The third quarter earnings season is in full swing. We have seen no major surprises so far among the Dividend Champions’ reports. Summaries of our take on the results that we have analyzed to date are provided below. More comprehensive reports are available in our weekly publications.

The latest addition to the Dividend Champions portfolio, A&W Revenue Royalties Income Fund (TSX: AW-U, OTC: AWRRF), reported pleasing third quarter results.

Royalty income (read as revenue) increased by 6.6% compared to the same quarter last year thanks to both increases in same-store sales and the number of stores contributing to the royalty pool.

The declared dividend per unit, payable monthly, was 6.4% higher than last year.

Although A&W’s growth momentum has slowed somewhat from the very strong first two quarters of the year, it is clear that the business is increasing its market share in a very competitive fast food market. The “better burger” initiative, focused on providing healthier, better-quality ingredients, is resonating well with customers.

The dividend yield is currently 4.6% with growth of 2%-3% per year baked in. We estimate the fair value at C$34 or US$26 but would not chase the units, given the run-up in the share price over the past few months.

Canadian National Railway (TSX: CNR, NYSE: CNI) reported lower third quarter 2016 profits as the strain of depressed freight volumes took its toll. Earnings per share was 1% lower but the dividend was increased by 20% compared to last year.

Revenue declined by 6% as carload volumes dropped by 4%. Price increases of around 2% were not enough to offset the freight volume weakness. Operating expenses, down by 7%, were extremely well contained in a weak operating environment.

The stock price moved ahead over the past few weeks as market participants sensed that 2017 may provide a much better operating environment and huge grain crops in both Canada and the U.S. boost freight volumes. We see some downside risks to this optimistic outlook, including tougher winter conditions than last year, higher energy costs and a more-difficult pricing environment that may overshadow a modest improvement in freight volumes.

The valuation for the stock remains full in absolute terms, with a premium valuation compared to its North American peers. We estimate the fair value of the stock at C$84 or US$63 with a dividend yield of 1.8%.

Suncor Energy (TSX:SU, NYSE:SU) bounced back strongly from the second quarter, which was impeded by the Fort McMurray wildfires, with both production and cash flow more than doubling in the third quarter.

Compared to the same quarter last year, operating cash flow was somewhat higher but decreased by 7% per share as a result of a higher share count (which was issued to finance the additional interest in Syncrude). The dividend per share remained unchanged.

Production returned to normal levels during the quarter and delivered 728,000 barrels of oil equivalent per day with oil sands and Syncrude facilities producing at much higher levels.

Cost containment was a highlight of the quarter, with oil sands cash operating costs of $22 per barrel, 18% lower than a year ago and the lowest in a decade.

The balance sheet remains in sound condition with a debt-to-capital ratio of 23% boosted by a $2.8 billion equity issue during the previous quarter. The balance sheet will receive a further boost as Suncor has announced the sale of its Petro Canada oil lubricants division for C$1.1 billion.

We are holding Suncor in the Dividend Champions portfolio for its ability to sustain its dividend during commodity downcycles and hopefully boost the dividend during upcycles. So far the company has not disappointed. The dividend yield is currently 2.8% with prospects for growth largely dependent on energy prices.

TransCanada Corp. (TSX: TRP, NYSE: TRP) reported a 26% increase in adjusted earnings per share for the third quarter of the 2016 financial year. The dividend was 8.7% higher than a year ago.

However, it is worth noting that adjustments of more than $700 million ($0.95 per share) were made to profits, as per acceptable accounting standards. Without the adjustments, the company reported a loss.

The natural gas pipelines division increased adjusted EBITDA profits substantially following the inclusion of the Columbia Pipelines business. The other main natural gas pipelines also performed well, including the Canadian Mainline — and a first contribution from the Topolobampo pipeline in Mexico.

The $13 billion acquisition of Columbia Pipeline Group was completed during the quarter. TransCanada issued equity and increased its debt levels considerably to finance the acquisition.

Post results and probably under pressure from rating agencies and financiers, the company also announced the sale of its U.S. North East power assets and another round of equity capital raising. When both transactions are concluded, the company’s debt-to-capital ratio will decline to around 68%, which is still relatively high in our opinion.

The share price had a good run over the past few months and the valuation discount to its peers has now closed. We estimate the fair value at C$59 per share or US$45. The well covered dividend yield is still reasonably attractive at 3.8% especially taking into account management’s promise of 8%-10% annual growth.

Thomson Reuters (TSX:TRI, NYSE:TRI) delivered what can at best be described as “reasonable” third quarter results despite adjusted earnings per share increasing by 20%. The dividend per share was 2% higher than last year.

On a consolidated basis, revenue was unchanged and adjusted EBITDA profit increased by 4%. The largest division, Financial and Risk, continued its improvement with a 10% increase in EBITDA as net sales of financial services products increased for the 10^th quarter in a row. The Legal division reported lower profit, while Tax and Accounting increased profit by 10%.

The US$3.2 billion net proceeds from the disposal of the Intellectual Property and Science Division, which closed in early October, will be used to reduce debt and repurchase shares, and for business investment purposes. Since the start of the year the company repurchased 31 million shares which represents about 4% of the outstanding shares. 

Reuters expects to deliver low-single-digit revenue growth for the full year and slightly higher profit margins. This is unchanged from previous guidance, but the company is flagging a further restructuring and expects to record a $200 million charge in the last quarter not incorporated in the profit guidance.

The balance sheet is reasonably levered with a net debt-to-capital ratio of 40%. Cash flow remains sound.

Reuters is trading at a slight discount to its international peers and an attractive and well-covered dividend yield of 3.3%. We estimate the fair value at C$55 or US$41.

WestJet Airlines Ltd. (TSX: WJA, NYSE: WJAVF) delivered an all-time record third quarter profit. Earnings per share increased by 18% while the dividend was kept unchanged.

Increased seat capacity, more passengers and a higher load factor resulted in an 8% increase in revenue while operating expenses were well contained. The company has effectively countered the weakness in its core domestic energy markets by adding more international and cross-border flights.

The balance sheet now carries more debt as a heavy schedule of plane deliveries were received during the past few months. This also impacted free cash flow, which was slightly negative in the first nine months of the year. Although the higher debt and lower cash flow is not a concern as yet, the company has to extract additional cash flows from their increased capacity before we will see higher dividends. Hopefully this will happen in 2017.

The business valuation remains undemanding, with a 2017 price-to-earnings ratio at 9 times and a dividend yield of 2.4%. We estimate the fair value at C$26 or US$19.

The list of expected reporting dates are provided in the table below, with the companies that have already reported results at the time of writing marked in green.