Wednesday, December 22, 2021

7 Canadian Companies Providing Dividend Growth Guidance

In 20172019, and last year, I shared a list of Canadian companies that provide dividend growth guidance. I've decided to update this list as I find dividend growth guidance, specifically when it is expressed as a percentage, useful in helping me assess the capital allocation plans for companies, introducing a soft control by which to judge management's actions, and assisting me in projecting the organic dividend growth rate of my portfolio for 2022. 

The table below could be considered a starting point for further research. Please, let me know of any other Canadian companies that provide dividend growth guidance. I'll gladly update the table with your input. Lastly, the percentage beside the company's ticker symbol in brackets is the amount of the 2021 dividend increase.

TC Energy Corp (TRP - 7.4%)                     
Dividend growth of 3-5% (down from 5-7% previously)
Emera Inc (EMA - 3.9%)
Dividend growth of 4-5% per year through 2024
Telus Corp (T - 5.2%)
Dividend growth of 7-10% per year through 2022
Capital Power Corp (CPX 6.8%)
Dividend growth of 5% per year through 2025
Fortis Inc (FTS - 5.9%)
Dividend growth of 6% per year through 2025
Brookfield Renewable Partners (BEP.UN - 5.0%)
Annual distribution increases of 5-9%
Brookfield Infrastructure Partners (BIP.UN - 5.2%)
Annual distribution increases of 5-9%

For those of you with a sharp eye, you may notice two companies missing from last year's list. Enbridge and Algonquin Power & Utilities Corp. Sadly, both companies moved away from providing percentage-based dividend growth guidance in their recent investor day presentations. Enbridge indicated that over the next three years, their dividend growth will be "up to level of medium-term DCF (distributable cash flow) / share growth". On the same slide of the presentation, the company indicates that they expect DCF growth per share to be in 5 to 7% range over the same time period. I chose to drop them from the above table as including the qualifier "up to" and knowing the company makes some subjective judgements in calculating their DCF each quarter. Similarly, Algonquin moved away from providing the crystal clear 10% dividend growth guidance, to indicating that their dividend growth will be based on "Sustainable long-term payout ratio target of 80-90% of normalized earnings". It is worth noting that the company expects their adjusted EPS growth from 2022 - 2026 to be between 7-9%. Again, given the company can wiggle anywhere within a 10% band of "normalized earnings" (another non-GAAP term), I don't feel comfortable including them in the above table.

As more companies start to move away from providing clear, percentage based dividend growth guidance, I may have to draft another entry to cover some companies who refer to a special ratio, or another less structured way to provide guidance on their distribution growth. It's definitely sad to see Algonquin and Enbridge move away from providing simple dividend growth guidance. 

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