This article in the economist points out that stocks for the long run does not always work. There was also another article suggesting that 2016 will maybe like 2008 (or perhaps 1998). There are people who have been threating us with a bear market and recession for a while. It will happen when it happens.
I still am going forward with stocks. This is because interest rates are so low. Of course the low interest rates have been going on for quite a while. These sorts of things go on for a lot longer than you would ever imagine.
People have been waiting for interest rates to get back to normal for years. It is hard to say when this will happen. This time around with low interest rates we have even got into negative interest rates which at one time it was thought to be impossible.
I am not saying that I will never go into bonds again. I just do not think that now is the time because of the very low and negative interest rates. Eventually bonds will have to go into a bear market; that is rates will have to rise. Remember that interest rates and bond values go in the opposite direction. We have had a hell of a bull market in bonds and it just seems to be going on and on. But nothing will last forever.
Also, what people do not talk about is that the bond market is much volatile than the stock market. Changes in interest rates can greatly affect the value of bonds and the longer the bond term, the greater the effect. On the other hand, you can safely buy bonds if you buy and hold until maturity. If you hold a bond until maturity, you will get the interest promised plus you capital. Of course, you need to ensure that you are buying a high quality bond for this to happen.
On my other blog I wrote yesterday about Bombardier Inc. (TSX-BBD.B, OTC-BDRBF)... learn more. Tomorrow, I will write about ARC Resources Ltd. (TSX-ARX, OTC-AETUF)... learn more on Friday, February 26, 2016.
Also, on my book blog I have put a review of the book The Fourth Revolution by Micklethwait, Wooldridge. learn more...
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. Follow me on Twitter.
Thursday, February 25, 2016
Tuesday, February 23, 2016
Dividend Cuts
Recently my portfolio has had a number of stocks that either increased or decreased their dividends. The TransAlta stock was especially a big dividend cut. I wanted to look at my overall portfolio and see what the net effect of these changes were.
What I found is that my total dividends were decreased by 0.16% from just prior to these changes to just after these changes. So this is basically a wash. However, my dividend income has increased by 1.8% when I compare last year's dividend income to that just after these changes.
The dividend changes are listed below:
This seems in line with what I have experienced in the past. I have never had my dividend income decrease year over year at any time.
On my other blog I wrote yesterday about Goodfellow Inc. (TSX-GDL, OTC-GFELF)...learn more. Tomorrow, I will write about Bombardier Inc. (TSX-BBD.B, OTC-BDRBF)... learn more on Wednesday, February 24, 2016. On this blog I will next be writing about Stocks for the Long Run Part 2... learn more on Thursday, February 25, 2016.
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. Follow me on Twitter.
What I found is that my total dividends were decreased by 0.16% from just prior to these changes to just after these changes. So this is basically a wash. However, my dividend income has increased by 1.8% when I compare last year's dividend income to that just after these changes.
The dividend changes are listed below:
| Stocks | Symbol | Price | New Div | Old Div | Diff |
|---|---|---|---|---|---|
| CDN National Railway | CNR | $75.95 | $1.50 | $1.25 | 20.00% |
| Metro Inc. | MRU | $41.41 | $0.56 | $0.47 | 19.97% |
| Richelieu Hardware | RCH | $67.64 | $0.64 | $0.60 | 6.67% |
| Mullen Group | MTL | $15.02 | $0.96 | $1.20 | -20.00% |
| TransAlta | TA | $4.92 | $0.16 | $0.72 | -77.78% |
This seems in line with what I have experienced in the past. I have never had my dividend income decrease year over year at any time.
On my other blog I wrote yesterday about Goodfellow Inc. (TSX-GDL, OTC-GFELF)...learn more. Tomorrow, I will write about Bombardier Inc. (TSX-BBD.B, OTC-BDRBF)... learn more on Wednesday, February 24, 2016. On this blog I will next be writing about Stocks for the Long Run Part 2... learn more on Thursday, February 25, 2016.
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. Follow me on Twitter.
Thursday, February 18, 2016
Stocks for the Long Run
This article in the economist talks about stocks for the long run. I have certainly had a great run with stocks as has Canada. But there are a lot of things that can kill stocks markets.
War and bankruptcies are the biggest items that can kill stocks markets. European countries (except UK) have a long history of bankruptcies. In fact most governments have had bankruptcies. It is much shorter to talk about countries that have not gone bankrupt, that is defaulted on bonds. These countries are the so called Anglo-Saxon countries of US, Canada, Australia and New Zealand. Also there is a Scandinavian country that has not gone bankrupt.
UK last defaulted on government bonds in the 12 century. New Zealand almost went bankrupt in 1979/1980, but was saved by an incoming Labour Party. I do not know remember which Scandinavian country that has never gone bankrupt. I tried to Google this but did not get anywhere.
