3 Top Canadian Stocks That Have Raised Their Dividends by Over 10%

These three Canadian stocks have recently raised their dividends by over 10% amid solid earnings and a healthy outlook.

| More on:
money cash dividends

Image source: Getty Images

Apart from increasing passive income, a dividend hike would indicate the management’s confidence in future cash flows. So, these stocks are an excellent buy for income-seeking investors. Meanwhile, here are three top Canadian stocks that have recently raised their dividends by over 10%.

Suncor Energy

After reporting a solid third-quarter performance, Suncor Energy (TSX:SU)(NYSE:SU) has doubled its dividends from $0.21 per share to $0.42 per share last month. During the quarter, the company’s operating profits came in at $1.043 billion compared to operating losses of $338 million in the corresponding quarter of the previous year. Its funds from operation increased by 126% to $2.641 billion. Increased production, higher oil prices, growth in refinery utilization rate, and cost-cutting measures boosted its financials.

Further, Suncor Energy is strengthening its balance sheet by lowering its debt levels. In the first nine months, the company has repaid $3.1 billion of debt and expects to repay another $1.9 billion by the end of this year. It has also raised its share repurchase target to 7% of its shares outstanding as of January 31, 2021.

Additionally, oil prices could remain elevated amid rising demand and supply concerns, benefiting oil-producing companies like Suncor Energy. Suncor Energy’s capital investments to increase production and higher refinery utilization rate could boost its financials in the coming years. So, given its improving cash flows, healthy outlook, and a high dividend yield of 5.18%, Suncor Energy would be an excellent buy right now.

Canadian Natural Resources 

Earlier this month, Canadian Natural Resources (TSX:CNQ)(NYSE:CNQ) had raised its dividends by 25% to $0.5875 per share, with its forward yield currently standing at 4.49%. For the quarter, the company’s adjusted EPS increased by 42.7% to $1.77 while generating around $2.2 billion free cash flows. Higher commodity prices, an 11% increase in its production, and improved operating efficiency drove its financials and cash flows. These strong cash flows appear to have prompted the company’s board to raise its dividends by 25%, which was the 22nd consecutive year of a dividend hike.

Meanwhile, Canadian Natural Resources is also strengthening its balance sheet by reducing its debt level. It expects to reduce its debt to $15 billion by the end of this year. Once this target is achieved, the company expects to utilize 50% of its free cash flows for share repurchases. Oil prices should trade above US$35 per barrel to cover the company’s capital expenditures and dividends. Meanwhile, with oil prices trading well above those levels, I believe the company’s dividends are safe.

Waste Connections

My final pick would be Waste Connections (TSX:WCN)(NYSE:WCN), which had posted a solid third-quarter performance last month. Its top-line and adjusted EPS increased by 14.9% and 23.6%, respectively. Also, its adjusted EBITDA increased by 16.9% to US$505.6 million despite the negative impact from dilutive acquisitions and hurricanes.

The strengthening of solid waste pricing, higher recycled commodity values, increased revenue from the E&P segment amid rising oil demand, and acquisitions drove the company’s financials. After reporting an impressive third-quarter performance, the company’s management also raised its 2021 guidance. Now, the management expects the company to post revenue of US$6.110 billion in 2021, while its adjusted EBITDA could come in at US$1.910 billion.

The improvement in economic activities could boost the demand for the company’s services. The recovery in the energy sector could also increase its revenue from the E&P segment in the coming quarters. Amid solid earnings and a healthy outlook, Waste Connections’ management had raised its quarterly dividends by 12.2% to US$0.205 per share, the 11th consecutive year of double-digit dividend growth.

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.

The Motley Fool has no position in any of the stocks mentioned. Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned.

More on Dividend Stocks

Pipeline
Dividend Stocks

Enbridge Is a High-Yielding Canadian Dividend Stock to Buy Now and Own Forever

Are you looking for a high-yielding Canadian dividend stock to buy? Enbridge (TSX:ENB) has plenty to offer investors.

Read more »

Retirees sip their morning coffee outside.
Dividend Stocks

Why I’d Buy These 2 Healthcare Stocks Today (Besides the Cheap $10 Price)

Two small-cap stocks trading under $10 worth buying right now as promising healthcare plays in 2023.

Read more »

Silver coins fall into a piggy bank.
Dividend Stocks

3 Dividend Stocks to Build Wealth in the New Year

These dividend stocks have proven they're set up for a strong future and have dividends you'll want to lock up…

Read more »

protect, safe, trust
Dividend Stocks

Retirees: These Dividend Stocks Come With Recession Protection

Retirees may be freaking out right now, but don't! Consider these high yielding dividend stocks for passive income while the…

Read more »

Dad and son having fun outdoor. Healthy living concept
Dividend Stocks

Parents: Max Out Your RESP Before the Dec. 31 Deadline!

Parents, make sure you're maxing out the RESP to get in on a government grant! Now is the time to…

Read more »

Gold bullion on a chart
Dividend Stocks

TFSA Investors: Why You Should Invest Your Room ASAP With These 3 Stocks

Choosing the right TFSA stocks for your portfolio might take some time. But with the right choices, you can stick…

Read more »

Target. Stand out from the crowd
Dividend Stocks

Here’s the Next TSX Stock I’m Going to Buy

Innergex is a TSX stock that is growing its revenue and earnings at an enviable pace. It also pays investors…

Read more »

A worker uses a laptop inside a restaurant.
Dividend Stocks

Got $500? 2 Stocks to Buy and Hold for at Least 5 Years

Given their multi-year growth potential and attractive valuations, I am bullish on these two TSX stocks.

Read more »