Cash-rich Canadian companies embrace dividend strategy

Thu Feb 28, 2013 12:30pm EST
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* Dividend hikes prevalent across the business spectrum

* Companies seek to boost their share prices

* Economic outlook makes payouts preferable to investing

* Trend seen continuing as cash stays on sidelines

By Andrea Hopkins

TORONTO, Feb 28 (Reuters) - Canadian companies of nearly every stripe have announced big dividend increases this year, aiming to dole out mountains of cash on a bet that shareholders prefer sweeter payouts to their throwing money at investments in an uncertain economy.

Bank of Montreal - Canada's No. 4 lender and the first of the big five banks out of the gate this year with quarterly financial results - set the tone for the lenders early this week with a surprise dividend increase.

But in the days before that, a swath of Canada's biggest names had already jumped on the dividend bandwagon. In telecoms, BCE Inc and Rogers Communications Inc raised payouts; in pipelines, TransCanada Corp and Enbridge Inc, and in retailing, Metro Inc and Tim Hortons Inc.

A host of others - Magna International Inc, Suncor Energy Inc and Telus Corp, to name three - are likely to raise their payouts or dividend targets or both sometime this year.   Continued...