There is always something to buy in the stock market. On Tuesday, I put out a list of the stocks that I covered and showed what stock might be a good deal based on dividend yield. Now I am trying to categorize what sorts of stocks may be a good deal based on dividend yield.
The advantages to using dividend yield to judge how cheap or expensive a stock is, is that you are not using estimates or old data (like last reported quarter's data). You are using today's stock price and today's dividend yield.
For other testing, like using P/E Ratios and Price/Graham Price Ratios, you use EPS estimates or from the last reported financial quarter. When using P/S Ratios, P/CF Ratios or P/BV Ratios you are using data from the last reported financial quarter.
However, no system is perfect. But if you are interested in buy a stock a list of stocks cheap or reasonable using dividend yield data might be a good place to start.
Categorizing stocks is not as simple as it might seem. Every site you go to has categorized stocks a bit differently. I try to keep this as simple as possible. See my spreadsheet here to see what stocks are showing whether a stock is relatively cheap based on historical high dividend yields (P/Hi), historical average dividend yields (P/Ave), historical median dividend yields (P/Med) or on 5 year median dividend yields (P/5Yr). As in other spreadsheets, you can highlight a line or a number of lines for better viewing.
In the following notes I am only going to list stocks showing as cheap using the historical high dividend yields (P/Hi) and historical median dividend yields (P/Med).
I follow 18 stocks in the Consumer Discretionary category. Of these stocks, only Dorel Industries (TSX-DII.B) is showing as cheap by the historically high dividend yield. Seven (or 39%) are showing cheap by historical median dividend yield. They are Canadian Tire Corporation (TSX-CTC.A); Dorel Industries (TSX-DII.B), High Liner Foods (TSX-HLF); Leon's Furniture (TSX-LNF); Magna International Inc. (TSX-MG), Reitmans (Canada) Ltd. (TSX-RET.A) and Thomson Reuters Corp (TSX-TRI). Newfoundland Capital Corp (TSX-NCC.A) is no longer showing as cheap by historical median dividend yield.
I follow 10 Consumer Staples stocks. None of these stocks are showing as cheap by the historically high dividend yield. Three stocks (or 30%) are showing cheap by historical median dividend yield. These are Empire Company Ltd. (TSX-EMP.A, OTC-EMLAF), Jean Coutu Group Inc. (TSX-PJC.A) and Loblaw Companies (TSX-L). Last month Empire Company Ltd. (TSX-EMP.A, OTC-EMLAF) was showing as cheap by the historically high dividend yield.
I only follow two Health Care stocks and both are US stocks. They are both cheap by the historical median dividend yield. The stocks are Johnson and Johnson (NYSE-JNJ) and Medtronic Inc. (NYSE-MDT). This is the same as for last month.
I follow 7 Bank stocks. None are showing as cheap by the historically high dividend yield. Six stocks (or 86%) are showing cheap by the historical median dividend yield. These stocks are Bank of Nova Scotia (TSX-BNS); Barclays PLC (NYSE-BCS), Home Capital Group (TSX-HCG, OTC-HMCBF), National Bank of Canada (TSX-NA); Royal Bank (TSX-RY) and Toronto Dominion Bank (TSX-TD). There is no change from last month.
I follow 12 Financial Service stocks. None are showing as cheap by the historically high dividend yield. Six (or 50%) stocks are showing cheap by the historical median dividend yield. These stocks are AGF Management Ltd (TSX-AGF.B); CI Financial (TSX-CIX); DirectCash Payments Inc. (TSX-DCI); Gluskin Sheff + Associates Inc. (TSX-GS); IGM Financial (TSX-IGM) and Power Corp (TSX-POW) Equitable Group Inc. (TSX-EQB) and TMX Group Ltd. (TSX-X) was on this list last month.
I follow 5 Insurance stocks. None are showing as cheap by the historically high dividend yield. Four stocks (or 80%) are showing cheap by historical median dividend yield. These stocks are Great-West Lifeco Inc. (TSX-GWO); Manulife Financial Corp (TSX-MFC); Power Financial Corp (TSX-PWF) and Sun Life Financial (TSX-SLF). There is no change from last month.
I follow 12 Real Estate stocks. Also, I am now classifying Real Estate under Financial which is what the TSX does. No stock is showing as cheap by the historically high dividend yield. Four stocks (or 33%) are showing cheap by historical median dividend yield. They are Artis REIT (TSX-AX.UN); FirstService Corp (TSX-FSV), Granite Real Estate (TSX-GRT.UN) and Melcor Developments Inc. (TSX-MRD. There is no change from last month.
