The Loonie Bin blog is a favourite. He has great entries on different aspects of investing. A novice investor should probably head right over to his Investing 101 section. This is divided up into a number of sections.
Life Before Dividend Investing
I remember when I was 12 I asked my father about investing in the stock market. Even though he is very wise and taught me many important things he, like most middle class people, had limited investment knowledge and invested his money in mutual funds. I followed his direction and thought mutual funds were the best way to invest without all the continue....
What is a Dividend?
A dividend is a portion of a corporation's profits paid out to its shareholders. The word dividend comes from the Latin word dividendum which means, "thing to be divided". As a shareholder of a dividend paying company, you are paid dividends for as long as you own the shares. You may be paid in the form of a cheque if you hold the actual share certificates or the dividends may be directly deposited continue....
Dividend Yield
Simply put, a dividend yield is a ratio between the yearly dividend of a company relative to its current share price. It can be found by dividing continue....
Dividend Growth
The most important part of any dividend investment machine is dividend growth. Without it, your investment returns will be a stagnant pool that will slowly erode away thanks to inflation. As dividends increase over time, not only does your dividend income increase, but so does continue....
The Power of Compounding
"Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it." - Albert Einstein.
Compounding or compounding interest is a process of earning interest not only on the principle of an investment, but on previously earned interest as well. This compounding effect continue....
More Good Things
There are a couple more items that I want to point out to you. The first one is a timely one on investing. It is talking about the fact that you should not just go for yield when investing in dividend paying stocks. The last two items talk about investing in Tax Free Savings Accounts (TFSA) versus Registered Retirement Savings Accounts (RRSP). Here are the last three I want to point out.
Man Can't Invest By Yield Alone
One of the biggest questions I get asked is "Should I invest in this stock, it has a great yield". While yield does play an important part when making an investment decision, there are many other important factors to consider. A stock that has a large continue....
TFSA vs RRSP: Which One Works For You?
It seems Canadians have been bombarded with the notion that the RRSP is the ideal way to save for retirement. Now that its baby brother, the TFSA has been introduced, there is a common question floating around the country asking which one is better. No matter how many "experts" continue....
TFSA vs RRSP Round Two: The RRSP
The RRSP was introduced in 1957 to help promote retirement savings. Unlike the TFSA, you may only contribute to an RRSP if you earned income in the previous year. Contributions to an RRSP continue....
Canadian Utilities Ltd
On my Investment Talk blog I am today writing about Canadian Utilities Ltd (TSX-CU). Today, I am discussing the stock price and what analysts say about this stock. To read about this stock go here....
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.
Wednesday, August 29, 2012
Monday, August 27, 2012
What to Read
On my Investment Talk blog I am today writing about The North West Company. Today, I am discussing the stock price and what analysts say about this stock. To read about this stock go here....
I am doing this entry because I get asked to suggest what a novice investor should read. I think that if you want to learn about investing today I would suggest reading some blogs rather than any particular book. I know that some people find investing intimating and complex. The great thing about blogs is that most blog entries do not take long to read and over a period of time, you can gain a good understanding of investing.
I write about specific companies, about such things as ratios and secular verses cyclical markets, etc. and these are all good things. However, if you are a novice investor, you may not understand all of this. (I have had complains.) Also, a number of people have asked me about what book should they read to learn about investing.
So, I want to introduce you to a number of investment bloggers I like. I feel they have great blogs that offer great information to the novice investor. Over the next couple of weeks, I will be talking about each blogger and what they have to offer the novice investor.
My blog list and dates for blog entry:
Dividend Ninja on September 10, 2012;
The Loonie Bin on August 29, 2012;
My Own Advisor on September 12, 2012;
Dividend Monk on September 04, 2012;
The Dividend Guy on September 06, 2012 and
The Passive Income Earner on September 17, 2012.
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.
I am doing this entry because I get asked to suggest what a novice investor should read. I think that if you want to learn about investing today I would suggest reading some blogs rather than any particular book. I know that some people find investing intimating and complex. The great thing about blogs is that most blog entries do not take long to read and over a period of time, you can gain a good understanding of investing.
I write about specific companies, about such things as ratios and secular verses cyclical markets, etc. and these are all good things. However, if you are a novice investor, you may not understand all of this. (I have had complains.) Also, a number of people have asked me about what book should they read to learn about investing.
So, I want to introduce you to a number of investment bloggers I like. I feel they have great blogs that offer great information to the novice investor. Over the next couple of weeks, I will be talking about each blogger and what they have to offer the novice investor.
