Thursday, January 24, 2008
2008 Mergent's Dividend Achievers list
Every year Mergents compiles a list of companies from Canada that have increased their dividends for five consecutive years or more. This is an easy task for most major firms like Banks of Nova Scotia (BNS), Bank of Montreal (BMO), Fortis Incorporated (FTS) and TransCanada Corporation (TRP). However, Income Trusts/Funds and Real Estate Investment Trusts (REITs) have also started popping up on the list. Firms like AltaGas Income Trust (ALA.UN) and Cominar REIT (CUF.UN) have made strong showings of late.
As I stated in my previous post, "Using this criterion for choosing companies that pay an ever increasing dividend is especially important for those investors who are looking to replace their salaries with dividend payments as they get older. A rising dividend will help these people keep pace with inflation. However, don't disregard the importance of a growing dividend for those in their share accumulation period (like moi) as the growing dividend means it will allow me to purchase more shares on a quarterly basis through the DRIP."
The above remains true especially when companies have a high dividend yield with little to no dividend growth. A good example is TransAlta Corporation (TA). The yield sits at a reasonable 3.30% but the company has not raised the dividend since 1999! For an excellent explanation as to why this can be a problem, please see point #9 of Tom Connolly's "Investing Yourself" document. In fact, the whole article is a wonderful primer on DIY investing and I read it often!
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