Many companies with a history of increasing their dividends have been stellar long-term performers. The following small cap Canadian business have been increasing their dividend annually during the past five years and have good free-cash-flow growth.
Many companies with a history of increasing their dividends have been stellar long-term performers. Take Procter & Gamble (NYSE: MMM), for example. Had an investor bought either one of those stocks 25 years ago and continually added to their holdings, they would have likely built a nice retirement nest egg by now.
But dividend growers aren’t just confined to large-cap companies. The following small cap Canadian business have been increasing their dividend annually during the past five years and have good free-cash-flow growth. These companies also have business models with predictable earnings and are currently yielding between 2% and 5%, yet have payout ratios that give it the flexibility to increase its dividend in the future.
Evertz Technologies Limited (TSX: ET): Evertz, which designs, manufactures and markets video and audio infrastructure equipment for the television, telecommunications and new-media industries, has been growing its dividend at an average annual rate of approximately 45% during the past five years and is currently yielding about 4.3%. The company has little long-term debt and cash and cash equivalents of about $103 million as of July 31, 2014.
During Evertz’s most-recently reported quarter (Q1 2015), the company’s revenue rose 54% year over year, while its fully-diluted earnings per share surged 63%. At the end of August 2014, Evertz’s purchase order backlog was in excess of $46 million. As well, Evertz Technologies has been increasing its international exposure, with about 45% of total revenue now generated outside North America.
Pason Systems Inc. (TSX: PSI): Pason, which provides data management systems for oil rigs both offshore and on land, has been growing its dividend at an average annual rate of approximately 19% during the past five years and is currently yielding about 2.2%. During the company’s most recently-reported quarter (Q2 2014), its revenue jumped 26%year over year while it swung to a per-share profit of $0.21 from a net loss of $0.48 per share.
Pason also announced that it is increasing quarterly dividend by 13% to $0.17 per share. Its recurring revenue model provides a cushion during times of weakness in the energy sector. The company’s stock price, meanwhile, has climbed steadily during the past five years although has pulled back with the recent slump in the prices of many oil-related stocks.
TransForce Inc. (TSX: TFI): The company, which provides trucking, courier, logistics and waste management services, has been growing its dividend at an average annual rate of approximately 7% during the past five years and is currently yielding about 2.2%.TransForce has grown its business through strategic acquisitions and while this has added to its debt load, the company’s growing free cash flow should allow it to pay it down quickly.
During TransForce’s most-recently reported quarter (Q2 2014), the company saw its total revenue rise 12.2% year over year while itsadjusted net income climbed 25.1%. TransForce’s stock price, meanwhile, has experienced a nearly four-fold increase during the past five years.
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