My blog list and dates for blog entry:
Dividend Ninja on September 10, 2012;
The Loonie Bin on August 29, 2012;
My Own Advisor on September 12, 2012;
Dividend Monk on September 04, 2012;
The Dividend Guy on September 06, 2012 and
The Passive Income Earner on September 17, 2012.
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.
Wednesday, August 22, 2012
Dividend Yields on Original Investments
I made a spreadsheet when I started this article. I have put it on my site. If you want a copy of this spreadsheet, just email me. This spreadsheet, because it is using formulas smooth out dividend increases. However, dividend increases are really lumpy, not smooth.
I have put on my spreadsheet what I think the likely growth in dividends would be based on what has occurred over the past 5 and 10 years. I have also included a line with growth that I have experienced with the particular stock.
For dividends yields on original investments nothing seems to beat the banks with their good dividends and good dividend increases. With the Royal Bank (TSX-RY) after owning it for 17 years, I have a yield of 31% on my original investment. My original yield on this stock was 4.13%. SNC-Lavelin (TSX-SNC) has not done badly. I started with a 2.35% and currently, after some 14 I have a yield on my original investment of 25.9%
I had at one time hoped that companies with low dividend yields, but high dividend growth would produce great dividend yields on the original investment. However, if you had bought Saputo stock at an average price in 1997 (15 years ago), when it was first issued, your dividend yield on your original investment would only be 11.2%.
The thing is that to beat the good growth, good dividends of banks with a lower dividend yield, the company would have to grow very fast. The problem is that fast growing companies do not maintain that fast growth over the longer term. At some point fast growing companies turn into mature companies and growth slows down.
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.
I have put on my spreadsheet what I think the likely growth in dividends would be based on what has occurred over the past 5 and 10 years. I have also included a line with growth that I have experienced with the particular stock.
For dividends yields on original investments nothing seems to beat the banks with their good dividends and good dividend increases. With the Royal Bank (TSX-RY) after owning it for 17 years, I have a yield of 31% on my original investment. My original yield on this stock was 4.13%. SNC-Lavelin (TSX-SNC) has not done badly. I started with a 2.35% and currently, after some 14 I have a yield on my original investment of 25.9%
I had at one time hoped that companies with low dividend yields, but high dividend growth would produce great dividend yields on the original investment. However, if you had bought Saputo stock at an average price in 1997 (15 years ago), when it was first issued, your dividend yield on your original investment would only be 11.2%.
The thing is that to beat the good growth, good dividends of banks with a lower dividend yield, the company would have to grow very fast. The problem is that fast growing companies do not maintain that fast growth over the longer term. At some point fast growing companies turn into mature companies and growth slows down.
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.
Monday, August 20, 2012
Women on Boards
There is evidence that when boards are diversified, they do better. One of the hot topics today is having women on boards. There are a number of studies that show having women on the board helps companies do better. Here is the original Credit Suisse study paper.
See a Bloomberg article on this subject and another article from Insider Investors relations on this subject. The Conference Board of Canada talks about the same thing here.
What these articles have in common is talking about how having women on boards help companies to perform better. Also, the number of women on boards has been increasing. However, we in Canada are not doing as well as the US is.
There is an organization in Canada that helps companies get women on their boards. See Women on Boards. The G&M have an article of how our Government is promoting the idea of putting women on company's boards. See G&M article.
When you are buying stock, you just might want to look at the company's information on who is on their board to see if they have diversity. It, of course, should not be the deciding factor, but it should be considered.
You can also consider other diversities, such as minorities on the board and independent directors. Companies often have information on their directors in their proxy information and lots of companies now show all the proxy information on their sites.
If you use Reuter's site you can see lots of information on people who are running a company. For example, for the company of Alimentation Couche-Tard Inc. that I am reviewing today, go to here on Reuter's for information on the people running this company.
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.
See a Bloomberg article on this subject and another article from Insider Investors relations on this subject. The Conference Board of Canada talks about the same thing here.
What these articles have in common is talking about how having women on boards help companies to perform better. Also, the number of women on boards has been increasing. However, we in Canada are not doing as well as the US is.
There is an organization in Canada that helps companies get women on their boards. See Women on Boards. The G&M have an article of how our Government is promoting the idea of putting women on company's boards. See G&M article.
When you are buying stock, you just might want to look at the company's information on who is on their board to see if they have diversity. It, of course, should not be the deciding factor, but it should be considered.
You can also consider other diversities, such as minorities on the board and independent directors. Companies often have information on their directors in their proxy information and lots of companies now show all the proxy information on their sites.