I advocate equity investing as I live in Canada and this is very likely to turn out very well. I was also very lucky that I started to invest in the late 1970's and early 1980's. In the late 1970's interest rates were historically high. Equity markets took off in around 1982 and where great throughout the 1980's and 1990's.
I have read a lot of economic books including historical ones. I realize how lucky I am to have been born in a country like Canada.
On my other blog on Tuesday I wrote about Absolute Software Corporation (TSX-ABT, OTC-ALSWF)... learn more. Tomorrow, I will write about of Emera Inc. (TSX-EMA, OTC-EMRAF)... learn more on Friday, February 19, 2016.
Also, on my book blog I have put a review of the book Prisoners of Geography by Tim Marshall learn more...
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. Follow me on Twitter.
War and bankruptcies are the biggest items that can kill stocks markets. European countries (except UK) have a long history of bankruptcies. In fact most governments have had bankruptcies. It is much shorter to talk about countries that have not gone bankrupt, that is defaulted on bonds. These countries are the so called Anglo-Saxon countries of US, Canada, Australia and New Zealand. Also there is a Scandinavian country that has not gone bankrupt.
UK last defaulted on government bonds in the 12 century. New Zealand almost went bankrupt in 1979/1980, but was saved by an incoming Labour Party. I do not know remember which Scandinavian country that has never gone bankrupt. I tried to Google this but did not get anywhere.
I advocate equity investing as I live in Canada and this is very likely to turn out very well. I was also very lucky that I started to invest in the late 1970's and early 1980's. In the late 1970's interest rates were historically high. Equity markets took off in around 1982 and where great throughout the 1980's and 1990's.
I have read a lot of economic books including historical ones. I realize how lucky I am to have been born in a country like Canada.
On my other blog on Tuesday I wrote about Absolute Software Corporation (TSX-ABT, OTC-ALSWF)... learn more. Tomorrow, I will write about of Emera Inc. (TSX-EMA, OTC-EMRAF)... learn more on Friday, February 19, 2016.
Also, on my book blog I have put a review of the book Prisoners of Geography by Tim Marshall learn more...
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. Follow me on Twitter.
Tuesday, February 16, 2016
Tax the Rich
When people ask me if I am making money on the internet with my stock information posting, I tell them that I am trying not to make money. The problem is that for me to make money on the internet with postings, I would have to do some work, I would take all the risks and the government will take half of anything I earn. So I am just not interested. I rather do more socializing.
This is the problem with "tax the rich". If you want wealth creators to create wealth they need a reason. Yes there are probably people cheating on their taxes and other that are not "paying their fair share". Those sorts of people will always be with us no matter what the tax rates are.
Upping taxes does not always work. If taxes are high, a government can collect physically less money by increasing tax rates. On the other hand if taxes are high and they reduce taxes, a government can sometimes collect physically more money.
The Liberals have admitted that they will not collect as much as they said with the new "Tax on the Rich". This is hardly surprising.
Another thing about taxes is how little people actually know about them. I complained to a friend that I did not want to bother making money on the internet. She then told me that she would not take money from her RRSP before she absolutely had to because she did not want to pay 50% tax either. The thing is her marginal tax rate is a lot lower than mine so she would not be dinged as much. Do you know what I am talking about? Do you know what your marginal tax rate is?
A classic case of taking money from the rich to help everyone else was the Soviet Union. However, it did not help at all because the people who ran the Soviet Union did not run the economy well. If we elected people who did handle the economy well we would not have the problems we have.
The current problem is practically every country has too much debt. Increasing the taxes is not going help us get out of this current mess. If anyone thinks that more tax on the "rich" is going to help is dreaming in Techno color. Our governments have promised more in pension and health care than they can possibly pay for. I have no idea how this will be resolved.
I am not defending anyone or inequity or really anything. I am just saying what will not work. If we want health care and pensions, we will have to figure out how to pay for it ourselves. There is no magical way of getting money. We cannot forever increase our debt. It just is not going to work.
OAS is a non-funded liability. OHIP is a non-funded liability. CPP is partially funded. Extra premiums collected since 2000 has been going into a fund. CPP started as a pay as you go pension. This means that money being paid in pension premiums go to pension payments to retirees.
When a pay as you go pension has less money coming in than going out, you have a problem. To make things even worse, extra money paid in not needed to pension payments to retirees just went into government general funds. That is it was spent. Most government pension plans are pay as you go.
I do not mind paying taxes. We live a comfortable life in a safe environment. I just do not feel the urge to do more, to make more money just to have half of go to tax.
On my other blog I wrote Friday about Manitoba Telecom Services Inc. (TSX-MBT, OTC-MOBAF) learn more. Tomorrow, I will write about Absolute Software Corporation (TSX-ABT, OTC-ALSWF)... learn more on Wednesday, February 17, 2016.
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. Follow me on Twitter.
