Among the key fundamental factors every income-focused investor should consider including dividend yield, dividend-payout ratio and various liquidity ratios related to the ability of said firm to continue to pay out a dividend over time, the track record of a company in delivering dividend increases should be one of the key metrics used to assess the value of an income-related investment over time.
Equities providing a relatively high dividend yield are fundamentally different from various static debt instruments offering stagnant yields in that such operating businesses are typically able to consistently grow earnings over time, passing on the bottom line increases of the underlying operations of the business to shareholders via dividend increases.
Companies which do so more frequently, or in larger percentage increases each year, are typically considered to be much more lucrative than other fixed-income investments due to the growth these securities provide.
On the TSX, the company with perhaps the most impressive track record remains Fortis Inc. (TSX:FTS)(NYSE:FTS). The utilities company has increased its dividend each year for more than four decades, providing investors with a dividend distribution which has continued to climb at an impressive rate due to the company’s ability to generate increasing value year after year in a competitive industry.
Relative to its peers, Fortis remains fairly valued given forecast dividend increases in the 6% range for the next few years, making this company a must-hold for long-term income-focused investors.
Invest Wisely, my friends.
