Thursday, February 13, 2020

Baby Boomers Investors

I read Jared Dillian article on Baby Boomers investors. See the article here. I can tell you why I did not invest in the big bond market. The gain in this market would be all capital gains. I was always looking for income.

Investing in bonds in this bond bull market would provide smaller and smaller returns as interest rates dropped. If you bought and sold bonds in the open market you could get capital gains, but I never invested to just reap capital gains. My last bond I sold in 1997 and it was a 30 year CIBC bond with great interest and I sold it for a good capital gain.

He also talks about baby boomers losing in both the dot-com stock market boom in 1999 and in the stock market in 2007. I did not lose much in either and quickly got back the value of my portfolio because I did not invest in the latest new thing. I looked at the stock being tooted in the dot-com stock market. Not only did these companies not have any earnings, most had no revenues.

My attitude to not investing in the next big thing kept me out of bitcoin and marijuana markets also. I do not regret this. I have talked to a number of people about investing in both. Some have made lots of money and some have lost money. It seems to be the people who got in both these markets at the beginning are the winners. Later invests, not so much.

When I was out to dinner with a club a while ago, one lady, when she heard that I invest asked me about getting into marijuana stock. She has not been investing. She had no experience in investing, but thought it would be a great idea to get into the market to make some money on marijuana stocks. This is precisely how novice investors loss money.

On my other blog I wrote yesterday about Richelieu Hardware Ltd (TSX-RCH, OTC-RHUHF) ... learn more. Next, I will write about ARC Resources Ltd (TSX-ARX, OTC-AETUF) ... learn more on Friday, February 14, 2020 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. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Tuesday, February 11, 2020

Warren Buffet

I get an email each day from Visual Capitalist and they have some interesting stuff to show. This one talks about Warren Buffet quotes that you might find interesting. The page with these Warren Buffett quotes is available here.

On my other blog I wrote yesterday about Intact Financial Corp (TSX-IFC, OTC-IFCZF) ... learn more. Next, I will write about Richelieu Hardware Ltd (TSX-RCH, OTC-RHUHF) ... learn more on Wednesday, February 12, 2020 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. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Thursday, February 6, 2020

Something to Buy February 2020

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. However, this is just a place to start. It is a good idea to check the stock with other tests, especially the P/S Ratio test.

For other testing, like P/E Ratios, P/S Ratios, P/CF Ratios, P/BV Ratios and Price/Graham Price Ratios, you use estimates or data from the last reported financial quarter.

This historical dividend yield test does not work well for old Income Trust companies. These companies had quite high Dividend Yields which will probably never be seen again. So, I started a column called VT (for Valid Test) and this applies to checking stock price using dividend yield. If it is not a valid test, I use N to show this. For these stocks, you might be better comparing the current dividend yield to the 10 year median dividend yield.

However, no system is perfect. But if you are interested in buying 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 Something to Buy February 2020 Spreadsheet 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 23 stocks in the Consumer Discretionary category. Four of these stocks (22%) are showing as cheap by the historically high dividend yield and they are Dorel Industries (TSX-DII.B, OTC-DIIBF), Molson Coors Canada (TSX-TPX.B, NYSE-TAP), Reitmans (Canada) Ltd. (TSX-RET.A, OTC-RTMAF), and Stingray Digital Group Inc (TSX-RAY.A). There is no change from last month.

Eleven (or 48%) of Consumer Discretionary are showing cheap by historical median dividend yield. They are Canadian Tire Corp (TSX-CTC.A, OTC-CDNAF), Dorel Industries (TSX-DII.B, OTC-DIIBF), Goodfellow Inc (TSX-GDL, OTC-GFELF), High Liner Foods (TSX-HLF, OTC-HLNFF), Leon's Furniture (TSX-LNF, OTC-LEFUF), Magna International Inc. (TSX-MG, NYSE-MGA), Molson Coors Canada (TSX-TPX.B, NYSE-TAP), Pizza Pizza Royalty Corp (TSX-PZA, OTC-PZRIF), Reitmans (Canada) Ltd. (TSX-RET.A, OTC-RTMAF), and Stingray Digital Group Inc (TSX-RAY.A). BRP Inc (TSX-DOO, NYSE-DOOO), has been removed from this list.

I follow 10 Consumer Staples stocks. No stocks are showing as cheap by the historically high dividend yield. There is no change from last month.

