividend growth is expected to ramp up over the next few weeks. That is of course, if companies follow regular dividend growth patterns. In this environment of uncertainty, more companies are taking a cautions approach and are opting to conserve cash instead.
This has led to several dividend cuts and suspensions. As of writing, there have been 47 TSX-listed companies which have either cut or suspended the dividend. Of those, three are Canadian Dividend All-Stars.
Since the last update, CAE Inc (TSX:CAE)(NYSE:CAE) became the fourth All-Star as it announced a temporary suspension to the dividend. It joined A&W Royalties Income Fund (OTC:AWRRF)[TSX:A&W.UN], NFI Group (OTCPK:NFYEF)[TSX:NFI] and Inter Pipeline (OTCPK:IPPLF)[TSX:IPL] as the only four All-Stars whose dividend has been impacted – thus far. The longer the economy takes to recover, the more likely others will join them.
Given the continued uncertainty, it is likely that many companies will opt to keep the dividend steady if COVID-19 mitigation efforts are having a material impact on operations. With more than a dozen All-Stars expected to raise dividends over the next few weeks, it will be interesting to see what trends emerge.
Of note, all figures are in Canadian dollars unless otherwise noted.
Upcoming Dividend Raises
Loblaw Companes (OTCPK:LBLCF)[TSX:L]
- Current Streak: 8 years
- Current Yield: 1.68%
- Earnings: April 29, 2020
What can investors expect: Canada’s largest grocery chain, Loblaw is scheduling to report first quarter results this coming Wednesday. Over its modest eight-year streak, Loblaw has announced their annual dividend raise at this time.
Of all companies due to announce a dividend increase, Loblaw is best positioned to come through. As essential services, grocers are navigating the crisis better than most.
Since the start of the streak, the company has raised dividends in the mid-to-high single digits. I expect this trend to continue.
|
EST DGR |
EST INCR |
EST NEW DIV |
|
7.94% |
$0.025 |
$0.34 |
Open Text (OTEX)[TSX:OTEX]
- Current Streak: 7 years
- Current Yield: 1.93%
- Earnings: April 30, 2020
What can investors expect: One of less than a handful of TSX-listed technology companies to achieve All-Star Status, Open Text is scheduled to announce quarterly results this coming Thursday.
In the current volatility, the tech sector is holding up quite well. As the world becomes more connected, technology is quickly becoming an essential service. That is, if it’s not already.
Open Text’s dividend growth rate is among the most consistent of all All-Stars. Since the dividend growth streak began, Open Text has raised dividends by approximately 15%.
To date, Open Text has not provided any updates re: COVID-19 impacts. As such, it is difficult to predict how operations are holding up. However, assuming no news is good news, I’d expect a raise inline with historical averages.
|
EST DGR |
EST INCR |
EST NEW DIV |
|
~15% |
$0.0262 |
$0.2008 |
Imperial Oil (IMO)[TSX:IMO]
- Current Streak: 25 years
- Current Yield: 4.86%
- Earnings: May 1, 2020
What can investors expect: Imperial Oil has the seventh-longest dividend growth streak in the country. Historically, the company has raised dividends along with first quarter earnings.
Unfortunately, the decades low oil prices is having a significant impact on producers. Imperial Oil’s impressive commitment to the dividend will be tested.
On the one side, Imperial Oil is among the best positioned to navigate the current bear market. On the other, there is a strong possibility that the streak may be near an end.
In my opinion, it is highly unlikely that Imperial Oil will raise dividends this coming week. In fact, the odds are looking increasingly likely that further dividend cuts in the oil sector are expected. Even oil majors like Imperial Oil are at risk.
It is also important to note that Imperial doesn’t have to raise this quarter to keep the dividend growth streak alive. It still has several quarters in which to do so.
However, to humour the optimist in me, should Imperial Oil shock the markets and bump up the dividend, expect nothing more than a token raise.
|
EST DGR |
EST INCR |
EST NEW DIV |
|
2.27% |
$0.005 |
$0.225 |
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Disclosure: I am/we are long IPPLF. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.
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