Income Investing: Weekly Dividend Raises

B2Gold (TSX:BTO)(NYSE:BTG) and Empire Company (TSX:EMP.A) recently announced dividend increases. Are these two income stocks buys today?

| More on:
Money growing in soil , Business success concept.

Image source: Getty Images

Income investing has been a staple for decades. In recent years, the dividend-growth strategy has grown in popularity as record-low interest rates make bonds and GICs much less attractive. As a result, several retail investors adopt this investing strategy as a means to build strong and sustainable income. 

There are two types of dividend-growth stocks: Canadian Dividend Aristocrats and up-and-coming Aristocrats. In Canada, Aristocrats are companies that have raised the dividend for at least five consecutive years. 

Recently, the pace of dividend growth has slowed. In light of the pandemic and the economic shutdowns, companies are actively preserving cash. Given this, the pace of dividend cuts is far outpacing dividend growth. 

Yesterday, we identified the two Canadian income stocks that cut dividends last week. Today, we look at two companies that recently bucked the trend and announced dividend increases. 

Old New Percentage Date
B2Gold (TSX:BTO)(NYSE:BTG) $0.01 $0.01 100.00% 06/12/2020
Empire Company (TSX:EMP.A) $0.12 $0.13 8.30% 06/18/2020

A Canadian Dividend Aristocrat

Empire Company is one of the largest grocery chains in the country. Given its status as an essential service, it is not surprising that the company was able to announce a dividend raise in this environment.

Not only is it reliable in this environment, it has been one of the premier income stocks in the country over the past quarter century. On Thursday, Empire announced an 8.30% raise, which extends the company’s dividend-growth streak to 26 years. This is tied for the seventh-longest streak in the country. 

This year’s raise is also a few percentage points higher than the company’s historical growth rate. In 2020, the company’s share price is up 7.75%, which is far outpacing the 9.06% loss posted by the S&P/TSX Composite Index. 

A senior gold producer

The gold industry is another that is doing really well. Long considered a safe haven in times of volatility, gold is living up to its status as a defensive investment. The price of gold is up by 14.53% in 2020 and is now trading just above $1,700 an ounce. 

At these prices, producers are generating considerable cash flow, and producers such as B2Gold are returning to dividend growth. B2Gold only recently began paying a dividend, and on Friday, June 12, it announced its first dividend raise. The penny-per-share raise is equal to a 100% increase. Of note, B2Gold pays the dividend in U.S. dollars. 

At today’s gold prices, income investors have plenty to look forward to. The company increased production for the 11th consecutive year, and all-in sustaining costs (AISCs) were only $862 per ounce in 2019; management is expecting AISCs to drop further in 2020. 

Given this, it is likely the company will grow the dividend, even if the price of gold weakens. It is quickly establishing itself as a reliable income stock. 

Are these income stocks a buy today?

Both companies make for excellent defensive investments. Empire is one the closest investors will get to guaranteed dividend income. Expect mid-single-digit dividend growth for years to come. 

After the price of gold cratered earlier in the decade, producers worldwide slashed dividends. Not surprisingly, income investors are a little more skeptical. However, these are not the producers of years past. They have much lower debt profiles and have spent years reducing costs. Given this, gold stocks such as B2Gold are worth another look.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Mat Litalien has no position in any of the stocks mentioned.

More on Dividend Stocks

financial freedom sign
Dividend Stocks

Million-Dollar TFSA: 1 Way to Achieve to 7-Figure Wealth

Achieving seven-figure TFSA wealth is doable with two large-cap, high-yield dividend stocks.

Read more »

analyze data
Dividend Stocks

How Much Will Manulife Financial Pay in Dividends This Year?

Manulife stock's dividend should be safe and the stock appears to be fairly valued.

Read more »

food restaurants
Dividend Stocks

Better Stock to Buy Now: Tim Hortons or Starbucks?

Starbucks and Restaurant Brands International are two blue-chip dividend stocks that trade at a discount to consensus price targets.

Read more »

Hand arranging wood block stacking as step stair with arrow up.
Dividend Stocks

1 Growth Stock With Legit Potential to Outperform the Market

Identifying the stocks that have outperformed the market (in the past) is relatively easy, but selecting the ones that will…

Read more »

money cash dividends
Dividend Stocks

Passive Income: The Investment Needed to Yield $1,000 Per Annum

Do you want to generate a juicy passive-income stream? Here's a trio of stocks that can generate a yield of…

Read more »

Shopping card with boxes labelled REITs, ETFs, Bonds, Stocks
Dividend Stocks

Invest $10,000 in This Dividend Stock for $1,500.50 in Passive Income

If you have $10,000 to invest, then you likely want a core asset you can set and forget. Which is…

Read more »

Dividend Stocks

Here’s the Average TFSA Balance in 2024

The average TFSA balance has steadily risen over the last six years and surpassed $41,510 in 2023. Will the TFSA…

Read more »

potted green plant grows up in arrow shape
Dividend Stocks

TFSA Set and Forget: 2 Dividend-Growth Superstars for the Long Run

I'd look to buy and forget CN Rail (TSX:CNR) and another Canadian dividend-growth sensation for decades at a time.

Read more »