Four stocks (or 40%) are showing cheap by historical median dividend yield. These are Empire Company Ltd (TSX-EMP.A, OTC-EMLAF), Loblaw Companies (TSX-L, OTC-LBLCF), Metro Inc (TSX-MRU, OTC-MTRAF), and Saputo Inc. (TSX-SAP, OTC-SAPIF). Alimentation Couche-Tard (TSX-ATD.B, OTC-ANCUF), and North West Company (TSX-NWC, OTC-NWTUF) have been removed from this list.

I follow Five Health Care stocks. One stock (or 20%) of these stocks is showing as cheap by the historically high dividend yield. That stock is HLS Therapeutics Inc (TSX-HLS, OTC-HLTRF). There is no change from last month.

Three or 60% are cheap by the historical median dividend yield. The stocks are HLS Therapeutics Inc (TSX-HLS, OTC-HLTRF), Johnson and Johnson (NYSE-JNJ), and Medtronic Inc. (NYSE-MDT). There is no change from last month.

I follow 10 Energy stocks. Two stocks or 20% are showing as cheap by the historical high dividend yield. They are Ensign Energy Services (TSX-ESI, OTC-ESVIF), and Suncor Energy (TSX-SU, NYSE-SU). Ensign Energy Services (TSX-ESI, OTC-ESVIF) has been added to the list.

There are Seven stocks (or 70%) showing cheap by historical median dividend yield. They are Canadian Natural Resources (TSX-CNQ, NYSE-CNQ), Cenovus Energy Inc. (TSX-CVE, NYSE-CVE), Ensign Energy Services (TSX-ESI, OTC-ESVIF), Husky Energy (TSX-HSE, OTC-HUSKF), Ovintiv Inc (TSX-OVV, OTC-OVV), Mullen Group (TSX-MTL, OTC-MLLGF) and Suncor Energy (TSX-SU, NYSE-SU). Ovintiv Inc (TSX-OVV, OTC-OVV) (old name Encana) has been added to this list.

I follow 8 Bank stocks. None are showing as cheap by the historically high dividend yield. There is no change from last month.

Five stocks (or 62.5%) are showing cheap by historical median dividend yield. They are Bank of Nova Scotia (TSX-BNS, NYSE-BNS), Barclays PLC (LSE-BARC, NYSE-BCS), CIBC (TSX-CM, NYSE-CM), Royal Bank (TSX-RY, NYSE-RY), and Toronto Dominion Bank (TSX-TD, NYSE-TD). Toronto Dominion Bank (TSX-TD, NYSE-TD) have been added to this list. National Bank of Canada (TSX-NA, OTC-NTIOF) has been removed from this list.

I follow 14 Financial Service stocks. No stock is showing as cheap by the historically high dividend yield. There is no change from last month.

Seven (or 50%) stocks are showing cheap by the historical median dividend yield. These stocks are Accord Financial Corp (TSX-ACD, OTC-ACCFF), AGF Management Ltd (TSX-AGF.B, OTC-AGFMF), Alaris Royalty Corp (TSX-AD, OTC-ALARF), Chesswood Group (TSX-CHW, OTC-CHWWF), IGM Financial (TSX-IGM, OTC-IGIFF), Onex Corp (TSX-ONEX, OTC-ONEXF) and Power Corp (TSX-POW, OTC-PWCDF). Chesswood Group (TSX-CHW, OTC-CHWWF) has been added to this list.

I follow 6 Insurance stocks. No stock is showing as cheap by the historically high dividend yield. There is no change from last month.

Four stocks (or 67%) are showing cheap by historical median dividend yield. These stocks are Great-West Lifeco Inc. (TSX-GWO, OTC-GWLIF), IA Financial Corp (TSX-IAG, OTC-IDLLF), Manulife Financial Corp (TSX-MFC, NYSE-MFC), and Power Financial Corp (TSX-PWF, OTC-POFNF). Sun Life Financial (TSX-SLF, NYSE-SLF) has been removed from this list.

I follow 32 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 showing as cheap by the historically high dividend yield. There is no change from last month.

Two stocks or 33% is showing as cheap by historical median dividend yield. They are Bird Construction Inc (TSX-BDT, OTC-BIRDF), and Stantec Inc. (TSX-STN, NYSE-STN). Bird Construction Inc (TSX-BDT, OTC-BIRDF) has been added to this list.

