Four more CE Portfolio Holdings announced dividend increases over the past month, bringing to six the total number that have boosted their payouts during fourth-quarter and full-year 2013 reporting season.

Of the 35 companies currently held in the Portfolio 21 have announced at least one dividend or distribution increase over the past 12 months. These 21 have combined for a total of 27 dividend-increase announcements.

Six of the 16 Aggressive Holdings have announced dividend increases since February 2013. Recent Portfolio addition Magna International Inc (TSX: MG, NYSE: MGA), including the 18.8 percent increase management announced along with fourth-quarter and full-year 2013 financial and operating results on Feb. 13, 2014, has boosted its payout twice within the past 12 months.

Fifteen of the 19 Conservative Holdings have raised their payouts. Two of the four that haven’t announced an increase over the past 12 months–Davis + Henderson Income Corp (TSX: DH, OTC: DHIFF) in November 2012 and RioCan REIT (TSX: REI-U, OTC: RIOCF) in December 2012–did actually do so relatively recently.

Artis REIT (TSX: AX-U, OTC: ARESF) has been paying CAD0.09 per unit since mid-2008. Student Transportation Inc (TSX: STB, NSDQ: STB) has held its annualized rate at CAD0.56 since its first dividend declaration in October 2006.

Bank of Nova Scotia (TSX: BNS, NYSE: BNS) and EnerCare Inc (TSX: ECI, OTC: CSUWF), which both added to their totals within the past month, have announced three dividend increases since February 2013.

AltaGas Ltd (TSX: ALA, OTC: ATGFF), which is pushing out to new all-time highs in the aftermath of its stellar fourth-quarter and full-year 2013 report, has boosted its dividend twice during the defined period.

Consistent dividend growth indicates reliable revenue and earnings. It also serves the important purpose of telegraphic management’s feelings about the future: It indicates optimism, that the underlying business will not only be able to support existing commitments but is strong enough to support the extension of same.

Consistent dividend growth also provides the best inflation hedge of them all.

And over the long term dividend growth is highly correlated with strong share performance.

It’s a lead-pipe certainty that interest rates, at some point in the not-distant future, will rise. And one of the surest bets for a rising-rate environment is dividend growth. Since 1986, S&P 500 dividend-growth stocks have kept pace with the rise in Treasury yields, whereas high-dividend stocks have sharply underperformed.

Dividend-growth stocks are backed by businesses with solid histories of revenue and earnings growth. They trade with reasonable if unspectacular yields. It’s not a super-sexy part of the market. But is a great way to build wealth over time, as over the long term dividend growth is highly correlated with strong share-price performance.

Fantastic Four

Bank of Nova Scotia (TSX: BNS, NYSE: BNS) reported that fiscal 2014 first-quarter earnings per share (EPS) grew by 6.5 percent to CAD1.32. Adjusted EPS were CAD1.34, up from CAD1.26. Revenue was CAD5.725 billion, up 9.2 percent from CAD5.245 billion a year ago.

Scotiabank, the most international of Canada’s Big Six with significant operations in Latin America and Emerging Asia, met analysts’ EPS estimates and beat top-line expectations.

Return on equity dipped to 15.4 percent for the three months ended Jan. 31, 2014, from 16.8 percent for the prior corresponding period. Scotiabank’s productivity ratio improved to 54.2 percent from 53.9 percent.

As of Jan. 31 Scotiabank’s Basell III Common Equity Ratio was 9.4 percent, up from 8.2 percent a year ago.

Highlighting the earnings announcement was a 3.2 percent increase to the quarterly dividend rate, to CAD0.64 from CAD0.62. It’s the second dividend increase for Scotiabank since we added it to the Conservative Holdings in August 2013 and the sixth since the end of the Great Financial Crisis.

Bank of Nova Scotia is a now a buy under USD62.

EnerCare Inc (TSX: ECI, OTC: CSUWF) reported that attrition in its rentals portfolio decreased by 33 percent in 2013 versus 2012. Total revenue, meanwhile, was up 9 percent to a company-record CAD299 million.

Earnings before interest, taxation, depreciation and amortization (EBITDA) were up 5 percent to CAD152 million. And management continues to fix up the balance sheet, with debt reduction totaling CAD51 million since 2011.

EnerCare too announced a dividend increase, by 4.1 percent to CAD0.0604 on a monthly basis or CAD0.725 on an annualized basis. It’s EnerCare’s third dividend increase in the last 12 months and the fifth in the last 27 months. Since Jan. 1, 2011, EnerCare has grown its annual dividend by 12 percent.

Management noted EnerCare’s “strong operating performance” in its rentals operations during 2013 as well as the further build-out of submetering.

