Last week, Canadian Utilities Limited (TSX:CU) declared a first-quarter dividend of $0.4623 per share, to mark a 1% increase over the previous payout. This extends its dividend growth streak to an impressive 54 consecutive years while maintaining a yield of approximately 4.3%. The new quarterly payment is payable on March 1, 2026.
This adjustment aligns with the utility company's recent trend of cautious capital allocation, as a payout ratio exceeding 90% leaves management with limited room for aggressive hikes.
While the company's ability to consistently raise dividends for more than half a century is a testament to the stability of its $24 billion asset base, the rate of growth hasn't been all that impressive. Five years ago, the quarterly dividend stood at 0.4398 cents, meaning the payout has expanded by just 5.1% in total over that entire period. By comparison, many other dividend-paying companies deliver increases of that magnitude or greater in a single year.
The stock's high payout ratio suggests that this slow pace is likely to persist as the company balances shareholder returns with the capital requirements of its energy infrastructure operations.
Investors looking for a safe and steady income stream may still find Canadian Utilities attractive due to its reliable business model and the predictable nature of its regulated earnings. However, those hoping for their income stream to grow significantly faster than inflation might be disappointed.
Over the past 12 months, the stock has risen by 24%, and it currently trades at roughly 22 times its trailing earnings.