I have 3 stocks I have left with the sub-index of Industrial. None are cheap by the historically high dividend yield. There is no change from last month.

Two stocks or 67% are showing as cheap by historical median dividend yield. They are Finning International Inc. (TSX-FTT, OTC-FINGF), and Russel Metals (TSX-RUS, OTC-RUSMF). There is no change from last month.

I have 7 Manufacturing stocks. None are showing as cheap by the historically high dividend yield. This has not changed from last month.

Three stocks or 43% are showing as cheap by historical median dividend yield. They are Exco Technologies Ltd. (TSX-XTC, OTC-EXCOF), Hammond Power Solutions Inc (TSX-HPS.A, OTC-HMDPF), and Intertape Polymer Group Inc (TSX-ITP, OTC-ITPOF). There is no change from last month.

I follow 16 Services stocks. One stock is showing as cheap by the historically high dividend yield. That stock is Pason Systems Inc. (TSX-PSI, OTC-PSYTF). There is no change from last month.

Four stocks or 25% are showing as cheap by historical median dividend yield. These stocks are Canadian National Railway (TSX-CNR, NYSE-CNI), Pason Systems Inc. (TSX-PSI, OTC-PSYTF), Transcontinental Inc (TSX-TCL.A, OTC-TCLAF) and Wajax Corp (TSX-WJX, OTC-WJXFF). There is no change from last month.

I follow 10 Material stocks. None are showing as cheap by the historically high dividend yield. This has not changed from last month.

Six stock or 60% are showing as cheap by historical median dividend yield. The stocks are Barrick Gold Corp (TSX-ABX, NYSE-ABX), Chemtrade Logistics Inc. Fund (TSX-CHE.UN, OTC-CGIFF), Hardwoods Distribution Inc. (TSX-HDI, OTC-HDIUF), Methanex Corp (TSX-MX, NASDAQ-MEOH), Stella-Jones (TSX-SJ, OTC-STLJF), and Supremex Inc (TSX-SXP, OTC-SUMXF). There is no change from last month.

I follow 10 Real Estate stocks. No stock is showing as cheap by historically high dividend yield. There is no change from last month. Two stocks (or 20%) are showing as cheap by historical median dividend yield. They are Melcor Developments Inc. (TSX-MRD, OTC-MODVF), and SmartCentres REIT (TSX-SRU.UN, OTC-CWYUF). H & R REIT (TSX-HR.UN, OTC-HRUFF) have been removed from this list.

I follow 3 of the Telecom Service stocks. No stocks are showing as cheap by historically high dividend yield. This has not changed from last month.

Three stocks (or 100%) are showing cheap by historical median dividend yield. These stocks are BCE (TSX-BCE, NYSE-BCE), Shaw Communications Inc. (TSX-SJR.B, NYSE-SJR) and Telus Corp (TSX-T, NYSE-TU). This has not changed from last month.

I follow 9 Tech stocks. None are showing as cheap by historical high dividend yield. There is no change from last month.

Four stocks (or 44%) are showing cheap by historical median dividend yield. They are Computer Modelling Group Ltd. (TSX-CMG, OTC-CMDXF), Evertz Technologies (TSX-ET, OTC-EVTZF), Quarterhaill Inc (TSX-QTRH, NASDAQ-QTRH), and Sylogist Ltd (TSXV-SYZ, OTC-SYZLF). There is no change from last month.

I follow 7 of the Infrastructure type utility companies. None are showing as cheap by historical high dividend yield. This has not changed from last month.

Two stocks (or 29%) are showing cheap by historical median dividend yield. They are Enbridge Inc. (TSX-ENB, NYSE-ENB), Keyera Corp (TSX-KEY, OTC-KEYUF). TC Energy Corp (TSX-TRP, NYSE-TRP) has been removed from this list.

I follow 10 of the Power type utility companies. One stock is showing as cheap by historical high dividend yield. This is ATCO Ltd (TSX-ACO.X, OTC-ACLLF). There is no changed from last month.

Two stocks (or 20%) are showing cheap by historical median dividend yield. Those stocks are ATCO Ltd (TSX-ACO.X, OTC-ACLLF), and Canadian Utilities Ltd (TSX-CU, OTC-CDUAF). There is no change from last month.

