My Companies Are From

I am currently following 135 good companies. Mostly they are Canadian companies, with a few exceptions. There are 52 companies from Ontario, 35 companies from Alberta and 26 companies from Quebec. These account for 113 of my companies or 83.7% of the stock that I follow. Of my followed companies, Ontario has 38.5%, Alberta has 25.9% and lastly with Quebec has 19.3%.

Smaller numbers are from the rest of Canada with 5 companies each from British Columbia and Manitoba. Plus, there are 3 from Nova Scotia and one each from Saskatchewan and Newfoundland. The rest of Canada has some 11.9% of the stocks I follow.

There are 6 of my companies that have head Offices in the US, but all but 2 of them have TSX listings. The ones without TSX listings are Johnson and Johnson (NYSE-JNJ) and Medtronic Inc. (NYSE-MDT). I also follow Barclay’s Bank (NYSE-BCS), a British Bank on the London Stock Exchange and NYSE Stock Exchange.

I have been investing and following Canadian companies for some time and it seems to me that Quebec is falling behind, with Ontario not changing much and Alberta pulling ahead. The other thing is that Alberta does not just have Energy, Pipelines and Mining companies. I have 2 Consumer Discretionary stocks, 9 Industrials stocks, 1 Information Tech (Computer Modelling (TSX-CMG)), 1 Power Generator (TransAlta Corp (TSX-TA), which also has pipelines) and 1 Real Estate (Melcor Dev. (TSX-MRD).

Do not get me wrong, there are still great companies out of Quebec. I just see the west doing increasingly better. I think that the development of the west has nothing to do with the contraction in Quebec. I think that Quebecers did this all by themselves. I remember a time when all the big Canadian Banks were deigning that they moved their Head Offices from Montreal to Toronto. Now, they just list their Head Offices in Toronto.

And, being from Ontario, I should not be cocky. We are also in danger of contraction. Having high debt government is just an accident waiting to happen.

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. See my website for stocks followed and investment notes. Follow me on twitter.

New Index to stocks I follow

I am today putting up a new index to the stock I cover. The last time I updated this index online was November 12, 2011, so it has been a while.

This index shows all the stock I follow, with some basic information. It gives the 5 year growth in such things as Dividends, Revenue, EPS and Book Value. It provides debt ratios at the last financial period for which I have reviewed the stock.

The index also shows the risk level of a stock and what sort of stock in the Sub-Index column. I also show the last analysts recommendation and sate when I last reviewed the stock.

You can use your mouse to highlight a line, to make it easier to see values for a particular stock.

Click here to see the new index.

Be a Better Investor

If you think you are smart when an investment turns out great, you should think you are dumb when an investment turns out badly. This would probably give you a more realistic view of yourself as an investor.

I do not believe people who say that an investment did not work out and it is someone else’s fault. After all, no one forced you to make an investment.

I make money in the market because of the entrepreneurship and drive of the company’s insiders. Hopefully, I pick good companies and insiders who are on the up and up.

Thinking that it is only because insiders are crooks and this is why a company has failed does nothing for your education as an investor. I do not say that this never happens, because it does. That is why you should diversify your portfolio.

I think that people were charged with improper conduct after 2008 bear market (and 2000 bear market) because people wanted to put the blame on someone other than themselves for the bear markets. Markets and economies go through good time and go through bad times. I do not think that we are ever going to change this.

You know, in theory, technical analysis should not work. Why does it work? It works because of us. We investors are emotional people. Portfolio theory says that everything that is knowable about a stock is known and the stocks are priced accordingly. Really? Then why do we have gyrations in the stock market? Could it be that investors often act like a mob rather than investors?

I generally have a positive attitude to business people. I think that the vast majority of them try to do a good job in running their businesses. Sorry, but I would never invest in a company that run by anyone I thought was dishonest. I do not understand people who invest but think that all business people are crooks. And, their attitude says nothing good about them.

So, if you want to be a better investor, take responsibility for all your investments. Was it not Pogo who said, “We have met the enemy and it is us.”

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. See my website for stocks followed and investment notes. Follow me on twitter.

Jeremy and Top Canadian Investing Blogs

Jeremy of Modest Money blog asked me to publicize his post of June 16, 2012 on Top Canadian Investing Blogs. He has a list of 28 blogs, most of which I know and some interesting ones I did not know of.

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. See my website for stocks followed and investment notes. Follow me on twitter.

