Earnings season is in full swing. 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 companies that did just that to the tune of 4-15%, so you can determine if you should invest in one or both of them today.
Cogeco Inc.
Cogeco Inc. (TSX: CGO) is a diversified holding corporation with operations in the communications and media sectors. Its subsidiaries include Cogeco Media, which is one of Quebec’s largest radio broadcasters, and Cogeco Communications Inc., which is the second-largest cable system operator in Ontario and Quebec and the ninth-largest cable system operator in the United States.
In its fourth-quarter earnings release on Thursday, November 2, Cogeco announced a 14.7% increase to its quarterly dividend to $0.39 per share, equal to $1.56 per share on an annualized basis, and this brings its yield up to about 1.9% at the time of this writing.
It’s important to make the following three notes about Cogeco’s dividend.
First, the first quarterly installment at the increased rate will come on November 30 to shareholders of record at the close of business on November 16.
Second, the company has raised its annual dividend payment each of its last 13 fiscal years, and this hike puts it on pace for fiscal 2018 to mark the 14th consecutive year with an increase.
Third, I think the company’s consistently strong financial performance, including its 28.7% year-over-year increase in operating cash flow to $977.1 million and its 30.9% year-over-year increase in free cash flow to $390.3 million in fiscal 2017, will allow its streak of annual dividend increases to continue for many years to come.
CT Real Estate Investment Trust
CT Real Estate Investment Trust (TSX: CRT.UN) is one of Canada’s largest commercial landlords with a portfolio of over 300 properties totaling approximately 25 million square feet of gross leasable area.
In its third-quarter earnings release on Monday, November 6, CT REIT announced a 4% increase to its distribution to $0.06067 per unit, equal to $0.728 per unit on an annualized basis, which brings its yield up to about 5.2% at the time of this writing.
Foolish investors must make the following three notes about CT REIT’s new distribution.
First, this distribution increase is effective for its January 2018 payment.
Second, the REIT has raised its annual distribution for four consecutive years, and this hike puts it on track for 2018 to mark the fifth consecutive year with an increase.
Third, I think its consistently strong growth of adjusted funds from operations (AFFO), including its 7.5% year-over-year increase to $0.687 per unit in the first nine months of 2017, and its ever-improving payout ratio, including 76.4% of its AFFO in the first nine months of 2017 compared with 79.8% in the same period in 2016, will allow its streak of annual distribution increases to continue in 2019 and beyond.
Which should you buy today?
Cogeco has risen more than 50% since I first recommended it in June 2016, and CT REIT has risen more than 15% since I first recommended it in June 2015, and both of these returns don’t even factor in reinvested dividends. I think both stocks still represent very attractive long-term investment opportunities, so take a closer look at each and consider initiating a position in at least one of them today.
