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Five stocks that will raise their dividends early in 2014

John Heinzl is the dividend investor for Globe Investor's Strategy Lab. Follow his contributions here. You can see his model portfolio here.

Which way is the market heading this year?

Beats me. I gave up predicting market moves a long time ago. But here's something I can say with a high degree of confidence: The following five stocks will raise their dividends early in 2014.

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How can I be so sure? Well, they've been doing it for years – in some cases decades. Barring some sort of catastrophe, they're not about to stop now.

That's the beauty of dividend growth investing – it's predictable. Even as the stock market fluctuates, these companies – and many others like them – reward shareholders with annual dividend hikes. Getting a dividend cheque every three months, and a dividend raise once a year, makes it easier for investors to live with the market's inevitable downturns.

Dividend increases aren't created out of thin air, mind you. For a company to consistently raise its payout, its revenues and profits also have to be growing. These companies also meet that test.

Bear in mind that no stock is bulletproof, and share prices – even of good companies – can be volatile. With interest rates potentially moving higher, some dividend stocks have already taken a hit. But all of these companies have an established track record of dividend increases that they will be very reluctant to break.

Canadian Utilities (CU-TSX)

Yield: 2.69%

Don't let Canadian Utilities' modest yield fool you. Buoyed by steady earnings growth, the Calgary-based owner of gas and electric utilities, pipelines and other energy assets has raised its dividend at nearly an 8-per-cent annual clip over the past five years. The only reason the yield has remained low is that the stock price has also risen (though it slipped slightly in 2013 as bond yields moved up). The company typically raises its dividend in mid-January and will almost certainly deliver increases for years to come given its ambitious growth plans, particularly in Alberta.

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Rogers Communications (RCI.B-TSX)

Yield: 3.66%

Hate paying cable and wireless bills? Here's one way to get even: Invest in Rogers. The company has rewarded shareholders with annualized dividend growth of more than 12 per cent over the past five years, and another increase is expected when the company reports fourth-quarter results on Feb. 12. Keep in mind that all wireless stocks come with regulatory risk and growth in the space is slowing, but Rogers is always looking for opportunities – the $5.2-billion deal with the National Hockey League serving as the latest example.

TransCanada (TRP-TSX)

Yield: 3.87%

TransCanada, which owns pipelines, power generation and natural gas storage assets, has raised its dividend in February (or late January) for 13 consecutive years. Even as the proposed Keystone XL pipeline is in political limbo, the company is forging ahead with plenty of other energy infrastructure projects and is aiming to achieve $9.5-billion in earnings before interest, taxes, depreciation and amortization (EBITDA) by 2020, up from $4.2-billion in 2012. That should keep the dividends flowing.

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Coca-Cola (KO-NYSE)

Yield: 2.77%

Shares of Coca-Cola aren't exactly quenching investors' thirst – they've gone basically nowhere over the past 18 months – but the dividend hasn't lost its sparkle. Last year, the world's biggest soft-drink maker announced its 51st consecutive dividend increase, and another hike of about 7 per cent is expected in February, according to Bloomberg estimates. Although it faces stagnant soft-drink sales in North America, Coke is generating growth from sports drinks and other non-carbonated beverages, and still has plenty of opportunity in emerging markets.

Wal-Mart (WMT-NYSE)

Yield: 2.40%

Even as Wal-Mart grapples with a tough economy, tight-fisted shoppers and intense competition, the global retailing behemoth keeps growing. Earnings have climbed nearly 10 per cent annually over the past five years and analysts see growth slowing only marginally, to about 9 per cent, over the next five. Last year, Wal-Mart raised its dividend by about 18 per cent, and in February it's widely expected to announce another hike, extending a streak of annual increases since its first dividend in 1974.

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About the Author
Investment Reporter and Columnist

John Heinzl has been writing about business and investing since 1990. A native of Hamilton, he earned a master's degree from the University of Western Ontario's Graduate School of Journalism and completed the Canadian Securities Course with honours. More


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