Posted by BM on February 7, 2022
“A dividend is a dictate of management. A capital gain is a whim of the market.”
We have already seen some of our top performing dividend growers of 2021 on ‘The List’ give back some of their capital gains from last year. This is normal, as the ‘excitement factor’ (P/E expansion) begins to retract as prices fall.
Always remember Jack Bogle’s expected return formula:
Future Market Returns = Dividend Yield + Earnings Growth +/- Change in P/E Ratio
Right now, we are seeing a negative change in P/E. Thankfully, dividend growth investors have dividend yield and earnings growth to fall back on during bear markets and we only purchase when the price is sensible, so we already have a built-in margin of safety. We use bear markets to buy more of our quality dividend growers on sale.
Performance of ‘The List’
The best performers last week on ‘The List’ were Alimentation Couche-Tard Inc. (ATD-T) up 7.3%; TD Bank (TD-T) up 5.4%; TFI International (TFII-T) up 4.5%.
Enghouse Systems Limited (ENGH-T) was the worst performer this week, down -1.9%.
‘The List’ was up this week 1.9% with a 0.0% YTD price return (capital) and an average of 6.4% in dividend increases (income) reported so far for fiscal 2022.
Dividend Increases
There were two companies on ‘The List’ that announced dividend increases this past week.
Brookfield Infrastructure Partners (BIP-N) on Wednesday said it increased its 2022 quarterly dividend from $0.51 to $0.54 per share, payable March 31, 2022, to shareholders of record on Feb. 28, 2022.
This represents a dividend increase of 5.9%, marking the 15th straight year of dividend growth for this global infrastructure company that owns and operates quality, long-life assets.
Bell Canada (BCE-T) on Tuesday said it increased its 2022 quarterly dividend from $0.875 to $0.92 per share, payable April 15, 2022, to shareholders of record on Mar. 15, 2022.
This represents a dividend increase of 5.1%, marking the 14th straight year of dividend growth for this quality Canadian telco.
Earnings Releases
There were two earnings releases announced from companies on ‘The List’ this past week.
Brookfield Infrastructure Partners Q4 FFO, Earnings Miss, Revenue Rise, Increases Dividend
07:44 AM EST, 02/02/2022 (MT Newswires) — Brookfield Infrastructure Partners (BIP) (BIP.TO) reported Q4 funds from operations of $0.97 per unit, up from $0.86 a year earlier.
Analysts polled by Capital IQ forecast $0.93.
Revenue for the December quarter was $3.25 billion, up from $2.53 billion a year earlier. A single analyst surveyed by Capital IQ forecast $1.94 billion.
“2021 was a remarkable year for Brookfield Infrastructure, highlighted by our strong organic growth, capital recycling accomplishments, and the deployment of significant capital into new investments and other growth initiatives,” said Sam Pollock, Chief Executive Officer of Brookfield Infrastructure. “We begin this year with a strong liquidity position and half of our 2022 deployment target already secured.”
BCE Reports Q4 Adjusted EPS Beat of $0.76, Announces 5.1% Dividend Hike, Guidance
MONTRÉAL, February 3, 2022 – BCE Inc. (TSX, NYSE: BCE) today reported results for the fourth quarter (Q4) and full-year 2021, provided financial guidance for 2022 and announced a 5.1%, or $0.18 per share, increase in the BCE annual common share dividend to $3.68.
“At Bell, we have been singularly focused on our purpose to advance how Canadians connect with each other and the world, and our strong execution and operational discipline to deliver on this purpose is paying off. Bell’s solid performance in Q4 and throughout 2021 reflect the steady demand for fast, reliable and innovative services to keep residents and businesses connected, informed and productive with net new mobile phone and mobile connected device, retail Internet and IPTV subscriber additions of 225,533 in Q4, and our best annual retail residential net subscriber performance in 10 years,” said Mirko Bibic, President and CEO of BCE Inc. and Bell Canada.
“A key part of our strategy has been to champion the customer experience. I’m proud of the gains we made this past year, leading the industry in reducing customer complaints, and enhancing our digital tools and self-serve apps so that our customers have a choice in how they interact with us. It’s clear that our historic network capital expenditure acceleration program to connect more Canadians faster and continue delivering on our purpose is the right path forward as Canada builds back from the impacts of COVID-19. We surpassed our 2021 network expansion targets reaching 1 million households with Wireless Home Internet one year ahead of schedule. We expanded our direct fibre footprint to communities across the country, and our 5G network now covers over 70% of the Canadian population.
As we look ahead to 2022, we plan to reach up to 900,000 more homes and businesses with direct fibre connections and expand the reach of our 5G network to meet our growing customer needs. And in every interaction, we will continue to build on the gains we made in making it easier for our customers to do business with us and keep them at the centre of everything we do.”
Guidance:
The table below provides our 2022 financial guidance targets. These ranges are based on our current outlook for 2022 taking into account the impact of COVID-19 on our 2021 consolidated financial results.
| 2021 Results | 2022 Guidance | |
|---|---|---|
| Revenue Growth | 2.5% | 1% - 5% |
| Adjusted EBITDA growth | 3.0% | 2% - 5% |
| Capital intensity | 20.6% | 21% |
| Adjusted EPS growth | 5.6% | 2% - 7% |
| Free cash flow growth | (10.5%) | 2% - 10% |
| Annualized common dividend per share | $3.50 | $3.68 |
For the full-year 2022, we expect growth in adjusted EBITDA, a reduction in contributions to post-employment benefit plans and payments under other post-employment benefit plans, and lower cash income taxes, will drive higher free cash flow.
