What Influenced my Investing

When I first started investing the place I went for information was Metro Library on Yonge Street just north of Bloor Street. Here I could look at "Financial Post Cards", some investing newsletters, files on specific companies and company annual statements. I stopped going to the library a long time ago. All the data I currently get now is all online.

The Financial Post Cards were basically cards on each stock the paper covered with current and historical information on them. At that time the Financial Post was a newspaper. It was later taken over by the National Post. The files at the library were a collection of articles from newspapers and magazines that staff cut out and put in files for each company covered.

One of the earliest newsletters I read was the Investment Report by MLC Communications. I still look at their stuff today. Their website is here. I still get their two free email newsletters, one is Advice Hotline E-mail and the other is The Daily Buy and Sell Advisor. For this second newsletter I do not currently see where it can be signed up for but they are in the midst of revising their website for this email. If you want independent advice, I would still recommend this company and their newsletters.

There were a couple of organizations that put out lists of Canadian dividend stocks. The dividend lists that I follow are Dividend Achievers and Dividend Aristocrats. They both have moved around over the years. The Dividend Achievers is now at Nasdaq OMX and is called NASDAQ Select Canadian Dividend Index (NQCADIV) and is here. The stocks in the list are here (see weighting tab.) Also see NASDAQ Broad Canadian Dividend Achievers Index (DACA) here. The Dividend Aristocrats is part of TSX site. Go to the "TSX Market Activity" and click on "Indices and Constituents" tab. I still look at these lists for stock ideas.

One of the earliest magazines I looked at was Canadian Shareowners magazine. It has changed tremendously over time. There is a write up on this organization on a blog. This blog also offers you the ability to click on an old magazine (dated 2005). When I was looking at this magazine it just reviewed big blue chip Canadian stocks and US stocks.

Their main theme was that you want to invest in companies that grow their revenue. Only these sorts of companies could grow earnings. So you looked for companies with revenue growth and earnings growth. Now this origination is an investment firm that you can buy stocks through and get investor education. There site is here. There is a discussion of this origination at Financial Wisdom Forum. The earliest entries are in 2005, but there are later ones at the bottom dated in 2013. This organization has changed beyond all recognition since I was first reading their magazine. I have not looked at this organization for quite a number of years (like over 20 years).

One early website I used was one run by a guy names Mike Higgs. He had a list of almost 50 companies he called dividend growth companies. He thought investors should only buy dividend growth stocks and then only when they were cheap. He put out a monthly list of his stocks and said whether they were cheap or expensive at that time. Unfortunately, Mike dies a few years ago from cancer and his website went with him.

On my other blog I am today writing about Home Capital Group (TSX-HCG, OTC-HMCBF) ...continue...

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 site for an index to these blog entries and for stocks followed. Follow me on Twitter.

Market Corrections

Market corrections can be a great time to reposition your stock portfolio. You could be better off buying and selling stocks in low markets. Yes, you might sell low or at a loss, but you also buy low. If you sell low you incur less in the way of capital gain taxes.

If there some stock you have had a long time, but did not want to sell because of large capital gains made over the years, perhaps you should sell it at market lows and buy something else that you like better for the longer term going forward. You would probably save money doing this then doing your buying and selling in more normal market times.

On my other blog I am today writing about Emera Inc. (TSX-EMA, OTC-EMRAF) ...continue...

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 site for an index to these blog entries and for stocks followed. Follow me on Twitter.

Making Money

What if you have a dividend stock portfolio and you have large paper losses. That is the value of your portfolio is lower than the book value (or cost of your portfolio). However, you are making an increasing dividend income on your portfolio.

Are you making money? Could the answer just be a matter of perspective? After all the loss is only a paper loss unless you sell and you are getting an increasing income.

On my other blog I am today writing about ARC Resources Ltd. (TSX-ARX, OTC-AETUF)...continue...

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 site for an index to these blog entries and for stocks followed. Follow me on Twitter.

Price/Earnings Ratios

P/E Ratios are relative to different sorts of stocks. Generally speaking a P/E below 10 says that the stock is cheap and one over 30 says it is expensive. However, you can have a very high P/E on a fast growing stock and make lots of money when the stock has momentum.

The P/E Ratio I use in my stock tests is the forward P/E Ratio. That is I am using the EPS estimates to calculate the P/E Ratio. I compare this P/E Ratio to the 5 year low, median and high median P/E Ratios I have in my spreadsheet for a particular stock.

That is I look at the 5 year median P/E Ratio for the stock price lows over the past five years, the 5 year median P/E Ratio for the stock price highs over the past 5 years and the 5 year median P/E Ratios for the stock price average between the stock highs and lows stock prices.

