As savvy investors know, owning a portfolio of dividend-paying stocks is the best way to build wealth over the long term, and this investment strategy generates the highest returns when you own stocks that raise their payouts every year. With this in mind, let’s take a look at three dividend-growth superstars that you could buy right now.
1. Toromont Industries Inc.
Toromont Industries Inc. (TSX:TIH) is one of the largest owners and operators of Caterpillar and Agco dealerships, one of the leading providers of commercial and industrial equipment rentals, and one of the leading designers of industrial and recreational refrigeration systems in North America. It pays a quarterly dividend of $0.18 per share, or $0.72 per share annually, which gives its stock a yield of about 1.9% at today’s levels.
A 1.9% yield may not impress you at first, but it is very important to make the following two notes.
First, Toromont has raised its annual dividend payment for 26 consecutive years, the third-longest active streak for a public corporation in Canada, and its 5.9% hike in February has it on pace for fiscal 2016 to mark the 27th consecutive year with an increase.
Second, the company has a target dividend-payout range of 30-40% of its trailing earnings from continuing operations, so I think its consistent growth, including its 19.2% year-over-year increase to $0.31 per share in the first quarter of fiscal 2016, will allow its streak of annual dividend increases to continue for many years to come.
2. Thomson Reuters Corp.
Thomson Reuters Corp. (TSX:TRI)(NYSE:TRI) is the leading source of intelligent information for the world’s businesses and professionals. It pays a quarterly dividend of US$0.34 per share, or US$1.36 per share annually, which gives its stock a yield of about 3.3% at today’s levels.
Investors must also make the following two notes.
First, Thomson Reuters has raised its annual dividend payment for 22 consecutive years, tying it with the company we will discuss next for the fourth-longest active streak for a public corporation in Canada, and its 1.5% hike in February has it on pace for fiscal 2016 to mark the 23rd consecutive year with an increase.
Second, the company has a target dividend-payout range of 40-50% of its free cash flow, so I think its consistent growth, including its 24.6% year-over-year increase to US$1.8 billion in fiscal 2015 and its US$288 million increase to US$223 million in the first quarter of fiscal 2016, will allow its streak of annual dividend increases to continue going forward.
3. ATCO Ltd.
ATCO Ltd. (TSX:ACO.X) is a diversified global corporation with operations in structures and logistics, electricity, pipelines and liquids, and energy sales. It pays a quarterly dividend of $0.285 per share, or $1.14 per share annually, which gives its stock a yield of about 2.9% at today’s levels.
Investors must also make the following two notes.
First, ATCO has raised its annual dividend payment for 22 consecutive years, tying it with Thomson Reuters for the fourth-longest active streak for a public corporation in Canada, and its 15.2% hike in January has it on pace for fiscal 2016 to mark the 23rd consecutive year with an increase.
Second, I think the company’s strong financial performance, including its 4.3% year-over-year increase in funds from operations to $484 million in the first quarter of fiscal 2016, and its growing asset base will allow its streak of annual dividend increases to continue for the foreseeable future.