I follow 34 Industrial stocks. Because I have so many and Industrial is not very descriptive, I have divided my Industrial stocks into 4 separate categories under Industrial. They are Construction, Industrial, Manufacturing and (Business) Services.
I have 6 Construction stocks. None are cheap by the historically high dividend yield. Four stocks or 67% are showing as cheap by historical median dividend yield. They are Bird Construction Inc. (TSX-BTD), SNC-Lavalin (TSX-SNC), Stantec Inc. (TSX-STN, NYSE-STN) and Toromont Industries Ltd. (TSX-TIH). There is no change from last month.
I have 6 stocks I have left with the sub-index of Industrial. None are cheap by the historically high dividend yield. Three stocks or 50% are showing as cheap by historical median dividend yield. They are Finning International Inc. (TSX-FTT), Methanex Corp. (TSX-MX), and Russel Metals (TSX-RUS). There is no change from last month.
I have 9 Manufacturing stocks. None are cheap by the historically high dividend yield. Last month Hammond Power Solutions Inc. (TSX-HPS.A) was showing as cheap by the historically high dividend yield. Two stocks or 22% are showing as cheap by historical median dividend yield. They are Exco Technologies Ltd. (TSX-XTC, OTC-EXCOF) and Hammond Power Solutions Inc. (TSX-HPS.A). Exco Technologies Ltd. is a new addition.
I have 15 Services stocks. None are showing as cheap by the historically high dividend yield. Last month Pason Systems Inc. (TSX-PSI) showed as cheap here. Four stocks or 27% are showing as cheap by historical median dividend yield. These stocks are Canadian National Railway (TSX-CNR); Mullen Group (TSX-MTL); Pason Systems Inc. (TSX-PSI, OTC-PSYTF) and Transcontinental Inc. (TSX-TCL.A).
I follow 9 Energy stocks. Two Stocks or (22%) are showing as cheap by the historical high dividend yield. They are Ensign Energy Services (TSX-ESI); and Suncor Energy (TSX-SU). Canadian Natural Resources (TSX-CNQ) is no longer on this list. There are three stocks (or 33%) showing cheap by historical median dividend yield. They are Canadian Natural Resources (TSX-CNQ); Ensign Energy Services (TSX-ESI); and Suncor Energy (TSX-SU).
I follow 3 Material stocks. None are showing as cheap by the historically high dividend yield. None are cheap by historical median dividend yield. This has not changed from last month.
I follow 8 Tech stocks. None are showing as cheap by historical median dividend yield. Four stocks (or 50%) are showing cheap by historical median dividend yield. They are Absolute Software Corporation (TSX-ABT); Calian Technologies Ltd (TSX-CTY), Computer Modelling Group Ltd. (TSX-CMG) and Evertz Technologies (TSX-ET). There is no change from last month.
I follow 8 of the Infrastructure type utility companies. None are showing as cheap by historical high dividend yield. Four stocks (or 50%) are showing cheap by historical median dividend yield. They are AltaGas Ltd (TSX-ALA, OTC-ATGFF); Enbridge Inc. (TSX-ENB, NYSE-ENB), TransCanada Corp (TSX-TRP, NYSE-TRP) and Veresen Inc. (TSX-VSN, OTC-FCGYF). There is no change from last month.
I follow 12 of the Power type utility companies. None are showing as cheap by the historically high dividend yield. Two stocks (or 17%) are showing cheap by historical median dividend yield. They are ATCO Ltd (TSX-ACO.X, OTC-ACLLF), and Fortis Inc. (TSX-FTS, OTC-FRTSF). There is no change from last month.
I follow 5 of the Telecom Service type utility companies. One stock is showing cheap by the historical high dividend yield. It is Shaw Communications Inc. (TSX-SJR.B, NYSE-SJR). Three stocks (or 60%) are showing cheap by historical median dividend yield. These stocks are Shaw Communications Inc. (TSX-SJR.B, NYSE-SJR); Telus Corp. (TSX-T, NYSE-TU) and WiLan Inc. (TSX-WIN, NASDAQ-WILN).
The last stock I wrote about was about was Power Financial Corp. (TSX-PWF, OTC-POFNF)... learn more . The next stock I will write about will be Thomson Reuters Corp. (TSX-TRI, NYSE-TRI)... learn more on Friday, May 6, 2016 around 5 pm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
See my site for an index to these blog entries and for stocks followed. I have three blogs. The first talks only about specific stocks and is called Investment Talk . The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter.
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