On my other blog I wrote yesterday about Canadian National Railway (TSX-CNR, NYSE-CNI) ... learn more. Next, I will write about Absolute Software Corporation (TSX-ABT, OTC-ALSWF) ... learn more on Friday, February 7, 2020 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. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Tuesday, February 4, 2020

Dividend Stocks February 2020

First, I want to point out that not all of the stocks I follow are great investments. I follow a diverse selection of stocks. There are some that I would never invest in personally. I follow a number of resource stocks even though I personally have little invested in this area. I follow what I find interesting and with resource stocks, I think it is important for Canadians to know what is happening in the resource area. On the other hand, I do follow of good number of great dividend growth stocks.

The theory is that you should use the dividend yield to see if a dividend stock is selling at a stock price that is relatively cheap. A stock price is considered cheap if it is selling at a dividend yield higher than the historical high yield or higher than the historical average yield or historical median yield. See my spreadsheet at dividend growth stocks that I just updated for February 2020. On this list,
  • I have 09 stocks with a dividend yield higher than the historical high dividend yield,
  • I have 48 stocks with a dividend yield higher than the historical average dividend yield
  • I have 70 stocks with a dividend yield higher than the historical median dividend yield and
  • 82 stocks with a dividend yield higher than the 5 year average dividend yield.
When I did my list last list in January 2020,
  • I have 08 stocks with a dividend yield higher than the historical high dividend yield,
  • I have 45 stocks with a dividend yield higher than the historical average dividend yield
  • I have 74 stocks with a dividend yield higher than the historical median dividend yield and
  • 86 stocks with a dividend yield higher than the 5 year average dividend yield.
When I did my list in January 2014,
  • I had 9 stocks with a dividend yield higher than the historical high dividend yield,
  • I had 45 stocks with a dividend yield higher than the historical average dividend yield and
  • 39 stocks with a dividend yield higher than the 5 year average dividend yield.
If you had one share of each stock, total dividends last month would be $173.37. This month dividends would be $174.59. It can vary as because some stocks are paid in US$ and so this figure is affected by currency exchange. Of the stock that I follow xx stocks has raised their dividends since last month.

Allied Properties REIT (TSX-AP.UN, OTC-APYRF)
ATCO Ltd (TSX-ACO.X, OTC-ACLLF)
Canadian National Railway (TSX-CNR, NYSE, CNI)
Canadian Utilities Ltd (TSX-CU, OTC-CDUAF)
Exco Technologies Ltd (TSX-XTC, OTC-EXCOF)

Metro Inc (TSX-MRU, OTC-MTRAF)
Pembina Pipeline Corp (TSX-PPL, NYSE-PBA)
Richelieu Hardware Ltd (TSX-RCH, OTC-RHUHF)
TransAlta Corp (TSX-TA, NYSE-TAC)

TransAlta Corp (TSX-TA, NYSE-TAC), after years of declining dividends and the last two years of flat dividends, this company has raised the dividend by 4.25% for April 2020. This is a good sign for the company.

Of the stocks I follow, none have cut their dividends. Of the stocks I follow, no stock has suspended or terminated their dividends.

Encana Corp (TSX-ECA, OTC-ECA) has changed its name to Ovintiv Inc (TSX-OVV, OTC-OVV) and has moved to the US. It has also done a 5 to 1 consolidation as of January 27, 2020. See a new item on CBC.

First Capital Realty (TSX-FCR. OTC-FCRGF) has become an REIT and has changed it symbols to First Capital Realty (TSX-FCR-UN. OTC- FCXXF). See the news item on Newswire.

Most of my stocks started out as Dividend Payers. Currently 14 stocks are not paying any dividends and this would be some 9.03% of the stocks that I follow. Four of these stocks never had dividends, so 5.81% of the stocks I follow have suspended their dividends. The three stocks that never paid dividends are Ballard Power Systems Inc. (TSX-BLD, NASDAQ-BLDP), Blackberry Ltd. (TSX-BB, NASDAQ-BBRY) and Trigon Metals Inc. (TSX-TM, OTC-PNTZF).

I am 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). See these fields on the right side of the file. You can highlight a particular stock using your cursor to highlight the appropriate line.

There are always some stocks to buy because they are priced reasonably. There are always stocks to currently avoid because they are overpriced. Looking at dividend growth stocks that are selling at stock prices that give them a dividend yield above the historical median dividend yield are probably the best bet.

