Earnings season is here, and not only is it a great time to see the most up-to-date financials of the world’s largest companies, but it’s also the most popular time for companies to raise their dividends. Let’s take a closer look at two dividend-growth stars that raised their dividends by 10-15% on Wednesday, so you can determine if you should add one of them to your portfolio today.
Brookfield Infrastructure Partners L.P.
Brookfield Infrastructure Partners L.P. (TSX: BIP.UN)(NYSE: BIP) is one of the largest owners and operators of high-quality, long-life infrastructure assets in the world. Its portfolio includes rail tracks, ports, toll roads, natural gas transmission lines and storage facilities, communication towers, electricity transmission lines, and a regulated terminal, which are located across North America, South America, Europe, Australia, and India.
In its fourth-quarter earnings release on Wednesday, February 1, Brookfield announced a 10.6% increase to its quarterly distribution to US$0.435 per unit, representing US$1.74 per unit on an annualized basis, and this brings its yield up to 5% at today’s levels. The first quarterly installment at this increased rate is payable on March 31 to unitholders of record at the close of business on February 28.
This hike added to Brookfield’s reputation for being one of the best distribution-growth plays in the industry today. It has raised its annual distribution for seven consecutive years, and its recent hikes, including its 3.5% hike in August and the 10.6% hike noted above, have it positioned for 2017 to mark the eighth consecutive year with an increase.
Investors can continue to rely on Brookfield for distribution growth beyond 2017 as well, because it has a long-term distribution-growth target of 5-9% annually, and I think its consistent growth of funds from operations, including its 13.8% year-over-year increase to US$2.72 per unit in fiscal 2016, and its expansion plans, including the over US$2 billion of projects currently in its capital backlog that will be commissioned over the next two to three years, will allow it to reach this target through 2025 at the very least.
Exco Technologies Limited
Exco Technologies Limited (TSX: XTC) is one of the world’s leading designers, developers, and manufacturers of dies, moulds, equipment, components, and assemblies to the die-cast, extrusion, and automotive industries.
In its first-quarter earnings release on Wednesday, February 1, Exco announced a 14.3% increase to its quarterly dividend to $0.08 per share, representing $0.32 per share on an annualized basis, and this gives its stock a yield of about 3.1% today. The first quarterly payment at this increased rate will be made on March 31 to shareholders of record at the close of business on March 15.
Like Brookfield Infrastructure Partners, Exco is one of the top dividend-growth plays in its industry. It has raised its annual dividend payment for seven consecutive years, and the 14.3% hike it just announced has it on pace for 2017 to mark the eighth consecutive year with an increase.
I think Exco’s dividend-growth potential is very promising going forward as well. I think its very strong financial performance, including its 7.1% year-over-year increase in adjusted net income to $0.30 per share and its 27% year-over-year increase in operating cash flow to $21.9 million in the first quarter of fiscal 2017, will allow its streak of annual dividend increases to continue through 2020 at the very least.
Should you prefer one to the other?
I think both Brookfield Infrastructure Partners and Exco Technologies represent attractive long-term investment opportunities, but if I had to choose just one to invest in today, I’d go with Brookfield because it has a much higher yield and a defined long-term distribution-growth target.
