These 2 Industry Giants Just Raised Their Dividends

Franco Nevada Corp. (TSX:FNV)(NYSE:FNV) and Sun Life Financial Inc. (TSX:SLF)(NYSE:SLF) just raised their dividends by 3-5%. Which should you buy? Let’s find out.

| More on:
The Motley Fool

One of the most successful investment strategies is to buy and hold stocks with track records of dividend growth. This is because a rising dividend is a sign of a very strong business with excellent cash flows and earnings to support increased payouts, and the dividends themselves really add up over time when you reinvest them.

With this in mind, let’s take a closer look at two stocks that raised their dividends by 3-5% this week, so you can determine if you should invest in one of them today.

Franco Nevada Corp.

Franco Nevada Corp. (TSX:FNV)(NYSE:FNV) is one of the world’s largest gold-focused royalty and streaming companies. It currently holds ownership interests in 339 assets across North America, South America, Africa, Southeast Europe, and Australia.

In its first-quarter earnings release on May 9, Franco Nevada announced a 4.5% increase to its quarterly dividend to US$0.23 per share, equal to US$0.92 per share on an annualized basis, and this gives it a yield of about 1.3% today.

Investors should also make the following three notes about Franco Nevada’s new dividend.

First, the first quarterly installment at the increased rate is payable on June 29 to shareholders of record on June 15.

Second, Franco Nevada has raised its annual dividend payment for nine consecutive years, and its two hikes in the last 13 months, including its 4.8% hike in May 2016 and the one it just announced, have it positioned for 2017 to mark the 10th consecutive year with an increase, and the hike it just announced also has it positioned for 2018 to mark the 11th consecutive year with an increase.

Third, I think its very strong financial performance, including its 30.8% year-over-year increase in revenue to a record US$172.7 million and its 47.1% year-over-year increase in adjusted net income to US$0.25 per share in the first quarter of 2017, will allow its streak of annual dividend increases to continue in 2019 and beyond.

Sun Life Financial Inc.

Sun Life Financial Inc. (TSX:SLF)(NYSE:SLF) is a leading international financial services organization. It provides a wide range of insurance, wealth, and asset management solutions to individuals and corporate clients around the world.

In its first-quarter earnings release on May 9, Sun Life announced a 3.6% increase to its quarterly dividend to $0.435 per share, equal to $1.74 per share on an annualized basis, and this brings its stock’s yield up to about 3.7% today.

Investors must also make the following three notes about Sun Life’s new dividend.

First, the first quarterly payment at this increased rate will be made on June 30 to shareholders of record at the close of business on May 31.

Second, Sun Life has raised its annual dividend payment each of the last two years, and its three hikes in the last 13 months, including its 3.8% hike in May 2016, its 3.7% hike in November 2016, and the one noted above, have it on pace for 2017 to mark the third consecutive year with an increase, and the hike it just announced also has it on pace for 2018 to mark the fourth consecutive year with an increase.

Third, I think its very strong operational performance, including its 7.8% year-over-year increase in assets under management to $927.28 billion in the first quarter of 2017, and its management team’s positive outlook on its business, including its expectation of achieving its medium-term goal of 8-10% earnings-per-share growth, will allow its streak of annual dividend increases to continue into the 2020s.

Should you buy one of these dividend growers today?

I think Franco Nevada and Sun Life Financial would make great additions to any Foolish portfolio, so take a closer look and consider adding one or both of them to yours today.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Joseph Solitro has no position in any stocks mentioned.

More on Dividend Stocks

dividends can compound over time
Dividend Stocks

Want a 7% Yield? The 3 TSX Stocks to Buy Today

These TSX stocks are offering high yields of over 7%, making them attractive for investors seeking steady passive income.

Read more »

how to save money
Dividend Stocks

The Smartest Dividend Stocks to Buy With $200 Right Now

These smartest dividend stocks can consistently pay and increase their dividends in the coming years, irrespective of the macro uncertainty.

Read more »

Electricity transmission towers with orange glowing wires against night sky
Dividend Stocks

3 Utility Stocks That Are Smart Buys for Canadians in November

These utility stocks benefit from regulated businesses and generate predictable cash flows that support higher dividend payouts.

Read more »

Start line on the highway
Dividend Stocks

Invest $10,000 in This Dividend Stock for $600 in Passive Income

Do you want to generate passive income? Forget the rental unit! This option will save you the mortgage yet still…

Read more »

Senior uses a laptop computer
Dividend Stocks

1 Reliable Dividend Stock for the Ultimate Retirement Income Stream

TD Bank (TSX:TD) shares are way too cheap with way too swollen a yield for retirees to pass up right…

Read more »

A worker drinks out of a mug in an office.
Dividend Stocks

Is Brookfield Infrastructure Partners a Buy for its 4.75% Yield?

Brookfield Infrastructure Partners (BIP) has a 4.75% dividend yield. Is it worth it?

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

Where to Invest Your $7,000 TFSA Contribution

The TFSA is attractive for investors who want to generate tax-free passive income.

Read more »

The TFSA is a powerful savings vehicle for Canadians who are saving for retirement.
Dividend Stocks

TFSA Investors: 3 Dividend Stocks Worth Holding Forever

These TSX stocks have the potential to grow their dividends over the next decade, making them top investments for TFSA…

Read more »