One of the most successful investment strategies is to buy and hold stocks with track records of dividend growth; this is because a rising dividend is a sign of a very strong business with excellent cash flows and earnings to support increased payouts, and the dividends themselves really add up over time when reinvested.
With all of this in mind, let’s take a closer look at two stocks that just raised their dividends and have reputations for doing so, so you can determine if you should invest in one of them today.
RioCan Real Estate Investment Trust (TSX:REI.UN) is one of Canada’s largest owners and managers of commercial real estate with a portfolio of 294 predominantly retail properties that contain approximately 45 million square feet.
In a press release on December 1, RioCan announced a 2.1% increase to its monthly distribution to $0.12 per unit, equating to $1.44 per unit annually, which brings its yield up to about 5.8% at the time of this writing.
It’s highly important for Foolish investors to make the following three notes.
First, this distribution increase is effective for RioCan’s January 2018 distribution, which is payable in February 2018.
Second, this is the 17th time the REIT has raised its distribution since 1994, and 2018 will mark the first year in which it has raised its annual distribution since 2013.
Third, I think RioCan’s very strong financial performance, including its 11.1% year-over-year increase in adjusted cash flows from operations to $402.2 million in the first nine months of 2017, could allow the company to continue to grow its distribution in 2019 and beyond.
In its fourth-quarter earnings release on December 5, BMO announced a 3.3% increase to its quarterly dividend to $0.93 per share, equating to $3.72 per share annually, which brings its yield up to about 3.7% at the time of this writing.
It’s important to make the following three notes about BMO’s dividend.
First, the first payment at the increased rate will be made on February 27 to shareholders of record on February 1.
Second, this is the second time BMO has raised its dividend in 2017, with the first being a 2.3% hike on May 24, and it’s now on track for fiscal 2018 to mark the seventh consecutive year in which it has raised its annual dividend payment.
Third, the bank has a target dividend-payout range of 40-50% of its adjusted basic earnings per share, so I think its continually strong growth, including its 8.5% year-over-year increase to $8.16 per share in fiscal 2017, will allow its streak of annual dividend increases to continue for another seven years at least.