Power of Dividend Growth

One great reason to invest in companies with growing dividends is the powerful effect they can have on your income.

One way of looking at stocks is what you are getting as a dividend yield on the original purchase price.

For Bank of Montreal (TSX-BMO), after some 29 years, I am getting a yield of almost 40% on my original investment. For this bank, my income is up 571%. That is the dividend has grown at the rate of 6.2% per year. BMO was one of the first stocks for me to buy.

For Fortis (TSX-FTS) after 24 years, I am getting a yield of almost 26% on my original investment. My dividend income on this stock has grown 269%. My income from this stock has grown at the rate of 7.9% per year.

Another favourite stock of mine, which is another bank, is Royal Bank (TSX-RY). I have had this stock for around 17 years. I am getting 31% dividend yield on my original investment. My dividend income has increased by 660% since I bought this stock. The increase in income from this stock is 12.6% per year.

I realize that these figures are not taking in inflation over the years, but they do illustrate the power of increasing dividends.

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. See my website for stocks followed and investment notes. Follow me on twitter.

Selling in a Bear Market

I only sell in a bear market because I like one stock better than another. If you sell and buy in a bear market your overall costs will be less. If I have such a trade of stock in mind, I try to pick a down market to do such a trade.

A reason I sell is when I see a stock I like better than one I have. Generally this is because I feel the stock I want to buy would be a better choice on a go forward basis. The best time to replace a stock is in a down market. If the relative exchange of stock would be the same in a down or up market, then in absolute dollar terms, doing a sell and buy in a down market is better.

At least that is my view. Also, I was talking about this to a friend of mine who is into Real Estate and she thinks that same is true in the Real Estate market. If you want to do a sell and a buy, it is best to do so in a down market.

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. See my website for stocks followed and investment notes. Follow me on twitter.

What stock to review next?

Anyone have a preference to what new stock I should review that I have not yet?

Best Canadian Dividend payers:
Canadian Energy Services & Technology (CEU)
Constellation Software Inc. (CSU)
From blogger.

Some Small Cap dividend payers:
Canexus Corporation (TSX-CUS) 7% yield Industrial Products
Newalta Corp (TSX-NAL) 2.1% yield Environmental Services
McGraw-Hill Companies Yield of 2.2% Communications & Media
ChemTrade Logistics (TSX-CHE.UN)
Canexus (CUS-T) An analysts said he liked this better than ChemTrade.

Small Bank?
National Bank (TSX-NA)
CDN Western Bank (TSX-CWB

Dividends and Special Dividends paying Stock:
Armtec Infrastructure Income Fund (TSX-ARF.UN)
First National Financial Income Fund (TSX- FN.UN)
Le Chateau Inc. (TSX-CTU.A)
MCAN Mortgage Corporation (TSX-MKP)
McGraw-Hill Ryerson Ltd (TSX-MHR)
ShawCor Ltd. TSX-(SCL.A)

Dividend Deluxe Stocks:
Shaw Communications (TSX-SJR.B)
CI Financial Corp (TSX-CIX)
Agnico-Eagle Mines (TSX-AEM)
Potash Corp. of Sask. (TSX-POT)
Cameco Corp. (TSX-CCO)
National Bank of Canada TSX-NA)
From G&M article.

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. See my website for stocks followed and investment notes. Follow me on twitter.

And the Dividends Roll In

Even with the latest hits to the value of my stock portfolio, I was happy to see two dividend increases for May 2012. The first one was for Royal Bank which increased their dividends by 5.6%. Even with this increase in dividends, it is expected that the Dividend Payout Ratio for Earnings will go lower in 2012 (from 65% to 49%).

The other increase was for Pembina. The thing about Pembina, I seem to be getting a higher dividend that they have declared. In January I got what they declared which was a monthly $.13 dividend. However, in February I got a $.1326 dividend (a 2% rise). Now for May they declared a dividend of $1.35, but I got one of $.1377 a 3.8% rise in dividends. Company said that they were raising their dividends in May from $.13 to $.135 which is a 3.8% rise in dividends.

I do not know what is happening here. But they have done this sort of thing before. When they converted from an income trust to a corporation they said they were not changing their dividends from $.13 per month However, as an income trust they were really paying $.1326 per month (or $1.56 per year). When they switched to a corporation they really reduced the dividends to pay $.13 per month or $1.56 per year).