EnerCare also announced the acquisition of the rental portfolio of Energy Services Niagara Inc, including approximately 2,441 electric and gas-fired water heaters. EnerCare is a buy under USD11.

Innergex Renewable Energy Inc (TSX: INE, OTC: INGXF) raised its dividend by 3.4 percent, the first increase for the company since its initial dividend declaration in May 2010.

The company posted 2013 revenue of CAD198.3 million, up 12 percent from CAD176.7 million in 2012, and adjusted EBITDA of CAD148.9 million, up 11 percent from CAD133.8 million.

Growth was attributable to the full-year contribution of the Stardale solar farm commissioned in May 2012 and the Brown Lake and Miller Creek hydroelectric facilities acquired in October 2012, the additional capacity at the Gros-Morne wind farm since November 2012 and the acquisition of the Magpie hydroelectric facility in July 2013.

Power generated was up 13 percent to 2,382 gigawatt-hours.

Innergex generated free cash flow of CAD59 million, up from CAD43.9 million in 2012 due to the increase in the number of facilities in operation.

For the year ended Dec. 31, 2013, the Innergex declared dividends of CAD0.58 per share, or 93 percent of free cash flow. That’s down from 115 percent in 2012. Innergex is a buy under USD10.

Magna International Inc (TSX: MG, NYSE: MGA) is the unquestioned star of the season from a dividend-growth perspective, with an 18.8 percent increase.

Management reported 2013 sales of USD34.84 billion, an increase of 13 percent compared to 2012 driven by growth in its North American, European, Asian and Rest of World production sales as well as higher tooling, engineering and other sales, and complete vehicle assembly sales.

Vehicle production increased 5 percent to 16.2 million units in North America and decreased 1 percent to 19.3 million units in Europe.

Complete vehicle assembly sales increased 20 percent to USD3.06 billion, while complete vehicle assembly volumes increased 19 percent to approximately 147,000 units.

Adjusted EBIT increased 25 percent to USD2.07 billion, while cash from operations was USD2.69 billion. Total investment for the year was USD1.37 billion, including USD1.17 billion in fixed-asset additions, a UsD192 million increase in investments and other assets and USD9 million to purchase subsidiaries.

Management noted solid performance in North America and further progress in improving profitability in Europe. Recent investments in Asia have begun to yield returns, even as Magna continues to invest in the region. Business in South America “is poised to generate some improvement going forward.”

Based on the 18.8 percent dividend increase Magna is now a buy under USD95.

REIT Reports

The five Canadian real estate investment trusts (REIT) included in the CE Portfolio Conservative Holdings posted another set of financial and operating numbers for 2013 that suggest the recent steep slide driven by fears of rising interest rates is well overdone.

Artis REIT (TSX: AX-U, OTC: ARESF) reported growth in funds from operations (FFO) per unit of 12.3 percent to CAD1.46, as adjusted FFO per unit ticked up by 9.6 percent to CAD1.26. Property net operating income was up 23.5 percent, while same-property NOI rose 3.3 percent. Occupancy for the REIT was 95.5 percent as of Dec. 31, 2013. The payout ratio for the year was 74 percent. Artis REIT is a buy under USD16.

Canadian Apartment Properties REIT (TSX: CAR-U, OTC: CDPYF) posted a 15.7 percent increase in operating revenue to CAD477 million, as normalized FFO grew by 20.2 percent to CAD159.4 million, or CAD1.56 per unit.

Average monthly rents were up 2.9 percent for 2013 versus 2012, while occupancy was 98 percent as of Dec. 31, 2013. The payout ratio for 2013 was 75 percent. Canadian Apartment Properties is a buy under USD25.

Dundee REIT (TSX: D-U, OTC: DRETF), which has suffered the most among our five REITs, generated FFO growth of 16.2 percent to CAD306.2 million, as FFO per unit ticked up to CAD2.88 from CAD2.86 in 2012.

Adjusted FFO per unit was up 2.5 percent. Occupancy as of Dec. 31, 2013, was 94.3 percent, while the REIT completed 1 million square feet of fourth-quarter leasing at higher rates. Dundee REIT, which posted a payout ratio of 78 percent for 2013, is a buy under USD39.

Northern Property REIT (TSX: NPR, OTC: NPRUF) saw 2013 total revenue growth of 5.2 percent to CAD175.3 million, as net operating income rose by 1 percent to CAD104.8 million.

FFO was up 2.8 percent to CAD72.85 million, while FFO per share was up 0.4 percent to CAD2.27. The 2013 payout ratio was 68 percent. Northern Property REIT is a buy under USD30.

RioCan REIT (TSX: REI, OTC: RIOCF) reported 2013 operating FFO increased by 12 percent to CAD492 million, or 7 percent on a per-unit basis to CAD1.63.