If you use Reuter's site you can see lots of information on people who are running a company. For example, for the company of Alimentation Couche-Tard Inc. that I am reviewing today, go to here on Reuter's for information on the people running this company.
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.
Wednesday, August 15, 2012
Inequality
There is much talk now of inequality. How society has money, but it is spread out in unequal ways. All these people want is to spread out society's money fairly.
However, this is not the only inequality. There are people who work and people who do not. Money, in our society, seems to be going to the people that work via jobs. Most are at productive jobs or government jobs.
Government jobs are non-productive. However, there are government jobs that keep our economy functioning.
I heard a lefty at a recent party declare that they should give money to the people rather than spend in on building things. (We in Toronto are building lots and lots of condos.) Of course, there is no mention of whom "they" are or where the money will come from. No hint that someone would have to give up money for others to receive it.
Many people just think of the government having lots and lots of money. No concept of where it comes from. (If they asked me, I could tell them. It comes from taxpayers like me. Government money does not come the 1% or whatever; it comes mainly from the middle classes, of which I am one.)
Some people who get money from the government do not work and some never have. This would be people on welfare. They are also not contributing to our society. I am not against using government money to help people out who are in need. But help should be short term, not permanent, unless people are truly disabled.
As I understand it, we have families in Canadian with a fourth generation on welfare. We also have street people. It seems that we need to fix why families spent generations on welfare before we can more on to help people living on the street. And, we should be finding ways of helping street people. It is rather ludicrous that in our rich society we have people living on the street.
The other big point is that our welfare program has done nothing to end poverty. The problem could be that the poorest performing schools are still in the poorest neighborhoods.
Also, just maybe money would be spread more evenly if everyone did something to contribute to our society. I believe that everyone should do something to contribute to our society.
We need to fixate more on creating wealth, not just distributing wealth.
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.
However, this is not the only inequality. There are people who work and people who do not. Money, in our society, seems to be going to the people that work via jobs. Most are at productive jobs or government jobs.
Government jobs are non-productive. However, there are government jobs that keep our economy functioning.
I heard a lefty at a recent party declare that they should give money to the people rather than spend in on building things. (We in Toronto are building lots and lots of condos.) Of course, there is no mention of whom "they" are or where the money will come from. No hint that someone would have to give up money for others to receive it.
Many people just think of the government having lots and lots of money. No concept of where it comes from. (If they asked me, I could tell them. It comes from taxpayers like me. Government money does not come the 1% or whatever; it comes mainly from the middle classes, of which I am one.)
Some people who get money from the government do not work and some never have. This would be people on welfare. They are also not contributing to our society. I am not against using government money to help people out who are in need. But help should be short term, not permanent, unless people are truly disabled.
As I understand it, we have families in Canadian with a fourth generation on welfare. We also have street people. It seems that we need to fix why families spent generations on welfare before we can more on to help people living on the street. And, we should be finding ways of helping street people. It is rather ludicrous that in our rich society we have people living on the street.
The other big point is that our welfare program has done nothing to end poverty. The problem could be that the poorest performing schools are still in the poorest neighborhoods.
Also, just maybe money would be spread more evenly if everyone did something to contribute to our society. I believe that everyone should do something to contribute to our society.
We need to fixate more on creating wealth, not just distributing wealth.
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.
Monday, August 13, 2012
Picking A Dividend Payer In Sideways Market
One of the things I do every weekend is to watch the TD Waterhouse investment video. This is the link to look at their videos. They are short at just around 10 - 15 minutes. The interviewees often have something interesting to say.
This past week was entitled "Picking a Dividend Payer in Sideways Market:. This weeks interviewee was Cynthia Caskey who is Vice President, Portfolio Manager and Sales Manager for TD Waterhouse Private Investment Advice. She felt that we are currently in a sideways market and that the best choice for investing was in dividend paying stock. She particularly liked dividend stocks that were growing their dividends.
She also talked about quality of management being an important in picking stocks. One of the things she mentioned was a recent study that said that company boards that have women outperform ones that do not.
She, as most people interviewed here, gives a couple of stock picks. Hers were Canadian Utilities (TSX-CU) and PepsiCo Inc. (NYSE-PEP).
I must admit that this is my current strategy. That is I am investing in dividend paying stock in order to make money in the market. I have bought a few things for capital gain, but they were all short term investments. The world economy is in deep trouble and I do not see things changing anytime soon. No one is willing to make the tough decision until they have to.