Recent News
A busy week coming up for companies on ‘The List’. Earnings reports give us a look ‘under the hood’ of our quality dividend growers and provide us with lots of tidbits of information to help in our purchase decisions. Paying attention to the fine print helps us understand the business better and how they will continue to grow earnings post COVID. Of the companies due to report this week, many have already announced dividend increases for 2022 or will be doing so in Q3 (historically). Any increase would be a welcome surprise.
Here are a few of the companies on ‘The List’ due to report earnings this week:
TFI International (TFII-T) is scheduled to report earnings after hours Monday Feb. 07
Intact Financial Corporation (IFC-T) is scheduled to report earnings Wednesday Feb. 09
Toromont Industries Ltd. (TIH-T) is scheduled to report earnings after hours Wednesday Feb. 09
Telus (T-T) is scheduled to report earnings Thursday Feb. 10
Fortis Inc. (FTS-T) is scheduled to report earnings Friday Feb. 11
Enbridge Inc. (ENB-T) is scheduled to report earnings Friday Feb. 11
Below is a snapshot of ‘The List’ from last Friday’s close. For a sortable version of ‘The List’ please click on The List menu item.
‘The List’ is not meant to be a template for investors to copy exactly. Rather, its purpose is to provide investment ideas and a real-time illustration of dividend growth investing in action. It is not a ‘Buy List’, only a starting point for our analysis and discussion.
The List (2022)
Last updated by BM on February 7, 2022
*Note: The following graph is wide, you can scroll to the right on your device to see more of the data.
| SYMBOL | COMPANY | YLD | PRICE | YTD % | DIV | YTD % | STREAK |
|---|---|---|---|---|---|---|---|
| AQN-N | Algonquin Power & Utilities | 4.9% | $14.04 | -2.2% | $0.68 | 2.3% | 11 |
| ATD-T | Alimentation Couche-Tard Inc. | 0.8% | $53.38 | 2.5% | $0.44 | 18.1% | 12 |
| BCE-T | Bell Canada | 5.4% | $67.93 | 3.1% | $3.68 | 5.1% | 13 |
| BIP-N | Brookfield Infrastructure Partners | 3.6% | $60.17 | -1.5% | $2.16 | 5.9% | 14 |
| CCL-B-T | CCL Industries | 1.3% | $64.50 | -4.9% | $0.84 | 0.0% | 20 |
| CNR-T | Canadian National Railway | 1.9% | $156.04 | 0.7% | $2.93 | 19.1% | 26 |
| CTC-A-T | Canadian Tire | 2.8% | $185.30 | 1.2% | $5.20 | 10.6% | 11 |
| CU-T | Canadian Utilities Limited | 4.9% | $35.86 | -2.0% | $1.76 | 0.0% | 50 |
| DOL-T | Dollarama Inc. | 0.3% | $66.90 | 5.5% | $0.20 | 1.7% | 11 |
| EMA-T | Emera | 4.4% | $59.78 | -4.5% | $2.65 | 2.9% | 15 |
| ENB-T | Enbridge Inc. | 6.3% | $54.72 | 10.5% | $3.44 | 3.0% | 26 |
| ENGH-T | Enghouse Systems Limited | 1.5% | $42.20 | -8.0% | $0.64 | 4.1% | 15 |
| FNV-N | Franco Nevada | 1.0% | $133.97 | -1.6% | $1.28 | 10.3% | 14 |
| FTS-T | Fortis | 3.6% | $59.75 | -1.2% | $2.14 | 4.4% | 48 |
| IFC-T | Intact Financial | 2.1% | $175.13 | 7.0% | $3.64 | 7.1% | 17 |
| L-T | Loblaws | 1.4% | $101.30 | -1.4% | $1.46 | 6.6% | 10 |
| MGA-N | Magna | 2.2% | $79.58 | -2.5% | $1.72 | 0.0% | 12 |
| MRU-T | Metro | 1.6% | $68.03 | 1.5% | $1.10 | 10.0% | 27 |
| RY-T | Royal Bank of Canada | 3.3% | $146.87 | 7.3% | $4.80 | 11.1% | 11 |
| SJ-T | Stella-Jones Inc. | 1.8% | $40.71 | 0.1% | $0.72 | 0.0% | 17 |
| STN-T | Stantec Inc. | 1.0% | $67.13 | -4.4% | $0.66 | 0.0% | 10 |
| TD-T | TD Bank | 3.4% | $105.62 | 6.3% | $3.56 | 12.7% | 11 |
| TFII-T | TFI International | 1.1% | $125.49 | -10.5% | $1.36 | 17.4% | 11 |
| TIH-T | Toromont Industries | 1.3% | $107.43 | -5.5% | $1.40 | 6.1% | 32 |
| TRP-T | TC Energy Corp. | 5.4% | $64.53 | 8.0% | $3.48 | 1.8% | 21 |
| T-T | Telus | 4.2% | $30.82 | 3.6% | $1.31 | 4.4% | 18 |
| WCN-N | Waste Connections | 0.7% | $123.02 | -8.2% | $0.92 | 8.9% | 12 |
| Averages | 2.7% | 0.0% | 6.4% | 18 |
