Dividend stocks that may benefit from recent takeovers

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We are looking for stocks with sustainable dividends that are ready to benefit from recent – and friendly – takeovers

Stocks with sustainable dividends that are ready to benefit from recent – and friendly – takeovers.An acrimonious takeover bid for Canada’s Teck Resources Ltd. continues to grab headlines. But that offer by mining giant Glencore PLC has likely overshadowed quieter – much friendlier – acquisition deals for other large firms.

While these transactions mostly carry some level of risk, many are poised to significantly expand revenue and earnings for the companies that successfully complete them. At the same time, the takeovers have the power to bolster already sustainable dividends for shareholders. Any growth-by-acquisition strategy is inherently riskier than internal growth, since it carries an above-average chance of unpleasant surprises. That’s because a buyer of something rarely knows as much about it as the seller. However, top acquirers can cut that risk by focusing on buying profitable, well-managed firms or assets that fit well with their current operations.

Our search started with a list of U.S. and Canadian stocks with significant recent acquisitions poised to further elevate their prospects – and their dividend sustainability. We then applied our TSI Dividend Sustainability Rating System.

 

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