Eight strong dividend plays in utilities, pipelines

Peter Ashton is vice-president of client services at Recognia Inc.

What are we looking for?

After this week's two-day Federal Reserve meeting, chair Janet Yellen indicated that though there were signs of strengthening in the U.S. economy, the Fed was in no rush to raise interest rates. A continued period of low interest rates may prove to be positive for dividend-paying stocks both in the U.S. and in Canada. Today, we will look for strong Canadian dividend plays in the traditional dividend haven of the utility and pipeline sectors.

The screen

We will be using Recognia's Strategy Builder to search for Canadian utility and pipeline stocks with strong dividend yields and a track record of increasing dividend payouts over time.

We begin by setting a minimum market capitalization threshold of $1-billion to focus on larger, more established companies in the market. Next, we will look for companies with a dividend yield of at least 2.5 per cent. Finally, in order to select companies with a likelihood of increasing their dividend payouts in the future, we will screen for companies with a dividend growth rate of at least 15 per cent annually, averaged over the past five years.

What did we find?

Enbridge is Canada's largest pipeline company by market cap and is also the largest natural gas distributor in Canada. The company has a market cap of more than $45-billion, pays a 2.6 per cent dividend and has a five-year average dividend growth rate of 13.8 per cent.

Calgary-based Gibson Energy operates two pipelines and two terminal facilities in Alberta as well as distributing propane to customers in Western Canada and the U.S. Gibson Energy has the highest dividend growth rate on our screen at 51.6 per cent.

Innergex Renewable Energy is the smallest company on our screen, with a market cap of just $1.1-billion. Innergex is a Quebec-based owner-operator of hydro-electric, wind and solar installations located across North America. The company has the highest dividend yield on our screen at 5.6 per cent and a five-year average dividend growth rate of 10.8 per cent.

More about Recognia

Recognia is a global leader in quantitative and technical analysis. It is accessible by more than 20 million investors and traders worldwide through leading retail online brokers. Recognia covers 85 exchanges worldwide, and analyzes 65,000 instruments daily including stocks, indices, ETFs, currencies and futures.

The investment ideas presented here are for information only. Investors should conduct further research before investing.