She is not the only one to think that we are in a sideways market. A lot of commentators on the market are saying the same thing.
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.
This past week was entitled "Picking a Dividend Payer in Sideways Market:. This weeks interviewee was Cynthia Caskey who is Vice President, Portfolio Manager and Sales Manager for TD Waterhouse Private Investment Advice. She felt that we are currently in a sideways market and that the best choice for investing was in dividend paying stock. She particularly liked dividend stocks that were growing their dividends.
She also talked about quality of management being an important in picking stocks. One of the things she mentioned was a recent study that said that company boards that have women outperform ones that do not.
She, as most people interviewed here, gives a couple of stock picks. Hers were Canadian Utilities (TSX-CU) and PepsiCo Inc. (NYSE-PEP).
I must admit that this is my current strategy. That is I am investing in dividend paying stock in order to make money in the market. I have bought a few things for capital gain, but they were all short term investments. The world economy is in deep trouble and I do not see things changing anytime soon. No one is willing to make the tough decision until they have to.
She is not the only one to think that we are in a sideways market. A lot of commentators on the market are saying the same thing.
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.
Wednesday, August 8, 2012
Sold SAP, Bought ALA
Today, August 8th, I sold some of my Saputo (TSX-SAP) stock and bought some AltaGas (TSX-ALA) stock. The reason for the change is that I think money that where the money is going to be made is in dividends not capital gains until the West does something to solve our debt problems.
Also Saputo was my biggest holding. It got to be the biggest holding because it has done so well. I had made total returns of 17% per year on this stock.
The downside of Saputo is that the dividend is very low, coming in at just 1.76%. AltaGas has a current dividend coming in today at 4.53%. One thing that is important to me is cash flow because I am living off of my dividends.
There is a cautionary note with AltaGas as they have decreased their dividends as well as increased them in the past. However, the decrease in dividends did come as a result of them switching from a unit trust company to a corporation. Their Dividend Payout Ratio for EPS is still a little high, but I think it is manageable.
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.
Also Saputo was my biggest holding. It got to be the biggest holding because it has done so well. I had made total returns of 17% per year on this stock.
The downside of Saputo is that the dividend is very low, coming in at just 1.76%. AltaGas has a current dividend coming in today at 4.53%. One thing that is important to me is cash flow because I am living off of my dividends.
There is a cautionary note with AltaGas as they have decreased their dividends as well as increased them in the past. However, the decrease in dividends did come as a result of them switching from a unit trust company to a corporation. Their Dividend Payout Ratio for EPS is still a little high, but I think it is manageable.
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.
Tuesday, August 7, 2012
Dividend Increases
I have usually projected my dividend increases to be 10% per year, but I generally got more than 12% on average. However, I doubt I will see such high dividend increases in the future. I have lowered my projection of dividend growth to 8% per year, but I wonder if that is not too high also.
The latest high increases I got were in 2006 and 2007 when they were 24% and 23% per year. The low point for this latest recession was 5.3% in 2010. This is the lowest increase I have had. Last year was better at 9.2%, but I wonder if this year will be higher.
Currently, year to date my dividend increase is 8.5%, but we seem to be going back into a recession or at the very least a slow growth time. To date my 5 year median dividend increase growth is at 9.2%.
There seems to be a lot of stocks where the 5 year dividend increase is less than the 10 year dividend increase. This is because dividends increases are declining. In some cases, there have been no recent increases. Bank of Montreal (TSX-BMO) still has not raised their dividends. Insurance companies are in the same position. There has been no recent increase in Power Financial (TSX-PWF) or Sun Life (TSX-SLF) dividends. Manulife has decreased their dividend and have not yet raised it again.
Some stocks seem to be holding up well like SNC-Lavalin (TSX-SNC) which has 5 and 10 year dividend growth of 23% and 24% per year. However, there seems to be a lot more like Saputo (TSX-SAP) which has 5 and 10 year dividend growth rates of 13% and 34% per year, and Leon's Furniture Ltd (TSX-LNF) which has 5 and 10 year dividend growth rates of 7.6% and 13.7% per year.
And just to prove my point, in July 2012, no stock of my raised their dividends. I usually have at least one or two every month, at a minimum, raising their 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.
The latest high increases I got were in 2006 and 2007 when they were 24% and 23% per year. The low point for this latest recession was 5.3% in 2010. This is the lowest increase I have had. Last year was better at 9.2%, but I wonder if this year will be higher.
Currently, year to date my dividend increase is 8.5%, but we seem to be going back into a recession or at the very least a slow growth time. To date my 5 year median dividend increase growth is at 9.2%.
