Monday, October 21, 2013

Dividend Growth

On Friday, I talked about possible good buys on Dividend Growth Companies that I hold. The table is shown below. Today, I want to address the Dividend Increase and the 5 year Median Dividend yield columns of my table.

If you want a copy of this spreadsheet to update yourself, just email me. To follow a particular line on the spreadsheet, use your cursor to highlight that line.

Name Symbol P/Hi P/Ave Div Inc Med Yld
Bank of Montreal BMO Exp. Cheap 0.8% 4.9%
BCE BCE Exp. Cheap 8.5% 5.3%
Calian Technologies Ltd CTY Exp. Cheap 2.3% 5.2%
Canadian Natural Resources CNQ Cheap Cheap 19.7% 0.7%
Ensign Energy Services ESI Cheap Cheap 5.4% 2.5%
Evertz Technologies ET Cheap Cheap 23.7% 2.3%
Hammond Power Solutions Inc. HPS.A Cheap Cheap 21.6% 1.4%
Leon's Furniture LNF Exp. Cheap 8.0% 2.7%
Manitoba Telecom MBT Exp. Cheap -8.2% 6.9%
McCoy MCB Exp. Cheap 14.9% 2.3%
Power Financial Corp PWF Exp. Cheap 3.8% 5.1%
Royal Bank RY Exp. Cheap 5.8% 4.2%
Saputo Inc. SAP Exp. Cheap 11.6% 1.8%
SNC-Lavalin SNC Exp. Cheap 17.7% 1.3%
Sun Life Financial SLF Exp. Cheap 1.8% 5.4%
Thomson Reuters Corp TRI Exp. Cheap 3.8% 3.6%
Toromont Industries Ltd. TIH Exp. Cheap 0.4% 2.2%
Toronto Dominion Bank TD Exp. Cheap 6.5% 3.8%
TransAlta Corp TA Cheap Cheap 3.3% 5.4%
Veresen Inc. VSN Exp. Cheap 1.2% 8.9%

Besides looking for a stock at a good price, when you look at dividend growth stocks, you need to consider what the dividend yield and dividend growth configurations are. A lot of companies can grow dividends. I include companies that increase dividends over time. I do not require that a company increases their dividends every year like to TSX's Dividend Aristocrat list does.

In basic terms, the closer the dividend yield is to 1%, the closer to the range of 20% to 25% you want the dividend increases to be. If the dividend yield is in the 4% to 5% range increases of at or just above inflation is fine. If the dividend yield is greater than 5%, I think you should question the viability of the dividend payments.

In the table, there are 4 stocks with the dividend increase column figures highlighted. This is because I think that the current 5 year dividend growth per year might not reflect what the dividend growth will be in the future.

For Hammond Power Solutions Inc. (TSX-HPS.A) this company just started to pay dividends in 2009. They have had very good increases in the past, but the latest one, while still good is lower at 11%. See my latest blog on this stock here.

For McCoy Corp (TSX-MCB) the dividends have been all over the place and since they started to pay dividends 2004 they have increased, decreased and cancelled them. See my latest blog entries on this stock here and here.

For Sun Life Financial (TSX-SLF), I think that once they start again to increase dividends they will be giving good increases. However, it is hard to say when they will again increase dividends. For my latest blog entries on this stock click here or here.

The last stock is Toromont Industries (TSX-TIH). They appear to reduce their dividends in 2011, but the reduction was because of a spin-off of Enerflex. The latest dividend increase was for 8.3% and the median dividend increase is probably around 10%. For my latest blog entries on this stock, click here or here.

I have shown only the 5 year growth for dividends. I will make one comment about dividend growth. If a company is not growing its dividends or cannot growth them, do not buy. No matter how good the dividend is, you will make far more money in the long term with a lower yield and a dividend that grows that earing a very good yield on a company that does not grow the dividend.

I have written about the Dividend Yields on Original Investments. This is really what I am talking about now as the combination of dividend yield and dividend increase determines what the dividend yield on your original investment will grow to.

On my other blog I am today writing about Gluskin Sheff + Associates Inc. (TSX-GS, OTC-GLUSF) ...continue...

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.


  1. Thank you for the auspicious writeup. It in reality was once a enjoyment account it.
    Look advanced to far brought agreeable from you! However,
    how can we keep up a correspondence? 강남오피

  2. Have you ever thought about publishing an e-book or guest authoring on other sites?

    I have a blog based upon on the same subjects you discuss and would really like to have you share some
    stories/information. I know my viewers would value your work.
    If you are even remotely interested, feel free to send me an email. えがおんカジノ