Report on Dividends
Mid-2024 and Prospects for 2025
Special 50% Discount Offer
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We issued our first Report on Dividends in January, and it proved so popular with our clients that we have decided to follow up with a mid-year report.
The first report identified 19 sustainable dividend growth companies that we favoured as BUY-recommended stocks and four companies with dividends we advised investors to be cautious about.
In our new dividend report, we have added four new names and removed three of them from the list of sustainable dividend growth names.
We also added two more names to the list of dividends to be cautious about. For these names, we are not necessarily forecasting a dividend cut, only that investors need to be mindful of company-specific risks.
Our new dividend report covers Communications Services, Tech, Financial Services, Consumer Staples and Discretionary, Materials, Utilities and Infrastructure, Brookfield companies, REITs, Energy, and Diversified Industrials.
Each of our analysts tackles payout ratios, accounting issues affecting those ratios, and other key sector-specific metrics.
As part of our evaluation, we use our Veritas Quality Ratings to score each company on Cash Flow Sustainability, Balance Sheet Exposure, and Accounting & Disclosure (ratings out of five versus sector peers).
As a follower of Veritas, you will know that our forensic accounting-based approach cuts through the financial reporting complexities and tricks to arrive at true cash flows and compare them versus sector peers.
Our goal with this report is to identify companies with the highest sustainable free cash flow that will support dividend growth for shareholders.
BCE's Troubling Payout Ratio
In our January report, BCE Inc. was one company on our list of dividend names to be cautious about.
As covered in The Globe & Mail, BCE's dividend payout ratio has exceeded 100% for the last few years using management's payout ratio definition. However, the payout ratio is actually much higher when our analyst Desmond Lau includes cash costs for leases the company requires for its satellites and other heavy equipment.
If our clients had avoided BCE starting January 16 (the date our first dividend report was published), they would have avoided a 14% total return loss - even including the seemingly juicy dividend. That compares to the 11% positive total return for the S&P/TSX composite through yesterday.
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We are offering our new dividend report as part of an annual subscription to our Veritas Quality Ratings reports for all the stocks under our coverage.
Your subscription would include:
- Dividend report: We highlight 20 sustainable dividend growth companies and six companies we think investors should be cautious about.
- The Veritas Journal: This is a weekly newsletter to our clients that highlights key points or overlooked takeaways from our research for the week.
- Veritas Quality Ratings Reports: As part of our investment recommendation process, we do a deep dive into each company's disclosure and accounting to provide insight into risks that may be unknown or underappreciated by the Street. Our Veritas Quality Rating Reports score each company out of five stars on five key risk metrics that have proven to affect stock price performance. These are Accounting and Disclosure, Business Operations, Corporate Governance, Balance Sheet Risk and Cash Flow Sustainability (visit our Veritas Approach page for more). Our Quality Ratings reports are usually about one page and contain summaries of our investment thesis and intrinsic value estimates. They are updated on material news, quarterly reports and investment recommendation changes. You would have full access to them through our website.
- Fact Finders: Be first to hear live and ask questions to the guests of our Fact Finders Webinar Series. If you haven't seen one, in each episode, we go on the ground to speak to industry professionals in a live, unscripted candid video format to discover how we can make better investment decisions. In this series and in everything we do, we believe that facts empower investors and that better information leads to better investment decisions.