Suncor Energy Inc. (SU)

[Timothy Smith]

Suncor has grown its dividend by a compounded rate of 21.4% in the last 5 years. Also, it spent over 2 billions in buybacks in the last two years. The company still has a $1.8 billion share buyback program that could purchase up to 49 million shares (around 3.2% of shares outstanding).

Suncor raised its quarterly dividend by 54% from $0.13 per quarter to $0.20 in April. The dividend could be raised by 5-10% ($0.01-0.02 per quarter) again in April,2014 when the company re-visits its payout policy. With annual cash flow from operations at $10 billion and capital expenditures at $7 billion, there is about $3 billion of free cash flow, which only $1.2 billion per year is committed to the current dividend. Thus, investors should expect further dividend growth in the years ahead.