What are we looking for?
Growing dividends are an investor's best friend. Dividends can help you pay less in taxes and studies have shown that companies that regularly increase their dividends outperform the market.
Today's screen
Bloomberg has a formula that it uses to try to predict dividend growth rates for the next three years. Here is how it works.
The formula takes into account such factors as company guidance, industry analysis, historical trends and analyst estimates. It also factors in some esoteric measures, such as option market implied dividends and historical regression analysis of fundamentals compared to dividends.
Finally, Bloomberg calculates something called the Bloomberg Dividend Directional Thermometer (DDT) score.
It's a reading from -100 to +100 using various fundamental, credit rating and company health data.
A negative score indicates a company might cut its dividend, while a positive score increases the potential for an increase. A score must be above +50 to be conclusive about a potential dividend hike.
A high DDT score doesn't always mean a big dividend increase is coming, however.
For instance, a company might have a high DDT score but indicate it is about to execute a large share buyback, which would lower its projected dividend increase rate. That's why Bloomberg takes into account more than just the DDT score when making its projections.
What did we find?
We've run this screen from time to time for Number Cruncher. When we ran it in May, BCE sat atop the list, followed by First Quantum, Rogers, Suncor and Metro Inc. The Big Five banks were absent from the top 20.
Since then, BCE and Metro have fallen out of the top 20 and Rogers has slipped to the bottom half of the list. Several of the names on this list don't offer much yield yet, so dividend lovers may want to wait until there is more yield to entice them.
The Big Five banks remain shut out, with Toronto-Dominion the best bet at position 32.