The stocks that are selling at prices that give them a dividend yield above the historical high yield could be good stocks to buy. However, these stocks may be selling so cheap because of current troubles, especially financial troubles and should be treated with caution. Do not forget that I have all the stocks I follow on this spreadsheet and some are much better investments than others.

You should always investigate a stock before you buy. Sometimes different stocks in certain sectors are just out of favour or the stock market is just in one of its declines. However, a stock may be relatively cheap because it has problems. That is why you should always investigate a stock before buying.

Looking at stock this way is equivalent to a stock filter. A main problem I know of is for the old income trusts. These companies have generally lowered their dividend yields forever and they will probably never get back to the old dividend yield highs they made as an income trust company. For these stocks, you might be better comparing the current dividend yield to the 5 year median dividend yield. I also started a column called VT (for Valid Test) and this applies to checking stock price using dividend yield. If it is not a valid test, I use N to show this.

Also, on some stocks I have a lot more information years in my spreadsheets than for other stocks. So, finding a stock on the list as "cheap" is only the first step in finding a stock to buy. This is the same with any other sort of stock filters that you can use.

The last thing to remember is that I have entering figures into a spreadsheet. I could put them in incorrectly, I can transpose figures and I can misread figures. This is another great reason why you should check a stock out before investing. As this is just a filter, it works better on some stocks than on others.

See my entry on my methodology in establishing the historical dividend yield highs and lows for the stocks that I cover. I have an entry on my introduction to Dividend Growth. You might want to look at my original entry on Dividend Growth Stocks. I have also written about why I like Dividend Growth companies.

On my other blog I wrote yesterday about Exco Technologies Ltd (TSX-XTC, OTC-EXCOF) ... learn more. Next, I will write about Canadian National Railway (TSX-CNR, NYSE-CNI) ... learn more on February 5, 2020 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 website for stocks followed and investment notes. 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 or StockTwits. I am on Instagram with #walktoronto.

Thursday, January 30, 2020

Is Buy and Hold Dead

I do buy and hold. I have been investing since the 1970’s and every year lots of people say Buy and Hold is dead. I read articles on how buy and hold is dead. Basically, they say that “Times have changed” and “The Rules are different now”. I do not know how often I have heard this.

I did not believe this in the past and I do not believe it now. Yes, when the bear markets occur, the value of my stock portfolio declines. However, my dividends increase and I live on my dividends. Also, my portfolio does recover. Of course, you should not be in stocks if you cannot stand the volatility of the market.

Bear markets can be scary. In the last two bear markets the value of my portfolio fell 30%. However, I do have good dividend paying companies and waiting out the bear markets was the best thing for me to do. How small investors lose is that they get scared in bear markets and sell stocks at a low price. After the market recover, it takes them awhile to get confidence to buy again. Generally, they buy after the market has increased a lot. This is how they lose money.

On my other blog I wrote yesterday about Shaw Communications Inc (TSX-SJR.B, NYSE-SJR) ... learn more. Next, I will write about AGF Management Ltd (TSX-AGF.B, OTC-AGFMF) ... learn more on January 31, 2020 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. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Tuesday, January 28, 2020

Banks and Other Things

All my charts are using data from the financial year ending in October 2019 for these banks.

For dividend paying stocks, the Dividend Payout Ratios are important. For the DPRs, lower ratios are better ratios. For Banks the DPR for EPS is the most important one. When looking at these ratios, it would appear that Nation Bank has the best one, which is the lowest one. However, last year the National Bank also had the lowest payout of EPS at 40.40%. The DPR payout expect is in the 40 to 55% level for banks. On this basis all the banks are fine.

The problem with cash flow is that for banks they tend to be volatile and often negative. A lot of analysts ignore the Cash Flow of banks.

Bank Symbol DPR for EPS DPR for CFPS
Bank of Montreal BMO 46.07% 23.36%
Bank of Nova Scotia BNS 52.25% Neg CF
CIBC CM 50.04% 42.65%
Royal Bank RY 45.71% 40.72%
National Bank NA 41.01% 34.68%
TD Bank TD 46.24% 35.88%


I have started to look at Dividend Payouts compared to Free Cash Flow. The problem I have with checking dividends against Free Cash Flow is that different sites sometimes have different values for FCF. For example, I am currently looking at updating my spreadsheet on AGF Management Inc. The Morningstar report from TD bank gives FCF from 2014 to 2018 as $41,723; $47,698; $49,827; $57.518; and $54.178. The WSJ says $29,879; $37,675; $41,442; $52,060; and $48,006. Maybe next year I will take a second look at this.

