2026 has been a busy year for dividend hikes so far. Not two quarters into the year, we have already seen several major Canadian companies hike their dividends. In the paragraphs below, I’ll explore three companies that raised their dividends in recent months — one of them by 17.5%!
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Canadian Pacific
Canadian Pacific Kansas City Railway (TSX: CP) is one of the Canadian companies to have raised its dividend recently, having increased the payout by 17.5%. The dividend hike corresponded with a quarter in which revenue and earnings both decreased slightly (2% and 3%, respectively). In the year ahead, earnings are expected to grow 13.5%. Given the high growth in the dividend alongside low (or even negative) growth in earnings, CP’s payout ratio appears set to increase this year. If forward earnings play out as expected, then the increase in the payout ratio may not be that high.
Propel Holdings
Propel Holdings (TSX: PRL) is a Canadian fintech firm that recently increased its dividend from $0.90 to $0.96, a 6.7% increase. The hike was apparently not well supported by the company’s earnings. In its most recent quarter, Propel earned the following:
- $166 million in revenue, up 19.5%.
- $20.7 million in reported net income, down 12%.
- $23 million in adjusted net income, down 1.7%.
- $0.49 in diluted earnings per share (EPS), down 12.5%.
- $0.54 in adjusted EPS, down 1.8%.
- A 34% return on equity (ROE), down 8%.
- $466 million worth of loans outstanding, up 22.7%.
- $592.7 billion in loans and advances outstanding, up 22.6%.
Overall, the company’s earnings showed a negative trend in the quarter, although offset by high growth in revenue and assets. It appears that the cause of the decline was a mismatch between the timing of interest costs and customer acquisition costs. The cost of acquiring a customer is recorded immediately, while the customer’s interest contribution accrues over the years. So, the high growth in assets last quarter may indicate future high growth (I’ll stop short of declaring that a certainty, though, and am overall neutral on PRL stock).
Fortis
On November 4 of last year, Fortis (TSX: FTS) announced it would be hiking its dividend by 4.1%. In February, the dividend hike went into effect, bringing dividends per share to $0.64. The hike brings Fortis’s dividend-growth streak to 52 consecutive years, among the longest of any TSX-listed company.
How has Fortis managed to achieve so much dividend growth over the years? It’s down to consistent, predictable growth.
Fortis usually grows its earnings and cash flows 4% to 5% per year. There are some years when they grow less or more than that, and some when they decline, but usually, the earnings growth is positive and predictable. This allows the company to raise its payout without also raising its payout ratio.
Fortis’s consistent revenue growth is due to a number of factors. Consistent/predictable revenue is a typical characteristic of regulated utilities, which lock in long-term recurring revenue, often with government protection. Fortis is such a company. Secondly, Fortis invests more in growth than other utilities do, investing consistently in infrastructure upgrades that allow it to increase rates and even connect new areas to the grid. Overall, it’s a pretty safe and consistent business model.
Foolish takeaway
As we’ve seen, many Canadian companies have been hiking their dividends lately. Does that mean you should rush out to buy their shares? In and of itself, no. But it is a vote of confidence in Canada’s economy from some of its biggest players. That’s a fact worth considering.