Concentration in Canada’s six major markets increased to 71.7 percent as of Dec. 31, 2013, from 67.5 percent, while occupancy dipped to 96.9 percent from 97.4 percent. RioCan, which reported a payout ratio of 87 percent for 2013, is a buy under USD27.

Conservative Update

Here are highlights for the eight other Conservative Holdings that reported results over the past month.

AltaGas Ltd (TSX: ALA, OTC: ATGFF) reported a 40.9 percent increase in 2013 revenue to CAD2.043 billion, as normalized earnings per share (EPS) surged by 31 percent to CAD1.51 and normalized FFO per share were up 17 percent to CAD3.47.

In its commentary management noted that it has strategic relationships in place to execute LPG and LNG export projects, as it sets the stage for the next phase of asset expansion. AltaGas is a strong buy on dips to USD37.25.

Brookfield Real Estate Services Inc (TSX: BRE, OTC: BREUF) posted 2013 cash flow from operations of CAD25.2 million, or CAD1.97 per share, down slightly from CAD25.4 million, or CAD1.98 per share, in 2012. Royalties were basically flat at CAD36.3 million, compared to CAD36.5 million.

Transactional dollar volume was up 6.1 percent during 2013 to CAD175.1 billion, driven by an average price increase of 5.1 percent and a 0.9 percent uptick in the number of units sold, as the Canadian real estate market demonstrated its resilience. Brookfield Real Estate Services is a buy under USD14.

Cineplex Inc (TSX: CGX, OTC: CPXGF), continuing to benefit from the diversification of its revenue streams, reported 2013 top-line growth of 7.2 percent to CAD1.17 billion. Fourth-quarter revenue was up 8.2 percent to CAD323.2 million, as offerings from Hollywood improved for the holiday season.

Annual box office was up 4.2 percent, while “other revenues” surged by 24.6 percent. Net income declined by 38.3 percent due to higher operating costs related primarily to the upgrade of projection capabilities, which should pay off with higher ticket prices down the line. Cineplex is a buy under USD36.

Davis + Henderson Income Corp (TSX: DH, OTC: DHIFF), reporting results for what was a transformational year, generated growth in revenue from continuing operations of 20.4 percent to CAD837.1 million.

Adjusted revenue was up 24.6 percent to CAD866.3 million, as acquisitions further reduced industry, customer and service concentration. Davis + Henderson is a buy under USD22.

Keyera Corp (TSX: KEY, OTC: KEYUF)–Feb. 14, 2014 (confirmed) generated 2013 distributable cash flow growth of up 44 percent to CAD288.1 million, or CAD3.68 per share, driven by margin improvements across all three operating segments.

Management also announced it will build a rail terminal to optimize shipments of propane from western Canada. Keyera is a buy under USD55.

Pembina Pipeline Corp (TSX: PPL, NYSE: PBA) reported 2013 revenue growth of 46.6 percent to CAD5.025 billion on acquisitions, new facilities and expansions, as cash flow from operating activities rose 80.8 percent to CAD651 million, or CAD2.12 per share.

Pembina, which is embarking on its largest expansion plan in 2014, is a buy under USD35.

Student Transportation Inc (TSX: STB, NSDQ: STB) posted fiscal 2014 first-half revenue growth of 15.3 percent, while adjusted EBITDA, driven by two tuck-in acquisitions and nine contract wins during the first quarter was up 18.2 percent. Student Transportation is a buy under USD7.

TransForce Inc’s (TSX: TFI, OTC: TFIFF) numbers were probably the point of greatest concern among Portfolio Holdings, as 2013 revenue declined by 1 percent to CAD3.109 billion. Income from operating activities slipped to CAD209.4 million from CAD247.1 million in 2012, as harsh weather impacted fourth-quarter results.

Management has proven itself capable of adjusting to difficult operating environments, and it’s likely the negative growth will prove transitory.

TransForce is still a consolidator in a highly fragmented North American transportation logistics industry, with free-cash generation and balance-sheet strength sufficient to add assets as the continental economy continues its slow recovery. TransForce is a buy under USD23.

Aggressive Update

Here are highlights for 10 Aggressive Holdings that reported results over the past month.

Acadian Timber Corp (TSX: ADN OTC: ACAZF) reported that 2013 net sales were up 8.1 percent to CAD74.4 million, as operating earnings rose 6.3 percent to CAD16.8 million.

Free cash flow dipped to CAD13.8 million from CAD14 million. But harvest volumes and pricing were up solidly. Acadian Timber is a buy under USD13.

Chemtrade Logistics Income Fund (TSX: CHE-U, OTC: CGIFF) posted 2013 distributable cash after maintenance CAPEX of CAD75.5 million, or CAD1.81 per share, down from CAD86.4 million, or CAD2.07, on higher expenses, including costs associated with the acquisition of General Chemical late in the year.