When Shares are issued for Stock Options, you want a company that issues around the same relative number of shares for its industry. Of course, the lower the number of shares issued for stock options; the less money comes out of the earnings for shareholders. In the value column, I am putting in the book value of the stock options at the end of the calendar year.

In 2019 CIBC has the lowest percentage of their shares issued for stock option purposes at 11%. They also had the lowest book value cost at $52M. Last RY had the lowest percentage at 10% with a book value of $92M. The National Bank has the highest percentage of their shares issued for stock options at 0.88%, however, the highest book value is BNS at $253M.

Bank Symbol Shares ‘% of Shares Value $M
Bank of Montreal BMO 0.962 0.15% $62
Bank of Nova Scotia BNS 4.111 0.34% $253
CIBC CM 0.512 0.11% $52
Royal Bank RY 1.900 0.13% $136
National Bank NA 2.951 0.88% $122
TD Bank TD 2.300 0.13% $124


Since I was looking for performance on a long term basis, I want to include the dividend growth and total return for the 6 banks that I cover.

Below is a chart showing the long term growth of dividends for these banks. Certainly, in most cases the 15 to 30 years growth is better than the 5 and 10 years growth. The TD Bank has the best ones over each period, but Royal Bank has the second best. It was the same last year.

Symbol 5 Yr. 10 Yr. 15 Yr. 20 Yr. 25 Yr. 30 Yr.
BMO 5.59% 3.61% 6.33% 7.58% 7.95% 6.96%
BNS 6.39% 5.94% 8.00% 10.97% 10.46% 9.65%
CM 7.28% 4.87% 6.43% 8.01% 8.93% 7.61%
RY 6.68% 7.70% 8.86% 10.50% 11.21% 9.32%
NA 7.65% 6.91% 10.59% 10.60% 10.45% 7.06%
TD 9.45% 9.01% 10.13% 10.98% 11.50% 9.75%


The other thing I looked at was long term total return. This is calculated from December to December. It will include both capital gains and dividends. It is a compound growth rate per year. Here I am looking for total return of 8% or more. Mostly the banks did that but with a few exceptions like BNS and CIBC in the 5 year total return range and BMO in the 15 year range.

Symbol 5 Yr. 10 Yr. 15 Yr. 20 Yr. 25 Yr. 30 Yr.
BMO 8.12% 10.49% 7.68% 12.26% 14.03% 14.47%
BNS 6.48% 8.48% 8.16% 13.26% 15.88% 15.88%
CM 6.42% 9.80% 12.42% 11.01% 13.57% 12.44%
RY 8.96% 9.98% 12.49% 14.54% 16.57% 13.78%
NA 10.62% 12.72% 10.80% 15.29% 16.25% 12.13%
TD 9.43% 12.20% 11.08% 10.07% 15.83% 12.89%


The next thing to cover is how well the banks cover their deposits with assets. In this case, the lower the ratio the better. In this case RY has the lowest and best ratio.

Bank Symbol Deposits Cov.
Bank of Montreal BMO 0.85
Bank of Nova Scotia BNS 0.95
CIBC CM 0.90
Royal Bank RY 0.70
National Bank NA 0.80
TD Bank TD 0.88


The last thing I want to cover how much an investor would earn if they bought shares with $1,000 on December 31, 1988. On this basis, BNS is the winner with total return of $31,568.31. RY is a close second at $31,242.35. CIBC had the lowest total return at $14,912.80 with National Bank close at $17,756.36.

Symbol Spent Shares Worth Divs. Pd Total
BMO $1,000.02 142.86 $14,377.43 $8,294.45 $22,671.88
BNS $1,000.02 273.23 $20,041.42 $11,526.89 $31,568.31
CM $1,000.06 80.78 $8,772.71 $6,140.09 $14,912.80
RY $1,000.03 211.87 $21,769.64 $9,472.71 $31,242.35
NA $1,000.04 173.92 $12,536.15 $5,220.21 $17,756.36
TD $1,000.00 224.72 $16,366.36 $6,734.50 $23,100.86


On my other blog I wrote yesterday about Enghouse Systems Ltd (TSX-ENGH, OTC-EGHSF) ... learn more. Next, I will write about Shaw Communications Inc (TSX-SJR.B, NYSE-SJR) ... learn more on January 29, 2020 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. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Thursday, January 23, 2020

Banks and Ratios 2

What I want to look at today is the relative stock price using different criterion between last year when I reviewed the banks and this year. What stock price testing is showing is that generally the banks are relatively the same as last year except for National Bank. Last year National Bank was showing mostly as reasonable, but this year is different. It is showing as above the median or expensive in these tests.

