Brookfield Renewable Partners LP (TSX:BEP.UN)(NYSE:BEP) just increased its cash distribution by 5.1% to an annualized payout of US$2.06 per unit. That implies a yield of 7% at US$29.29 per unit.
A Sustainable Dividend
In 2018, it increased its funds from operations (“FFO”) per unit by nearly 14%, resulting in a payout ratio of <91% for the year, which was a meaningful improvement from 2017’s payout ratio of 98%. The lower payout ratio makes a safer dividend.
Management aims for cash distribution growth of 5-9% per year in the stock. It’s conservative to assume a cash distribution growth rate of 5% because, since 2011, its distribution has compounded at a growth rate of 5.4%.
Generally, dividend-growth stocks are a conservative way to invest in the stock market. Typically, they’re mature companies that generate sufficient earnings or cash flows to pay a generous dividend and maintain and grow the business.
This Telecom offers a growing dividend
It’s been a long time since TELUS (TSX:T)(NYSE:TU), the third-largest Canadian telecom has hit my minimum yield target of 4.7%.
The dividend is safe, and the stock is reasonably valued — not a bargain and not excessively expensive. At ~CAD$46 per share, TELUS trades at a P/E of ~16, while it’s estimated to increase its earnings per share (“EPS”) by 6.5-7.1% per year over the next 3-5 years.
At current levels, TELUS can deliver 8-11% per year on average over 3-5 years.
Johnson & Johnson (NYSE:JNJ) recently reported its Q4 and full year results. In 2018, it increased sales by 6.7% to $81.6 billion. Excluding divestitures/acquisitions, sales would have increased by 5.5%
A Business Overview
J&J is a globally diversified healthcare company that operates in three segments:
Consumer, which includes popular brands such as Tylenol, Motrin, Neutrogena, and Aveeno;
Pharmaceutical with Zitiga, Stelara, Tremfya, etc. that were key contributors to growth; and
The Pharmaceutical segment is the largest and experienced the highest sales growth of 12.4% (compared to 1.8% for Consumer and 1.5% for Medical Devices). The segment experienced market outperformance driven by double-digit growth in 10 key products.
In 2018, about 51% of its sales were in the U.S. and 49% were international (23% in Europe, 18% in Asia-Pacific and Africa, and 7% in the western hemisphere excluding the U.S.).
J&J’s blockbuster portfolio contributed nearly 47% of sales in 2018.
The company doesn’t stop there, though. It continues to grow its portfolio via research and development (“R&D”), acquisitions and licensing, deals and partnerships, etc. In 2018, it spent about $11 billion in R&D, which was about 13% of sales and aligned with the percentage spent in 2017.