When I look to see if a stock price is good or not, yes, I use the P/E Ratio. However, I also try to use at least 3 other stock price tests. This would include generally include looking at the Price/Graham price Ratios, the dividend yield, and the Price/Book Value per Share Ratio. If for some reason I cannot use one of the above there are also Price/CFPS Ratio and the Price/Sales Ratio.

What you generally get for each year for stock prices is the stock price high, low and the close prices. The highs are the highest stock price reached in the year. The lows are the lowest stock price reached in the year. The median or average price is the value between the high and low prices for a year. (I calculate this value.) These are generally all close prices. The close price is the last price for a particular day or period. For example, the highest price reached in a year is generally a day end close price.

Generally, stock charts show the close price per day over a period of time, if the period is 1 month or more. If the time period is say more than 10 years, a lot of stock charts just show the close price for each week or each month in the applicable period. If say a stock price on a chart is dated January 31, 2014, what you generally get is the close price for the day of January 31, 2014.

Further reading would be in Investopedia and Wikipedia. It is interesting that Investopedia thinks that a 20-25 P/E Ratio is an average one whereas Wikipedia thinks that a P/E Ratio of 17 to 25 is high. The About.com site also has an article on P/E Ratios. If you like video, you can learn about P/E Ratios on YouTube.

On my other blog I am today writing about ARC Resources Ltd. (TSX-ARX, OTC-AETUF)...continue...

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 site for an index to these blog entries and for stocks followed. Follow me on Twitter.

Increased Dividends in 2013

I have some 49 stocks spread out over 5 accounts of Canadian Trading Account, US Trading Account, TFSA, RRSP and RRIF. In 2013, my dividend income increased by 10.53%.

Of these stocks that I hold, 28 or 57.2% increased their dividends in 2013. Of the stocks that increased dividend 5 or 10.2% increased their dividends twice during the year. Of the other stocks, 2 or 4.1% stocks decreased their dividends and 20 or 38.8% stocks kept their dividends level in 2013.

Of my consumer stocks, 6 out of 9 or 66.7% raised their dividend and 3 kept them level. Of my energy stocks 2 stocks of 3 raised their dividends and one kept theirs level. Of my Financial stocks, all of the banks raised their dividends but the other financial stocks kept theirs level.

All my real estate stocks raised their dividends in 2013. Of my utility stocks 6 out of 8 stocks or 75% raised their dividends. Of the other 2, one kept the dividends level and one decreased their dividends. Four of my 11 industrial stocks or 36% raised their dividends and the others kept their dividends level. Of my tech stocks 2 raised their dividends and 1 kept theirs level.

I also had two stocks give me a special dividend. One was Evertz Technologies (TSX-ET), a Tech firm and the other was Melcor Developments Inc. (TSX-MRD), a Real Estate firm.

See my spreadsheet at here.

On my other blog I am today writing about Manitoba Telecom Services Inc. (TSX-MBT, OTC-MOBAF)...continue...

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 site for an index to these blog entries and for stocks followed. Follow me on Twitter.

Patient's Time

Our medical industry has absolutely no regard for patient's time. They seem to think that their time is all important and patient's time has no importance whatsoever.

A typical is I when I went for a mammogram at WCH. I got their a few minutes early as I do not know where to go in the new building. I get up to the check in window and I was told to wait. The clerk was doing this and that. No thought of customer service. No skin off anyone's nose at the hospital if I have to just stand outside this window for 5 or 10 minutes.

Why do I have to wait like this? Who knows why they do this. I suspect it is a lack of good organization. Another possible reason is probably because they can do this. What choice do I have? I really have none. If I walk away, I do not get the mammogram that I need to have. If I book at another hospital, it is the same song and dance.

I finally get to the next waiting room and again I have to just wait. I am on time. They are not. I see no incentives for them to take patients on time. No thoughts of customer service. No thoughts at all.

On my other blog I am today writing about Canadian National Railway (TSX-CNR, NYSE-CNI)...continue...

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 site for an index to these blog entries and for stocks followed. Follow me on Twitter.

Something to Buy

There is always something to buy in the stock market. On Monday, 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.

Categorizing stocks is not as simple as it might seem. Every site you go to has categorized stocks a bit differently. I try to keep this as simple as possible. See my spreadsheet at here. As in other spreadsheets, you can highlight a line or a number of lines for better viewing.

A number of Consumer Staple stocks seem to be cheap. Examples would be Canada Bread (TSX-CBY) Dorel Industries (TSX-DII.B A) and Metro Inc. (TSX-MRU). A number of energy stocks also seem cheap. Examples are Canadian Natural Resources (TSX-CNQ); Cenovus Energy Inc. (TSX-CVE) and Suncor Energy (TSX-SU).