I will start off with my favourite measure of for determining if the current stock price is relatively good or not. My favourite measure is to compare the current dividend yield with the historical dividend yield. The last column shows difference between the current dividend yield and the historical median dividend yield. What you want is a current dividend yield equal to or above the historical median dividend yield.

In 2020 BMO and National Bank had dividend yields below the historical median dividend yields. All the rest had dividend yields above the historical median dividend yields and therefore reasonable. Also, both BNS and CIBC are showing the stock price as cheap. Only BNS and CIBC testing is showing the stock price cheaper than last year.

Bank 2020 Symbol Price Dividend Yield M/C
Bank of Montreal BMO $103.80 $4.24 4.08% -2.97%
Bank of Nova Scotia BNS $72.48 $3.60 4.97% 20.85%
CIBC CM $108.77 $5.76 5.30% 20.90%
Royal Bank RY $106.55 $4.20 3.94% 3.73%
National Bank NA $73.52 $2.84 3.86% -2.94%
TD Bank TD $74.12 $2.68 3.62% 3.90%


In 2019 banks, except for BMO, the current dividend yields were above the historical median dividend yield. The stock prices in 2019 are reasonable and all but BMO are below the relative median.

Bank 2019 Symbol Price Dividend Yield Re Med
Bank of Montreal BMO $97.24 $4.00 4.11% -4.11%
Bank of Nova Scotia BNS $73.57 $3.40 4.62% 12.72%
CIBC CM $110.24 $5.44 4.93% 13.70%
Royal Bank RY $99.06 $3.92 3.96% 7.24%
National Bank NA $60.86 $2.60 4.27% 8.43%
TD Bank TD $72.83 $2.68 3.68% 6.05%


The next checking of the stock price I will look at is using the Price/Sales Ratio. Here for a reasonable or cheap stock price you want the current P/S Ratio to be lower than the 10 year median ratio.

In 2020 only BNS and CIBC had ratios lowered than the 10 year ratio. The rest have stock price that are reasonable, but above the median. Also, except for BNS, CIBC, and TD Bank the other banks this year are relatively more expensive. National Bank is a lot more expensive.

Bank 2020 Symbol Price Rev per Share P/S Ratio M/C
Bank of Montreal BMO $103.80 $37.15 2.79 9.28%
Bank of Nova Scotia BNS $72.48 $26.67 2.72 -17.44%
CIBC CM $108.77 $43.22 2.52 -0.32%
Royal Bank RY $106.55 $31.84 3.35 11.34%
National Bank NA $73.52 $23.88 3.08 10.66%
TD Bank TD $74.12 $22.21 3.34 5.75%


In 2019, it was the BNS and National Bank that had current ratios below the 10 year median ratios. All the others had stock prices that were reasonable, but above the median.

Bank 2019 Symbol Price Rev per Share P/S Ratio M/C
Bank of Montreal BMO $97.24 $36.32 2.68 4.72%
Bank of Nova Scotia BNS $73.57 $25.39 2.90 -11.96%
CIBC CM $110.24 $42.34 2.60 3.12%
Royal Bank RY $99.06 $30.41 3.26 3.74%
National Bank NA $60.86 $22.88 2.66 -0.12%
TD Bank TD $72.83 $21.57 3.38 7.75%


The next checking of the stock price I will look at is using the Price/Book Value per Share Ratio. Here you want the current P/B Ratio to be lower than the 10 year median P/B. Ratio. Here the last column shows how much above or below the current P/B Ratio is compared to the 10 year median P/B Ratio.

In this test for 2020, the banks of BNS, CIBC and RY showed a price that was reasonable and below the median. For BMO, National Bank and TD the price is relatively reasonable but above the median. Except for Royal Bank and National Bank all the other banks are relatively cheaper. National Bank is relative a lot more expensive.

