My contribution to this index is also 3 stocks. My pick to add to the Dividend Growth index is Fortis Inc. (TSX-FTS), Toromont Industries Ltd. (TSX-TIH), and Saputo (TSX-SAP). They are all dividend growth stocks of various risk levels and in different sectors.
I try to buy good companies and I try to diversify my portfolio so that a loss of a stock or dismal returns in one sector does not do irreparable damage to my investments. So, I will review my picks and why I like these particular stocks.
Fortis Inc. (TSX-FTS)
This stock was one of my first buys and I have had it since 1987. I also bought some for another account in 1995 and 1996 and then sold some in 1998 because this stock was too high a percentage of my portfolio. Overall, I have made a return of 13.27% per year on this stock to the end of September 2012. Some 8.47% per year of my return was in capital gain and 4.8% per year was in dividends.
This company has a great record of increasing their dividends. The 5 year median dividend yield is 3.3%, which is a decent return. The 5 and 10 year growth in dividends is 11.6% and 9.5% per year. The yield I am earnings on my original investment in 1987 is 25.8% and the dividend yield I am earning for my 1995 investment is 13.4%.
The 5 year median Dividend Payout Ratios are 67% for earnings and 27% for cash flow.
Utilities stocks tend to have lots of debt with low Liquidity Ratios. This stock is no different. However, this stock has a very good cash flow and this makes up for the low Liquidity Ratios. This stock generally has good Debt Ratios.
We are half way through 2012 as far as financial reporting is concerned. Analysts since March have moved the expected revenue down slightly. Over the past 90 days, the expected EPS has remained the same.
See my spreadsheet at fts.htm. For my latest blog postings dated March 2012, click here or here.
This has been a good stock for me and a very solid earner. It is the sort of stock that new investors should start with as it is a utility stock.
Toromont Industries Ltd. (TSX-TIH)
I built my portfolio initially on utility stocks and bank stocks. Once your portfolio gets to a certain size you need to diversify. This is a much riskier stock than Fortis and is considered to be an industrial stock. It is also more volatile and subject to the ups and downs of the business cycle.
Over long periods of time, you would expect this stock to produce better capital gains than a stock like Fortis. However, that long period of time would have to include both a secular bear and bull markets. We have been in a secular bear market since 2000.
I first bought this stock in 2008 and then some more in 2011. The 5 year median dividend yield is 2.23%, which is lower than the one for Fortis. To the end of September 2012, I have made a return of 6.8% on this stock. Some 3.28% per year of this return is in Capital Gain and 3.52% per year is dividend return.
The 5 and 10 year dividend growth is 5.7% and 12% per year. They were having a hard time in the latest recession and earnings are not growing well. So, dividends were decreased in 2011. The company started increasing the dividends again in 2012. This is an industrial stock, so you can expect some variations in dividends.
The 5 year median Dividend Payout Ratios are 32% and 19.5% for earnings and cash flow respectively. I have had no growth in dividends from when I bought the stock, but I expect to have dividend increases in the long term.
We are half way through 2012 as far as financial reporting is concerned. Analysts since March have moved the expected revenue down slightly. Over the past 90 days, the expected EPS has moved down from $1.51 to $1.46.
This stock has brought diversification to my portfolio and I expect it to do well in the long term.
See my spreadsheet at tih.htm. For my most recent blog entries dated April 2012, click here or here.
As I had said above, I built my portfolio initially on utility and bank stock. This is also a riskier stock than Fortis. However, it is a consumer products (consumer staple) stock and this would bring some stability to this stock. The 5 year median dividend is just 1.8%. Consumer stocks tend to have lower Dividend Payout Ratios because they need money to grow and invest. Lower Dividend Payout Ratios lead to lower dividends.
I bought this stock first in 2006 and then some more in 2007. My total return to the end of September 2012 on this stock is 16.50% per year. Some 14.19% per year comes from capital gain and 2.31% from dividends.
In August 2012, I sold some of this stock in my RRSP account because the dividends are low and I wanted to increase dividends in my RRSP Account. I replace some this stock with AltaGas (TSX-ALA). When I did this trade Saputo had a dividend yield of 1.76 and Alta Gas had a dividend yield of 4.53%.
Dividends have grown over the past 5 and 10 years at the rate of 13% and 34% per year, respectively. The 5 year median Dividend Payout Ratios for this stock is 33% and 24% for earnings and cash flow, respectively. Dividends increases vary for this company as the dividend increase for 2010 was 10.3%, the dividend increase for 2011 was 18.8% and the dividend increase for 2012 is 10.5%.
Over the past 90 days, the EPS for this stock has trended down from $2.68 to $2.64 to the current $2.62.
This stock has brought diversification to my portfolio and I expect it to do well in the long term. I expect to earn more in capital gains than in dividends compared to utility and bank stocks.
See my spreadsheet at sap.htm. For my most recent blog entries dated June 2012, click here or here.
Other Members of this Group
The other members of this group are listed below. I have also posted links to their October 2012 update for the Dividend Growth Index (DGI) where I know what the link is. Please note that these links will not work until the entry is posted by each blogger on October 9, 2012.
Dividend Growth Investor and DGI
Dividend Guy and DGI
Dividend Mantra and DGI
Dividend Monk and DGI
Dividend Ninja and DGI
My Own Advisor and DGI
Passive Income Earner and DGI
See Dividend Guy 's initial blog entry on this index.
Stocks Covered in this Index
Below is a chart showing all the stocks covered by this index and by which blogger and I have given a link to their sites. Since the inception of this Dividend Growth Index, the return is 22.2%. The year to date return is 6.6%.
|Chevron Corp||CVX-N||Dividend Growth Investor|
|Enterprise Product Partners||EPD-N||Dividend Growth Investor|
|McDonald's Corp||MCD-N||Dividend Growth Investor|
|National Bank||NA-T||Dividend Guy|
|Conoco Phillips||COP-N||Dividend Mantra|
|Phillip Morris||PM-N||Dividend Mantra|
|Procter & Gamble||PG-N||Dividend Mantra|
|Energy Transfer Equity||ETE-Np||Dividend Monk|
|Novartis AG||NVS-N||Dividend Monk|
|Husky Energy||HSE-T||Dividend Ninja|
|Abbott Labs||ABT-N||My Own Advisor|
|Bank of Nova Scotia||BNS-T||My Own Advisor|
|CML Healthcare||CLC-T||My Own Advisor|
|Aflac||AFL-N||Passive Income Earner|
|Canadian Nat. Railway||CNR-T||Passive Income Earner|
|Canadian Nat. Resources||CNQ-T||Passive Income Earner|
|Toromont Industries Ltd||TIH-T||SPBrunner|
We are tracking our index against a number of ETFs. The main drag on our return comes from Canadian National Resources (TSX-CNQ) which is down over 30%. However, this company is into Oil and Gas and these products are down year to date, so this is hardly surprising.
|S&P/TSX 60 Index Fund||XIU||5.39%|
|Dow Jones Canada Select Dividend Index Fund||XDV||3.89%|
|SPDR S&P 500 ETF||SPY||16.43%|
|Vanguard Dividend Appreciation ETF||VIG||10.92%|
|Dividend Growth Index||DGI||5.7%|
On my Investment Talk blog I am today writing about Keyera Corp. (TSX-KEY). Today, I am discussing the stock price and what analysts say about the 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 or StockTwits.
Investing in Companies that increase their dividends on a regular basis seem like a good way to go.ReplyDelete