There are not that many cheap companies in Finance, but the banks mostly seem on the cheaper side. There are not many companies cheap in the Tech sector except for small companies like Calian Technologies Ltd (TSX-CTY) and Evertz Technologies (TSX-ET).

The infrastructure type utility companies are not cheap. What utility companies that are cheap, seem to be cheap for a good reason. Examples are Atlantic Power Corp (TSX-ATP) and TransAlta Corp (TSX-TA)

On my other blog I am today writing about Nordion Inc. (TSX-NDN, NYSE-NDZ)...continue...

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 site for an index to these blog entries and for stocks followed. Follow me on Twitter.

Dividend 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. See my spreadsheet at dividend growth stocks.

I am showing whether a stock is relatively cheap based on historical high dividend yields (P/Hi), historical average dividend yields (P/Ave) 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 average 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. They 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.

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. You might want to look at my original entry on Dividend Growth Stocks.

On my other blog I am today writing about Exco Technologies Ltd. (TSX-XTC, OTC- EXCOF)...continue...

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 site for an index to these blog entries and for stocks followed. Follow me on Twitter.

Capital Gains

When you invest in stock you can make dividend income and capital gains. I do make capital gains along with dividends in my investments. However, my capital gains are just a byproduct of my investing style and not primarily why I am investing.

Sure, I have invested just to get capital gains. I like tech stocks and I invested in Research in Motion, now Blackberry to make capital gains on its rise. Generally this is momentum investing. It was fun and I made money. I have also invested in stocks that go up and down a lot and so you can invest in them when they are down and sell when they are up and make capital gains. Resource stocks are generally good for this.

You can make money on other types of stocks. When I was reviewing Rogers Sugar in January I came across an interesting item in Seeking Alpha about the stock going up and down and lot and best to buy when it is down. This entry is dated in 2012, but it still seems to apply.

However, I think to invest for capital gain is a lot harder than to invest for dividends. There is also the cost of investing for capital gains. Every time you invest for capital gains there is a buy and sell and you pay fees. You also pay taxes with each stock sale. Another thing is that you have to keep a close eye on these stocks at all times. Markets can sometimes turn against you quickly.

It is not that I do not pay fees on dividend stocks. However, I do hold them for very long periods of time. I mostly buy stocks, but occasionally you have to sell dividend stocks because they are doing very poorly. An example is AGF Management Ltd. (TSX-AGF.B-TSX). It was a dividend growth stock that ran into trouble around 2003 and has not yet recovered.

As far as capital gain taxes go, I do not have much. Of course, the thing is my heirs will have to pay them out of their inheritance. In Canada, stocks are consider sold on date of death and capital gains taxes are due from stock purchase date to date of death. I have held some stocks for a very long time. The book value of my portfolio is less than half of the value of my portfolio. (Capital gain taxes were started in 1994. So, capital gains taxes are only due from 1994.)

However, a lot of dividend stocks you can put away and forget for long periods of time. I do review once a year all my stocks and I might also review if I read something bad about them in the news. However, you do not need to watch them all the time. And, if they run into trouble, you usually have time to get out.

With AGF Management Ltd. (TSX-AGF.B-TSX) I notice it was in some problems in 2003. I kept an eye on it and finally sold half my holdings in 2006 and then the rest in 2008. I was hoping it would recover. In any event I made a small profit of around 2% per year, including dividends.

The point is that when buying dividend paying stocks you tend not to get the volatility that occurs in stocks bought for capital gains. Things move along much slower.

On my other blog I am today writing about Shaw Communications Inc. (TSX-SJR.B, NYSE-SJR)...continue...

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 site for an index to these blog entries and for stocks followed. Follow me on Twitter.

Monkeys Vs Fund Managers

Research done by Aon Hewitt and Cass Business School shows that buying an equity index that is a market capitalization-weighted index may be not be the best approach in investing. What they found is that indices constructed by the capitalization-weighted method underperformed all other methods of constructing indices.

You can construct indices using an equal weight method, or capitalization with a cap or base an index on low volatility. Another study constructed indices using total dividends paid by a company; each company's total annual cash flow; each company's book value; each company's total annual sales and also according to a combination of these.

In these studies, the indices constructed by capitalization method, which is the common method, underperformed all other methods. The point is that you might want to consider this information if you are buying an ETF.

You can find information on these papers on Cass Business School's site together with the papers. What may be more interesting is a 5 minute video on this subject.

On my other blog I am today writing about Valener Inc. (TSX-VNR, OTC-VNRCF)...continue...

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 site for an index to these blog entries and for stocks followed. Follow me on Twitter.