Bank 2020 Symbol Price BVPS Curr P/B M/C
Bank of Montreal BMO $103.80 $71.54 1.45 0.06%
Bank of Nova Scotia BNS $72.48 $53.61 1.35 -24.47%
CIBC CM $108.77 $81.19 1.34 -30.22%
Royal Bank RY $106.55 $54.39 1.96 -1.06%
National Bank NA $73.52 $35.40 2.08 18.00%
TD Bank TD $74.12 $45.19 1.64 1.87%


In this test for 2019, the banks of BNS, CIBC and RY showed a price that was reasonable and below the median. For BMO, National Bank and TD the price is relatively reasonable but above the median.

Bank 2019 Symbol Price BVPS Current P/B Re Med
Bank of Montreal BMO $97.24 $64.73 1.50 3.60%
Bank of Nova Scotia BNS $73.57 $49.75 1.48 -20.07%
CIBC CM $110.24 $73.83 1.49 -22.23%
Royal Bank RY $99.06 $51.11 1.94 -2.11%
National Bank NA $60.86 $34.40 1.77 1.68%
TD Bank TD $72.83 $40.45 1.80 11.83%


In another test I look at the Price/Graham Price Ratio compared to the 10 year median P/GP Ratio. You want the current P/GP Ratio to be lower than the 10 year median P/GP Ratio. Here again the last column says how much the current P/GP Ratio is above or below the 10 year median P/GP Ratio.

In 2020, BNS, CIBC, Royal Bank and TD Bank are all showing current P/GP Ratios lower than 10 year median P/GP ratios. These banks are showing stock prices that are reasonable and below the median. All the other banks are showing stock prices that are reasonable, but above the median. Only National Bank is showing a stock price relatively higher than last year.

Bank 2020 Symbol Price Graham Pr P/GP Ratio M/C
Bank of Montreal BMO $103.80 $124.57 0.83 0.40%
Bank of Nova Scotia BNS $72.48 $94.73 0.77 -14.99%
CIBC CM $108.77 $146.82 0.74 -19.47%
Royal Bank RY $106.55 $105.82 1.01 -1.28%
National Bank NA $73.52 $72.67 1.01 14.97%
TD Bank TD $74.12 $82.53 0.90 -6.45%


In 2019, all the banks but BMO has a lower price than the median. This mean they are showing as reasonable and below the median. CIBC is almost cheap.

Bank 2019 Symbol Price Graham Pr P/GP Ratio Re Med
Bank of Montreal BMO $97.24 $113.47 0.86 2.02%
Bank of Nova Scotia BNS $73.57 $90.21 0.82 -11.35%
CIBC CM $110.24 $144.96 0.76 -19.10%
Royal Bank RY $99.06 $101.51 0.98 -5.26%
National Bank NA $60.86 $69.77 0.87 -0.88%
TD Bank TD $72.83 $78.56 0.93 -4.43%


The last test on stock price test to look at is to compare the current Price/Earnings Ratio to the 10 year median P/E Ratio. By this criteria, BNS stock price is relatively the lowest. For all the stocks but National Bank, the stock prices are showing as reasonable and below the median.

Bank 2020 Symbol Price EPS Est. Curr P/E M/C
Bank of Montreal BMO $103.80 $9.64 10.77 -5.05%
Bank of Nova Scotia BNS $72.48 $7.44 9.74 -13.79%
CIBC CM $108.77 $11.80 9.22 -7.64%
Royal Bank RY $106.55 $9.15 11.64 -0.98%
National Bank NA $73.52 $6.63 11.09 6.73%
TD Bank TD $74.12 $6.70 11.06 -10.21%


In this test for 2019, all the banks are showing a price that is relatively reasonable and below the median. In that year CIBC is relatively cheaper than the other banks.

Bank 2019 Symbol Price EPS Est. Curr P/E M/C
Bank of Montreal BMO $97.24 $8.84 11.00 -3.34%
Bank of Nova Scotia BNS $73.57 $7.27 10.12 -10.45%
CIBC CM $110.24 $12.65 8.71 -15.23%
Royal Bank RY $99.06 $8.96 11.06 -8.86%
National Bank NA $60.86 $6.29 9.68 -6.88%
TD Bank TD $72.83 $6.78 10.74 -14.20%


On my other blog I wrote yesterday about Transcontinental Inc (TSX-TC.A, OTC-TCLAF) ... learn more. Next, I will write about Sylogist Ltd (TSX-SYZ, OTC-SYZLF) ... learn more on Friday, January 24, 2020 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. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.