Special dividends help adjust to a variable price of oil: Head of equity strategy
Canada’s benchmark stock index finished the trading day higher on Thursday as investors digested a slew of earnings releases.
The S&P/TSX Composite Index closed up 31.10 points, or 0.16 per cent, to 19,577.04.
Shares of Restaurant Brands International Inc. closed 7.64 per cent higher at $75.97 as its fast-food chains saw customers return in the second quarter. Its Tim Hortons brand reported sales rose above pre-pandemic levels for the first time.
“We've seen a bit of pent-up demand in Canada, which has helped drive some sales,” José Cil, chief executive officer of Restaurant Brands International, said in an interview Thursday.
Cil also referenced the strength of Tim Hortons’ marketing partnership with Justin Bieber, in which the restaurant released specialized drinks, Timbits and merchandise in collaboration with the Canadian singer.
“[Our partnership with] Justin Bieber -- I've said many times that I'm a Belieber and it’s been a big part of our success.”
Meanwhile, shares of Canadian Natural Resources Ltd. ended 2.23 per cent lower at $65.41 Thursday following its second-quarter results, despite cash flow doubling to nearly $5.9 billion. The company also said it will pay a special dividend of $1.50 per common share later this month.
Jeff Weniger, head of equity strategy at WisdomTree Asset Management, said special dividends are becoming more common in both the Canadian and global oil sector.
“It's almost becoming a way to operate a business in the energy sector specifically,” Weniger said in an interview Thursday.
“What they realize is [energy companies] don't necessarily need to pay the same exact dividend every quarter and then ratchet it up X per cent. We can make this a little bit variable because the reality is that their underlying stock and trade, which is the oil price, is also variable,” he said.
On the technology front, Lightspeed Commerce Inc. closed down 11.86 per cent at $27.71 per share, after the company posted mixed results in its latest quarter.
The Montreal-based company’s revenue forecast fell short of the average analyst estimate, but gross transaction volume surged 36 per cent year-over-year to US$22.1 billion.
“This return to in-person dining and in-person shopping is really good for Lightspeed,” Jean Paul Chauvet, chief executive officer of Lightspeed, said in an interview Thursday.
Despite several technology companies like Clearco and Robinhood Markets, Inc. announcing massive job cuts over the past few weeks, Chauvet said he doesn’t see that in the cards for Lightspeed this year.
Shares of Coinbase Global, Inc. gained 10.04 per cent on Thursday after it announced its partnering with BlackRock Inc. to help give institutional investors exposure to the crypto market.
Markets in New York were mixed Thursday. The S&P 500 closed down 0.08 per cent, the Dow Jones Industrial Average was 0.26 per cent lower and the tech-heavy Nasdaq finished the trading day up 0.41 per cent.
Benchmark West Texas Intermediate fell US$2.12 to US$88.52 per barrel.
The Canadian dollar was at 77.72 cents U.S., down 0.19 per cent.
Here’s a roundup of some other earnings-related stories:
- Maple Leaf Foods Inc. reported sales in its plant-based protein division fell 15 per cent in the second quarter, which contributed to the company’s earnings miss.
- Bombardier Inc. raised its full-year forecast for free cash flow. The jet-maker posted a second-quarter loss.
- Home Capital Group Inc. set aside $4.7 million for loans that could go bad in its latest quarter. The alternative lender also said it might repurchase up to $115 million of its shares.
- SNC-Lavalin Group Inc. slashed its full-year outlook for cash from operating activities, citing the “need to fund higher costs” to finish lump-sum turnkey projects. The engineering company reported a profit of just $0.01 per share, in the second quarter.
- BCE Inc. reaffirmed its full-year financial forecasts after the company beat analyst estimates for the second quarter. The telecom giant reported second-quarter profit rose 5.3 per cent year-over-year to $791 million, while posting a record for wireless customer retention.
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