Pembina is paying out more than 100% of their earnings. However, they are really still running their corporation as an income trust as they have a tax pool they help them avoid taxes until 2014 to 2015.

We are only into the first part of June and my dividend income has increase 8.3% so far this year. My portfolio has dropped 5.2% from last month. If subtract off money I took out to live on, my portfolio is down 5% since last month.

My portfolio is up 1.9% this year and TSX is down 4.4%. My portfolio tends to be less volatile than the TSX.

Fascination with Retirement

It seems everywhere I read people are talking about retirement. I do not understand the fascination. Why on earth are young people worried about OAS not starting for them until 67? If you are 20 or 30 and you are worried about retirement, I say get a life. It is not like I am saying not to save. Everyone needs to save for future rainy days.

However, I think that we should be more focused on what we are going to do because we are going to live a long time. A more important question might be is “how are we going to ensure we stay health so we can enjoy our long life?”

It is not as if you would will get to retirement and just have a few years to enjoy it. Life expectancy is 81 years on average. Also, if you do get to 65 the average life expectancy is now 85. That means that at age 65 average life expectancy is now 20 more years. (See Statistics Canada.)

And these statistics are only averages. That means that 50% of people will dead and 50% will still be alive. These statistics are produced from people dying now. How will they change for future generations? Life expectancy has been steadily rising for quite some time. The statistics I quoted are the latest available and they are dated 2009.

So have you thought about being ready to live a long time?

Reply to Mike

The Question

"I am struggling with the question “Am I making money in the stock market?” Because of the current state of the market, my portfolio is down, but then I am still getting dividend income on a regular basis. Am I making money because I am receiving dividend income? Perhaps the dividend income is really like return of capital. Say your portfolio is down 15% and you are getting 4% dividend. It is like taking money from your portfolio and paying yourself as dividend. I cannot be making money if I add up the value of my portfolio and the dividend received, and the total amount is less than what I originally invested.

My Answer

The thing with investing in stocks is that the value of the stocks can fluctuate a lot. However, all you are getting are paper losses or gains until you actually sell a stock. If you have good dividend paying stocks, their value should rise over time.

I think that I am making money as I keep track of the ability of the companies I invest in to pay their dividends. If a company is earning money and can afford dividends I do not worry. The value of a company can vary because of a lot of factors, not just a company’s ability to earning money and pay dividends. When I company I own has a stock price treading downward and I do not panic and sell, I will only have a paper loss, not a real one.

Another idea about dividends is that you are being paid to wait for better stock prices. For most stock markets, the stock prices will rise over time. (Although this is probably only true for Anglo-Saxon countries; as they have a better record on bankruptcy than other countries. However, this is a whole other subject.) On your typical dividend paying stock, the stock will tend to rise at the same rate, over the long term, as the growth in dividends.

Actually, dividend payments can be a return of capital in some instances. That is when the Dividend Payout Ratio for earnings is above100%. In this case, the book value will trend down. It is probably fine if this occurs on a short term basis. I would be very worried if 5 year median DPR for earnings was 100% or above. However, you should also view such a company with regards to the DPR for cash flow as well.

And, horrors of horrors I have heard stories of companies borrowing to buy dividends. This is really bad.

REITs have a different basis for deciding what they can pay out and sometimes this is over 100% of earnings because the companies are structured differently. But, this is a reason why book value can tread downwards for REITs (and, as it did for some income trust companies).

Some companies, when they are unsure if earnings will hold, give out special dividends when they can and only raise the dividends when they can make the rise permanent. Leon’s Furniture (TSX-LNF) is a company that does this.

We are in a secular bear market and have been since 2000. Until we get out of it, the market will not do much. That is why dividend paying stocks are a good place to be. They do not fall as much as the general market, but they also do not rise as much as the general market. However, you can make a decent return over time.

There are arguments that the Canadian market has gotten out of the secular bear market while the US is still in one. I do not personally believe this. Our market is doing better than the US market, but I do not think we have left the secular bear. (You can blog a lot on this topic alone.)

Do not forget that you can get cyclical bear and bull markets within secular bear and bulls markets. Secular bear and bulls markets generally last around 15, 16 years.

We will not get out of this secular market until we do something about the debt we are in. A lot of this will depend, no so much on Canada, but on the Americans because their economy can greatly affect ours. Our market has done better than the US ones since 2000.

Would anyone else like to answer this?