The Globe and Mail reports in its Wednesday, Sept. 21, edition that dividend growth is great, but
it is even better with a side
order of dividend momentum. The Globe's Rob Carrick defines momentum as a
company showing much stronger
dividend growth in the past
12 months than in the previous
five-year period. Mr. Carrick says this is only a rough guide to future
dividend increases. A company
might get cocky and increase
dividends in a way that proves
unsustainable. However, a spike in
dividend growth can also suggest
a company sees better times ahead. Mr. Carrick says check
the financials of a company
with recent dividend growth
momentum to get a sense of
whether it is a one-shot deal. For
some ideas on companies to
investigate, Mr. Carrick ran a screen in
which stocks in the S&P/TSX 60
index were ranked by their one-year
dividend growth rate. Mr. Carrick
then pulled out stocks where
the one-year growth rate was
significantly higher than the
annualized five-year rate. One name that came up was Fortis ($41.64). Mr. Carrick says this dividend
growth stalwart boosted its
payout by 10.3 per cent in the
past 12 months, up from a five-year
average of 5.3 per cent.
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