National Bank's “Dividend All Stars” portfolio contains 21 equities deemed to its “top sustainable yield ideas” with an eye toward three investment criteria: “1. Dividend/distribution yield of approximately 4 per cent or greater; 2. Low risk of the current payout proving unsustainable/dividends ideally growing; and 3. Generally positive bias regarding the prospects of the company and/or share price.”
Since this year’s portfolio was unveiled on Feb. 15, it has returned income of 2.94 per cent and realized an average price return of negative 2.75 per cent for a total return of almost 0.2 per cent through Aug. 23 versus a decline of 5.2 per cent for S&P/TSX Composite Index.
“The purpose of the NBF Dividend All-Stars portfolio is to provide income-seeking investors with high quality companies that NBF Analysts generally hold a positive view towards,” the analyst said. “The group’s average 5.5-per-cent yield is attractive despite increases in interest rates (10-year Canada yield at 3 per cent vs. 1.9 per cent in February 2022) and supported by an elevated average payout measure yield. Seven companies increased dividends since the last publication (February 2022) including Algonquin Power & Utilities, Capital Power, CIBC, CT REIT, Exchange Income, Mullen Group and Topaz Energy. Dividend increases have continued to significantly outpace reductions; including the first half of 2022, there have been 139 dividend increases versus 11 reductions (of which, the last six occurred during the COVID-19 pandemic) since the initial 2012 publication.”
“As of this update, the average yield of All-Star equities is elevated at 5.5 per cent and payout easily funded for each with most having the capacity to grow dividends/distributions. The average payout ratio of the portfolio is 56 per cent and the average payout measure (AFFO, FCF, etc.) yield is 12 per cent.”
Touted for investors “seeking elevated, stable income from high quality companies,” the portfolio currently looks like this:
- Alaris Equity Partners Income Trust ( “outperform”) with a $23.50 target. Average: $22.25.
- Algonquin Power & Utilities Corp. ( “sector perform”) with a US$16 target. Average: US$16.33.
- Allied Properties REIT ( “outperform”) with a $36.50 target. Average: $42.30.
- AltaGas Ltd. ( “outperform”) with a $33 target. Average: $34.42.
- BCE Inc. ( “outperform”) with a $71 target. Average: $68.60.
- Capital Power Corp. ( “outperform”) with a $52 target. Average: $50.81.
- Choice Properties REIT ( “sector perform”) with a $14 target. Average: $14.94.
- Canadian Imperial Bank of Commerce ( “outperform”) with an $84 target. Average: $76.34.
- CT REIT (“outperform”) with an $18 target. Average: $17.79.
- Dexterra Group Inc. ( “outperform”) with a $10 target. Average: $9.56.
- Dream Industrial REIT ( “outperform”) with a $14.25 target. Average: $15.98.
- DRI Healthcare Trust ( “outperform”) with a US$9.75 target. Average: $14.50 (Canadian).
- Enbridge Inc. ( “outperform”) with a $61 target. Average: $60.55.
- Exchange Income Corp. ( “outperform”) with a $60 target. Average: $61.64.
- IGM Financial Inc. ( “outperform”) with a $48 target. Average: $42.86.
- Keyera Corp. ( “outperform”) with a $38 target. Average: $36.46.
- KP Tissue Inc. ( “sector perform”) with a $9.50 target. Average: $10.50.
- Mullen Group Ltd. ( “outperform”) with an $18 target. Average: $17.40.
- Topaz Energy Corp. ( “outperform”) with a $30 target. Average: $29.13.
- Transcontinental Inc. ( “outperform”) with a $23 target. Average: $21.83.