Double Win for 3 Canadian Dividends

03/05/2013 9:45 am EST


John Deman of Money Reporter sees earnings growth plus dividend hikes as powerful incentives to buy into these Canadian blue chips.

Fourth-quarter earnings at venerable incumbent telecom BCE (BCE) beat those of last year’s by 5%, with BCE earning 65 cents per share versus 62 cents. As a result, annual earnings were also higher by 2%. In fiscal 2012, BCE made $3.18 per share, compared with $3.13 per share in fiscal 2011.

The company also indicated another dividend increase. The most recent one came just two updates ago, and that was an increase from the update before that. The annual payout will rise to $2.33 per share from $2.27 as of the first quarter of fiscal 2013.

A decade or more ago, BCE paused its long historical record of dividend increases, but it’s back on track now. This latest increase is the ninth annual increase, and the payout is up 60% from its fourth-quarter 2008 level.

Higher earnings and higher dividends tend to lead to a higher stock price, and that’s the case here. BCE’s share price is up 4.48% in three months, and 11.9% in a year.

Last update, the stock was down 4.46% in three months, due to the failed bid to take over Astral Communications, which would have given it a dominant footprint in the Quebec market, in both English and French. BCE is still pursuing that deal.

BCE also closed a deal to buy a 37.5% stake in Maple Leafs Sports and Entertainment for half of $1.3 billion. With the lockout now over, hockey-related revenue is now flowing. BCE is a buy for dividends and further gains.

Bank of Nova Scotia’s (BNS) Scotiabank made 15% more in fiscal 2012 than 2011, with earnings of $5.22 per share versus $4.53, thanks to a strong 22% increase in fourth-quarter earnings. Growth in Latin America banking revenues is key to these increases, and gives BNS an advantage over its Big Six brethren.

Last update, the bank raised its dividend to $2.28 per share, up from $2.20 annually. And the stock price is up 8.75% in three months, the second increase in a row, and 9.1% from a year ago. Canada’s most international bank (it operates in 50 countries) is a buy.

Enbridge (ENB) announced that it is increasing its dividend to $1.26 per share from $1.13. The stock is up 12.67% in three months (following a decline of a penny last update), plus a 13.2% gain over one year ago.

And there’s more: fourth-quarter earnings were up 17% in fiscal 2012, while annual earnings increased by 11%, to $1.62 per share versus $1.46. Enbridge had previously provided guidance for earnings of between $1.58 and $1.74 per share in 2012, and so it met that as well. Enbridge is a buy for both income and future gains.

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