Wednesday, April 13, 2016

12 Monthly Paying Canadian Dividend All-Stars

What is your favorite day of the month? If you are a dividend investor, my bet is that you answered the 15th or the last day of the month, two popular dividend payment days. Although a case could be made that is inefficient for companies to pay dividends monthly as opposed to quarterly or semi-annually, I have a soft spot for monthly payers. Having a little extra cash available to re-invest each month provides me a psychological boost. For this reason, I decided to mine the Canadian Dividend All-Star list to identify monthly payers and take a quick look at their financial characteristics.  As a reminder, the Canadian Dividend All-Star list consists of companies that have managed to increase their dividends annually for a minimum of five years. Out of the 89 Canadian Dividend All-Stars at March 31, 2016, only 12 companies pay monthly dividends.

Here are some fun facts about the 12 monthly dividend payers:
  • The average length of their streak of raising dividends is 8.2 years (vs 10.7 years for the entire list)
  • Their average dividend yield was 5.26% (vs 3.64% for the entire list)
  • Their average amount of their latest dividend increase was 6.63% (vs 9.30% for the entire list)
  • Their average EPS payout ratio was 110.49% (unable to calculate for the entire list)
  • Their average trailing P/E ratio was 21.9 (unable to calculate for the entire list)
  • Their average 1/3/5 year dividend growth rates were 7.4%/6.9%/9.4% (vs 12.2%/13.1%/15.3%)
  • Of the ten sectors used to classify the list, the monthly dividend payers are diversified across seven sectors including Real Estate (3), Communication Services (2), Consumer Cyclical (2), Energy (2), Industrials (2), Financial Services (1), and Utilities (1).
As with any other screen, the above is simply a starting point for further research.  Clearly a deeper dive is required given the average EPS payout ratio of 110%, the expensive 22X average trailing P/E, and the lower relative dividend growth rates offered by the 12 monthly payers. Corus should probably not be included on the list at all as they froze their dividend in January 2016 when announcing their transformational acquisition of the media assets of Shaw Communications. 

Personally, I currently own four of the monthly dividend payers (Corus, Alaris, Enbridge Income, and Granite Real Estate), and have owned Inter Pipeline as recently as last month. Of my current holdings, I would consider selling Corus as it is a vastly different and more leveraged company than when I first invested in it. On the other hand, Cineplex has long been on my watch list as it holds a virtual monopoly on movie theatres in Canada. However, the stock seems very expensive (P/E of 24X) and only offers a 3.1% yield.

Do you hold or are you interested in purchasing any of the 12 monthly payers?

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