Dividend investors are beginning to think about new entrants for their self-directed RRSP accounts, and the market is serving a broad variety of juicy choices.
With many of the former dividend darlings down in the dumps, the decision on which companies to buy might seem a bit more difficult for 2016. One popular strategy is to hedge against trouble in the Canadian economy by adding stocks with strong exposure to the rising U.S. dollar.
Fortis runs electricity generation and natural gas distribution businesses in Canada, the U.S., and the Caribbean.
Last year the company spent $4 billion to purchase Arizona-based UNS Energy. The integration of the company has gone well and UNS is already accretive. With the U.S. dollar now worth CAD$1.35, investors are getting a nice return on U.S.-based operations.
In fact, Fortis has 41% of its assets located in the United States, so the stock is a great way to get exposure to the U.S. market.
Q3 2015 adjusted net earnings came in at $145 million, or $0.52 per share, up from $0.21 per share in the same period last year. The company just increased the quarterly dividend by 10% to $0.375 per share.
The distribution yields about 4.1%, and investors should see continued growth in the payout. Fortis has increased the dividend every year for more than four decades.
Bank of Montreal
Bank of Montreal also gives investors access to the U.S. through its BMO Harris Bank division. The unit operates more than 500 branches primarily located in the U.S. Midwest.
The group’s commercial and industrial loans have increased significantly in recent years and strength in that segment is expected to continue. Earnings from U.S. operations hit $1 billion in fiscal 2015, representing 21% of total profits. Fiscal Q4 net income from the U.S. group jumped 22% compared with Q4 2014.
The bank recently purchased GE Capital’s Transport Financing business. The acquisition will boost the company’s position in the commercial lending space and adds more U.S-based revenues at a time when growth in Canada is facing some headwinds.
Bank of Montreal just increased its quarterly dividend to $0.84 per share. That’s good for a yield of 4.4%. The bank has given investors a piece of the profits every year since 1829.