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Globe and Mail
11 hours ago
- Business
- Globe and Mail
Dividend-paying conglomerates with break-up potential that may reward investors
Sustainable dividends from conglomerates well placed to unlock holding company discounts. Honeywell International Inc. HON-Q shares rose early this week after the industrial conglomerate reiterated plans to split into three independent companies. The move, spurred by activist investor Elliott Investment Management, should further lift Honeywell's share price and so shrink its 'holding company discount.' That's the tendency for multifaceted conglomerates to trade for less than the total value of their various parts. Holding companies often see their share prices rise after opting to break themselves up into their constituent businesses. Essentially, the market finds it easier to assess the value of 'pure-play' firms. We started with our extensive list of dividend-paying Canadian and U.S. companies, before singling out conglomerates offering steady growth prospects – as well as breakup potential. We then applied our TSI Dividend Sustainability Rating System to home in on top dividend payers. Our system awards points to a stock based on key factors: Companies with 10 to 12 points have the most secure dividends, or the highest sustainability. Those with seven to nine points have above average sustainability; average sustainability, four to six points; and below average sustainability, one to three points. TSI Network is the online home of The Successful Investor Inc. – the group of widely followed Canadian investment newsletters by editor and publisher Pat McKeough. They include our award-winning flagship newsletter, The Successful Investor, and the TSI Dividend Advisor. TSI Network is also affiliated with Successful Investor Wealth Management. Our TSI Dividend Sustainability Rating System generated five stocks: Montreal-based Power Corp. of Canada POW-T holds controlling interest in Great-West Lifeco Inc., IGM Financial Inc. and much more. Calgary-headquartered ATCO Ltd. ACO-X-T owns 52.5 per cent of Canadian Utilities Ltd. CU-T but also ATCO Structures & Logistics and 40 per cent of Neltume Ports; the latter operates 18 ports and related operations in South America. Honeywell International Inc., based in North Carolina, had already spun off two subsidiaries (Resideo Technologies Inc. and Garrett Motion Inc. GTX-Q) to shareholders in 2018 and now plans to break up even further. Global conglomerate 3M Co. MMM-N, with headquarters in Minnesota, sells a wide array of products with little overlap and so has a lot of breakup potential. In fact, it spun off its health care unit as Solventum Corp. SOLV-N last year. Washington-based Danaher Inc. DHR-N has made a number of breakup moves in the past but still has a varied range of businesses well-positioned for hiving off as standalone firms. We advise investors to do additional research on investments we identify here. Scott Clayton, MBA, is senior analyst for TSI Network and associate editor of TSI Dividend Advisor.
Globe and Mail
08-05-2025
- Business
- Globe and Mail
Sustainable dividends from cell-tower providers poised for growth
What are we looking for? Sustainable dividends from cell-tower providers poised for growth. The screen Telus Corp. T-T is exploring a possible sale of 49.5 per cent of its cell-tower network in an effort to pay down debt. That stake could attract as much as $1-billion, while keeping Telus in control of a network with some 3,000 towers spread across key markets. Like Telus, all tower companies own and operate the physical structures, themselves, but it falls to the mobile network operators that lease space on those structures to install and maintain their broadcast equipment. As our TSI analysts point out, the arrangement makes for a diversity of customers leasing space on any given tower. Our search started with dividend-paying cell-tower operators. From there, we focused on established players well positioned for cash-flow growth as demand rises and the industry's high barriers to entry keep out new competitors. From there, we applied our TSI Dividend Sustainability Rating System, awarding points to a stock based on key factors: Companies with 10 to 12 points have the most secure dividends, or the highest sustainability. Those with seven to nine points have above average sustainability; average sustainability, four to six points; and below average sustainability, one to three points. More about TSI Network TSI Network is the online home of The Successful Investor Inc. – the group of widely followed Canadian investment newsletters by editor and publisher Pat McKeough. They include our award-winning flagship newsletter, The Successful Investor, and the TSI Dividend Advisor. TSI Network is also affiliated with Successful Investor Wealth Management. What we found Our TSI Dividend Sustainability Rating System generated five stocks. American Tower Corp. AMT-N, based in Boston, is the largest independent operator of wireless telecom and broadcast towers, with more than 149,000 sites worldwide. Headquartered in Houston, Tex., Crown Castle Inc. CCI-N owns and operates more than 40,000 cell towers throughout the U.S. Not that the company is planning to sell its fibre business and will cut its dividend by 32.1 per cent later this year to reflect the loss of those assets. SBA Communications Corp., SBAC-Q based in Boca Raton, Fla., owns and operates towers, principally in the U.S., but also South America, Central America, Canada and Africa; all together, that's almost 40,000 towers. DigitalBridge Group Inc., DBRG-N also headquartered in Boca Raton, is a global digital infrastructure investment firm. The company owns, invests in and operates businesses such as cell towers and data centres. These interests include Vertical Bridge, with more than 17,000 towers. And finally, Vancouver's Telus continues to profit from selling telecom services to Canadians. The unlocking of value with the sale of the cell-tower stake, combined with Telus's move to retain controlling interest, will further support its high dividend. We advise investors to do additional research on investments we identify here. Scott Clayton, MBA, is senior analyst for TSI Network and associate editor of TSI Dividend Advisor.