There seems to be a lot of stocks where the 5 year dividend increase is less than the 10 year dividend increase. This is because dividends increases are declining. In some cases, there have been no recent increases. Bank of Montreal (TSX-BMO) still has not raised their dividends. Insurance companies are in the same position. There has been no recent increase in Power Financial (TSX-PWF) or Sun Life (TSX-SLF) dividends. Manulife has decreased their dividend and have not yet raised it again.
Some stocks seem to be holding up well like SNC-Lavalin (TSX-SNC) which has 5 and 10 year dividend growth of 23% and 24% per year. However, there seems to be a lot more like Saputo (TSX-SAP) which has 5 and 10 year dividend growth rates of 13% and 34% per year, and Leon's Furniture Ltd (TSX-LNF) which has 5 and 10 year dividend growth rates of 7.6% and 13.7% per year.
And just to prove my point, in July 2012, no stock of my raised their dividends. I usually have at least one or two every month, at a minimum, raising their 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.
Wednesday, August 1, 2012
What I get from my Spreadsheets
My spreadsheets give me background information for analyzing stocks. They give me information to analyze how a stock is doing and a basis to help decide what is a good relative price for a stock. The past may not be the future, but neither are the future and the past totally divorced from each other.
One of the things I get from spreadsheets is the answer to the question "Is the company growing?" I look at revenues, earnings, dividends, cash flow and book value. Revenue growth is important as without growth you are not going to get long term growth in earnings, dividends, cash flow or book value.
My spreadsheets give me not only current values and ratios, but where the stock has been in the past, for example on things like debt ratios. I can see how the stock is fairing relatively to what it did in the past.
Take debt ratios, a lot of sites will give you what it is currently, but you need the past to make sense of it, but you also need have a general knowledge where the debt ratios should be for the type of stock you are analyzing. Some stocks types of stocks, i.e. utilities have much heavier debt loads than other types of stock. This is just the way these companies operate.
There is another aspect of my spreadsheets. They contain a number of ratios, not only debt ratios, but things like Price/Sales Ratio, Price/Graham Price Ratio, Price/Earnings Ratio, Price/Cash Flow Ratio, Price/Book Value Ratio and Earnings per Share/Cash Flow Ratio.
They also contain current and historical yields, like Earnings Yield, Dividend yields. I include returns on assets, comprehensive income and net income or earnings.
When I look at the current stock price, I can perform a number of tests to see if the current price is relatively low or high. Usually I test price using Price/Earnings Ratios, Price/Graham Price Ratios, Price/Book Value Ratios and dividend yield. If these tests are invalid for any reason, I can also look at Price/Sales Ratios and Price/Cash Flow Ratios.
My spreadsheets one tool I use to analysts stocks. For such things like these ratios you need also to understand what is a generally considered to be reasonable ratios, which sometimes can vary a lot from relative ratios.
One of the things I get from spreadsheets is the answer to the question "Is the company growing?" I look at revenues, earnings, dividends, cash flow and book value. Revenue growth is important as without growth you are not going to get long term growth in earnings, dividends, cash flow or book value.
My spreadsheets give me not only current values and ratios, but where the stock has been in the past, for example on things like debt ratios. I can see how the stock is fairing relatively to what it did in the past.
Take debt ratios, a lot of sites will give you what it is currently, but you need the past to make sense of it, but you also need have a general knowledge where the debt ratios should be for the type of stock you are analyzing. Some stocks types of stocks, i.e. utilities have much heavier debt loads than other types of stock. This is just the way these companies operate.
There is another aspect of my spreadsheets. They contain a number of ratios, not only debt ratios, but things like Price/Sales Ratio, Price/Graham Price Ratio, Price/Earnings Ratio, Price/Cash Flow Ratio, Price/Book Value Ratio and Earnings per Share/Cash Flow Ratio.
They also contain current and historical yields, like Earnings Yield, Dividend yields. I include returns on assets, comprehensive income and net income or earnings.
When I look at the current stock price, I can perform a number of tests to see if the current price is relatively low or high. Usually I test price using Price/Earnings Ratios, Price/Graham Price Ratios, Price/Book Value Ratios and dividend yield. If these tests are invalid for any reason, I can also look at Price/Sales Ratios and Price/Cash Flow Ratios.
My spreadsheets one tool I use to analysts stocks. For such things like these ratios you need also to understand what is a generally considered to be reasonable ratios, which sometimes can vary a lot from relative ratios.
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