The General Chemical essentially doubles Chemtrade’s size and represents the culmination of an asset-gathering process that began back in 2003. Chemtrade is a buy under USD18.

Enerplus Corp (TSX: ERF, NYSE: ERF) posted annual production growth of 9 percent in 2013, exceeding both annual and exit production forecasts for the year. Production averaged 89,800 barrels of oil equivalent per day (boe/d), ahead of guidance of 89,000 boe/d.

Total oil production increased by 5 percent to average 38,250 barrels per day, while natural gas output increased by 15 percent to 288 million cubic feet per day, representing 54 percent of overall production volumes.

Funds flow grew by 17 percent year over year to CAD754 million, or 14 percent on a per-share basis, due to the increase in production volumes, lower costs and an increase in commodity prices. Enerplus is a buy under USD18.

Extendicare Inc (TSX: EXE, OTC: EXETF) reported 2013 revenue of CAD2.024 billion, including a CAD19.6 million year-over-year increase in same-facility operations. Adjusted FFO per share declined to CAD0.82 from CAD0.994 in 2012. Extendicare remains a buy under USD7.

Newalta Corp (TSX: NAL, OTC: NWLTF) reported that 2013 revenue grew by 8 percent to CAD783.4 million, while adjusted net EPS were up 7 percent to CAD0.90.

Management noted a weak start to 2013 was mitigated by steady improvement as the year progressed, and its growth plan remains on track. Newalta is a buy under USD17.50.

Noranda Income Fund (TSX: NIF-U, OTC: NNDIF) reported 2013 earnings before interest and taxation (EBIT) were up 11.9 percent to CAD65 million on higher zinc metal production and sales, processing fees and premiums and a weaker Canadian dollar, partially offset by lower by-product revenue. Noranda is a buy under USD6.

Parkland Fuel Corp (TSX: PKI, OTC: PKIUF) generated 2013 distributable cash flow growth of 5 percent to CAD136.5 million, while adjusted EBITDA were up 4 percent to CAD204.7 million. Total fuel volume was up 57 percent, driven by the acquisition of Elbow River. Management confirmed its ambitious adjusted EBITDA forecast for 2014 through 2016. Parkland Fuel is a buy under USD18.

ShawCor Ltd (TSX: SCL, OTC: SAWLF) reported that revenue, EBITDA, net income, and EPS for 2013 were all company records at CAD1.8 billion, CAD391 million, CAD220 million and CAD3.51, respectively, driven by solid execution and rapid growth for Asia-Pacific operations. ShawCor is a buy under USD45.

Vermilion Energy Inc (TSX: VET, NYSE: VET) posted record average annual production of 41,005 boe/d during 2013, an increase of 8 percent compared to 37,803 boe/d in 2012.

Approximately 75 percent of the company’s year-over-year production growth was achieved organically through continued development of its Cardium and Mannville resource plays in Canada, and successful conventional drilling programs in France and Australia.

Vermilion generated record fund flows from operations in 2013 of CAD667.5 million, or CAD6.61 per share, an increase of 20 percent from CAD557.7 million, or CAD5.69 per share in 2012.

Growth was driven by higher production volumes in all regions and by higher price realizations for North American oil and gas production as well as European gas. Improved pricing in Canada for both oil and gas production resulted in higher company-total realized prices as compared to 2012.

Vermilion Energy is a buy under USD56.

Wajax Corp (TSX: WJX, OTC: WJXFF) reported a 2.6 percent decline in 2013 revenue to CAD1.428 billion, while net earnings fell 27.6 percent to CAD47.7 million. The Equipment segment suffered on mining CAPEX cutbacks, though Power Systems and Industrial Components benefited from a recovery for oil and gas customers during the fourth quarter. Wajax remains a hold.

Please note that fourth-quarter and full-year 2013 results for Aggressive Holding Peyto Exploration & Development Corp (TSX: PEY, OTC: PEYUF) are detailed in this month’s Best Buys feature.

Remainders

Fourth-quarter and full-year 2013 results are in for most of the CE Portfolio, but there are four “stragglers,” whose reporting dates are listed below.

Should a company post numbers that fundamentally change our investment thesis and require immediate action we’ll issue a Flash Alert.

Conservative Holdings

• Bird Construction Inc (TSX: BDT, OTC: BIRDF)–March 12, 2014 (estimate)

Aggressive Holdings

• Ag Growth International Inc (TSX: AFN, OTC: AGGZF)–March 12, 2014 (confirmed)
• Crescent Point Energy Corp (TSX: CPG, OTC: CSCTF)–March 13, 2014 (confirmed)
• Lightstream Resources Ltd (TSX: LTS, OTC: LSTMF)–March 11, 2014 (confirmed)