Exploring 3 large-cap Canadian pipelines that have continued to maintain and increase their dividends since oil prices plummeted. Which of Enbridge Inc (TSX:ENB)(NYSE:ENB), TransCanada Corporation (TSX:TRP)(NYSE:TRP), or Pembina Pipeline Corp. (TSX:PPL)(NYSE:PBA) pays out the safest dividend of the group? Which company has the best dividend prospects? Should investors buy these Canadian pipeline companies now or wait?
Kinder Morgan Inc (NYSE:KMI) got a lot of attention when it slashed its dividend by 75%. At the same time, its share price has fallen over 60% from more than $40 to under $16. Yet, strong Canadian energy infrastructure leaders such as Enbridge Inc and TransCanada Corporation have not only maintained but continued to grow their dividends. At the same time, they have also been sold off due to lower oil prices.
Enbridge increased its dividend by 14% this year and it would be its 21st consecutive year increase.
TransCanada should be announcing its dividend hike for this year by the end of March, which would be its 16th consecutive year increase.
Pembina hiked its dividend by 5.2% in May; it has increased it for 4 consecutive years.
Are Their Dividends Sustainable?
Enbridge, TransCanada, and Pembina Pipeline are only more attractive than a year ago if they can maintain healthy dividends. Can they? Read More
Four U.S. stocks and a Canadian stock increased dividends by 14-27%. They hiked their last dividend in Q4 2015 or Q1 2016. How did they perform as stocks in the past year? Are they good buys now to boost growth for your portfolio?
Last year was a rough ride for anyone who is invested in energy or mining stocks. As a Canadian, I wasn’t spared. It’s my fault really. At one point, I had 30% of my portfolio in energy, thinking that I should be buying more when energy stocks were falling lower. How wrong I was!
I experienced slashed dividends from Kinder Morgan Inc (NYSE:KMI) and Cenovus Energy Inc (TSX:CVE)(NYSE:CVE). The benefit of owning a portfolio of stocks is that winners can cover for the losers. Boy, was I glad I had winners in my portfolio. Some of my winners are listed below.
My Fastest-Growing Dividends
Amgen, Inc. (NASDAQ:AMGN) increased its dividend by 26.6% from 79 cents to $1 in Q1 2016.
Starbucks Corporation (NASDAQ:SBUX) increased its dividend by 25% from 16 cents to 20 cents in Q4 2015.
Mastercard Inc (NYSE:MA) increased its dividend by 18.8% from 16 cents to 19 cents in Q1 2016.
Microsoft Corporation (NASDAQ:MSFT) increased its dividend by 16.1% from 31 cents to 36 cents in Q4 2015.
Enbridge Inc (TSX:ENB)(NYSE:ENB) increased its dividend by 14% from C46.5 cents to C53 cents in Q1 2016.
I started buying shares in Kinder Morgan (NYSE:KMI) since January 2014 with my starter position bought at $36. So far, it has done well for me as a dividend growth investor. Its quarterly dividend grew from $0.41 per share to $0.45 per share, which is an annual growth of 9.75%. Not too shabby for a starting yield of 4.56% and 14.4% unrealized gains. Adding on dips would have added to the profitability of this position.
Kinder Morgan’s price is 3.5% away from its 52-week high. Is it a buy now?
Its dividends are expected to grow 10% a year through to 2020. That is $3.22 per share of dividends by the end of 2020.
Based on a 4.5% yield, Kinder Morgan will reach $71.58 by the end of 2020.
It’s reasonable to expect Kinder Morgan to have annualized returns of more than 13.5% with Monday’s closing price of around $41.20.