Category Archives: Dividend Investing

This is One of the Biggest Safe Dividends You Can Get

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%.

Hydroelectric generation
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Top U.S. Dividend Growth Stocks for January

The U.S. stock market, using SPDR S&P 500 ETF Trust (NYSE:SPY) as a proxy, has bounced about 8% from a low in December. The ETF has some strong resistance at the US$270 range. It needs to break that range and make a new high to indicate that the correction that started in October won’t continue.

technical chart showing SPY bouncing from Dec 2018 low
Source: Stockcharts

Despite the market rebounding, there are still some good-value quality U.S. dividend growth stocks for long-term investing. Here are two out of seven top U.S. dividend ideas I wrote about here in December. They’re still great buys today.

dividend income
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Why Scotiabank May Not Be As Great As You Think

Summary
  • Bank of Nova Scotia is Canada’s most international bank with a focus on the Pacific Alliance countries.
  • In the past 10 years, the bank’s earnings-per-share growth versus its share count growth was pretty poor compared to its peers.
  • The stock has underperformed its peers but has outperformed the market.
  • Scotiabank’s dividend yield of 4.7% is safe, and you can expect stable dividend growth from the bank.

As the third-largest Canadian bank by market cap, Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) or Scotiabank is often viewed as a blue-chip dividend growth stock. However, it may not be as great an investment as you think.

First, here’s an overview of the bank.

Business Overview of Bank of Nova Scotia

Scotiabank is Canada’s most international bank, but it still generates about half of its earnings from Canada. Its Canadian Banking segment is secure and generated the highest return on equity (“ROE”) of 22.7% in fiscal 2018 compared to the ROE of 14.4% and 16%, respectively, for its International Banking segment and its Global Banking and Markets segment. The overall ROE was decent at 14.9%.

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