4 Dividend paying blue chip stocks: Following up earlier advice

We update you on each of our Recommended Common Stocks on a rotating basis every three months, as well as in between those regular updates where events warrant. The following four blue chip stocks are now due for their quarterly updates.

Canadian stocks are up 7.13% since we last updated our research on the following stocks three months ago, a nice add-on to the 6.07% the TSX rose in the prior three months. For another reference point, the TSX Composite Index is up 10.89% from its level of one year ago, a more robust gain than its rise of 17.90% as at the prior update.

As for the four stocks below, all four of them show outright gains and three greater increases than the index from three months ago. Three report price increases from one year ago, with all three beating the index by a wide margin. Three also feature dividend increases.

CTC earnings, price are up once again

Canadian Tire Corporation (TSX:CTC.A) Recent price $99.65; dividend $1.75; yield 1.76%; EPS $6.97; PE 14.3; 52-week high $101.05; 52-week low $68.03; one-year price change +44.4%

Let’s start the good news rolling with a dividend increase at Canada’s favorite retailer, which brings the annual payout to $1.75 per share from $1.40 previously.

That $0.35 per share increase supersedes trailing increases of $0.20 (to $1.40 four updates ago) and $0.10 (to $1.20), so C-Tire does have a record of increasing its payout to shareholders over time..

The more-than-just-tires store made $6.91 in fiscal 2013, 13% over the $6.10 per share made in fiscal 2012; the latter a 7% increase from the $5.71 per share it made in fiscal 2011.

In three months C-Tire’s share price is up 8.29%, the fourth increase in a row, and in a year it’s up 44.4%. With a PE ratio of 14.3 times, it’s a good cheap stock to buy, relative to the TSX average. CTC is a buy for income and gains.

Power Corp goes six for six

Power Corporation of Canada (TSX:POW) Recent price $29.70; dividend $1.16; yield 3.91%; EPS $1.65; PE 18.0; 52-week high $32.82; 52-week low $25.02; one-year price change +9.6%

In business since 1925, Power is today a diversified management and holding company whose main asset is its stake in Power Financial, but it also has media assets and a piece of CITIC (China International Trust and Investment Corporation). Essentially, it’s a diversified financial play with exposure to mutual funds, insurance and other financial activities.

In three months Power’s blue chip share price is up 1.99% for the sixth gain in six updates. It’s also up 9.6% in a year. That’s the good news.

The not-so-good news is that in the first quarter of 2013 Power made 14% less, and in the second quarter 12% less, such that annual results were only 1% higher to $2.08 from $2.06 per share. Regardless, POW is a buy for diversification, income and gains over the long term.

Telus is our favorite dividend aristocrat

Telus Corporation (TSX:T) Recent price $38.65; dividend $1.44; yield 3.73%; EPS $2.01; PE 19.2; 52-week high $39.56; 52-week low $29.52; one-year price change +12.5%

We often point out Telus as one of the best dividend stocks, and as such, a good example of a dividend aristocrat. And here it goes again; this update it has raised its payout to you to $1.44 per share annually from $1.36. The update before, the dividend was increased to $1.36 per share from $1.28 the prior update (after adjusting for the stock split), which itself was an increase from $1.22 the update before that.

Telus can thank Providence that Verizon has decided not to enter the Canadian market, a threat that weighed on all telecoms but particularly on Telus. T’s share price is up 15.65% in three months following two declines in a row, and it is up 12.5% in a year. Fiscal 2013 earnings were up 9% to $2.02 per share from $1.85. It’s a buy.

Top dividend stock TD raised its payout as well recently

Toronto-Dominion Bank (TSX:TD) Recent price $51.23; dividend $1.88; yield 3.78%; EPS $3.61; PE 14.2; 52-week high $51.85; 52-week low $39.7795; one-year price change +20.9%

Life is good when an investor can go, “Ho hum, another quarter, another payout increase.” Last update TD did what it regularly does: raised its dividend. The annual rate is now $1.88 per share, up from $1.77 previously; the prior update TD had raised it to $1.62 per share, an increase from $1.54.

In fiscal 2013 TD made 2% more earnings at $6.91 per share. First-quarter 2014 earnings were up 15%. Its share price is up 13.95% in three months, the second in two updates, and it’s up 20.9% from a year ago.

TD is a buy for income and more gains.

 

Money Reporter, MPL Communications Inc.
133 Richmond St.W., Toronto, ON, M5H 3M8. 1-800-804-8846