Earnings season is the most popular time for companies to raise their dividends, and this season has been another highly active time. Let’s take a closer look at two high-yielders that raised their dividends by 1-9% this week, so you can determine if you should buy one of them today.
First National Financial Corp.
First National Financial Corp. (TSX: FN) is the parent company of First National Financial LP. With approximately $99.39 billion in mortgages under administration as of December 31, 2016, First National is Canada’s largest non-bank originator and underwriter of mortgages and is among the top three in market share in the mortgage-broker distribution channel.
In its fourth-quarter earnings release on February 28, First National announced an 8.8% increase to its quarterly dividend to $0.154167 per share, representing $1.85 per share on an annualized basis, and this brings its stock’s yield up to a rich 6.8% at today’s levels. The first monthly payment at this increased rate will be made on April 17 to shareholders of record at the close of business on March 31.
Investors should also make the following two notes about First National’s new dividend.
First, it has raised its annual dividend payment each of the last five years, and its two hikes in the last 12 months, including its 9.7% hike in April 2016 and the one noted above, have it on pace for 2017 to mark the sixth consecutive year with an increase.
Second, I think First National’s strong financial performance, including its 91.8% year-over-year increase in net income attributable to common shareholders to $196.53 million in 2016, and its wildly improved dividend-payout ratio, including 50.3% of its net income in 2016 compared with 88.3% in 2015, will allow its streak of annual dividend increases to continue for another five years at least.
Pattern Energy Group Inc.
Pattern Energy Group Inc. (TSX:PEG)(NASDAQ:PEGI) is an independent power company. It has a portfolio of 18 wind-power facilities, including one it has agreed to acquire, with a total owned interest of 2,644 megawatts in the United States, Canada, and Chile.
In its fourth-quarter earnings release on March 1, Pattern announced a 1.4% increase to its quarterly dividend to US$0.41375 per share, representing US$1.655 per share on an annualized basis, and this brings its yield up to a hefty 8.3% today. The first quarterly installment at this increased rate is payable on April 28 to shareholders of record at the close of business on March 31.
Investors must also make the following three notes.
First, Pattern has now raised its dividend for 12 consecutive quarters!
Second, it has raised its annual dividend payment for three consecutive years, and its numerous hikes over the last year, including its 2% hike in November and the one noted above, have it positioned for 2017 to mark the fourth consecutive year with an increase.
Third, Pattern has a dividend-payout target of 80% of its cash available for distribution, so I think its consistently strong growth, including its 43.8% year-over-year increase to US$132.97 million in 2016 and its projected 5.3-24% year-over-year growth to US$140-165 million in 2017, will allow its streak of quarterly and annual dividend increases to continue going forward.
Which should you add to your portfolio today?
First National Financial and Pattern Energy each offer high, safe, and growing dividends, making them fantastic long-term investment opportunities today. Take a closer look at each and strongly consider adding at least one of them to your portfolio.