This is the problem with "tax the rich". If you want wealth creators to create wealth they need a reason. Yes there are probably people cheating on their taxes and other that are not "paying their fair share". Those sorts of people will always be with us no matter what the tax rates are.
Upping taxes does not always work. If taxes are high, a government can collect physically less money by increasing tax rates. On the other hand if taxes are high and they reduce taxes, a government can sometimes collect physically more money.
The Liberals have admitted that they will not collect as much as they said with the new "Tax on the Rich". This is hardly surprising.
Another thing about taxes is how little people actually know about them. I complained to a friend that I did not want to bother making money on the internet. She then told me that she would not take money from her RRSP before she absolutely had to because she did not want to pay 50% tax either. The thing is her marginal tax rate is a lot lower than mine so she would not be dinged as much. Do you know what I am talking about? Do you know what your marginal tax rate is?
A classic case of taking money from the rich to help everyone else was the Soviet Union. However, it did not help at all because the people who ran the Soviet Union did not run the economy well. If we elected people who did handle the economy well we would not have the problems we have.
The current problem is practically every country has too much debt. Increasing the taxes is not going help us get out of this current mess. If anyone thinks that more tax on the "rich" is going to help is dreaming in Techno color. Our governments have promised more in pension and health care than they can possibly pay for. I have no idea how this will be resolved.
I am not defending anyone or inequity or really anything. I am just saying what will not work. If we want health care and pensions, we will have to figure out how to pay for it ourselves. There is no magical way of getting money. We cannot forever increase our debt. It just is not going to work.
OAS is a non-funded liability. OHIP is a non-funded liability. CPP is partially funded. Extra premiums collected since 2000 has been going into a fund. CPP started as a pay as you go pension. This means that money being paid in pension premiums go to pension payments to retirees.
When a pay as you go pension has less money coming in than going out, you have a problem. To make things even worse, extra money paid in not needed to pension payments to retirees just went into government general funds. That is it was spent. Most government pension plans are pay as you go.
I do not mind paying taxes. We live a comfortable life in a safe environment. I just do not feel the urge to do more, to make more money just to have half of go to tax.
On my other blog I wrote Friday about Manitoba Telecom Services Inc. (TSX-MBT, OTC-MOBAF) learn more. Tomorrow, I will write about Absolute Software Corporation (TSX-ABT, OTC-ALSWF)... learn more on Wednesday, February 17, 2016.
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. Follow me on Twitter.
Thursday, February 11, 2016
Plan for Bears
You cannot time the market. You will not know ahead of time when the market will be moving up or down. But, the fact is we have had bear markets in the past and will have then in the future. It is just we never know when or how bad any bear market will be. The thing is, if you are in a market there will be times of expansion and times of contraction.
If you own a house or a condo, you should know at the least about the last two bear markets in real estate in your area. You should have at least an idea on how you would handle such a time.
I am into stocks. I have been through a number of bear markets. I expect to go through bear markets in the future. I just do not know when.
I see lots of newsletters saying that they know people who had tried to ride out a bear market and have lost money. Of course the value of your portfolio will go down in a bear market. But, you only lose if you sell and turn paper loses into real losses. Newsletters that promise to help you sell to protect you from such a lose make money by selling you a newsletter.
No one knows when to sell. No one can tell when the top or the bottom of a market is. The only thing that is possible to know is if the market is relatively high or relatively low.
If you have basic solid companies you will have no problems going through a bear market. I have done it many times. Do not panic and sell. The other thing that happens in bear markets is some dividend stock cut or cancels their dividends. This will happen in every bear market. However, other dividend stocks keep their dividends level and some raise theirs. What I have found in bear markets is that dividend increases for my portfolio slows down.
If you are buying companies just for capital gain, you might have some problems in a bear market. It depends on what sort of companies you own.
On my other blog I wrote yesterday about Canadian National Railway (TSX-CNR, NYSE-CNI) learn more. Tomorrow, I will write about Manitoba Telecom Services Inc. (TSX-MBT, OTC-MOBAF)... learn more.
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. Follow me on Twitter.
If you own a house or a condo, you should know at the least about the last two bear markets in real estate in your area. You should have at least an idea on how you would handle such a time.
I am into stocks. I have been through a number of bear markets. I expect to go through bear markets in the future. I just do not know when.
I see lots of newsletters saying that they know people who had tried to ride out a bear market and have lost money. Of course the value of your portfolio will go down in a bear market. But, you only lose if you sell and turn paper loses into real losses. Newsletters that promise to help you sell to protect you from such a lose make money by selling you a newsletter.
No one knows when to sell. No one can tell when the top or the bottom of a market is. The only thing that is possible to know is if the market is relatively high or relatively low.
If you have basic solid companies you will have no problems going through a bear market. I have done it many times. Do not panic and sell. The other thing that happens in bear markets is some dividend stock cut or cancels their dividends. This will happen in every bear market. However, other dividend stocks keep their dividends level and some raise theirs. What I have found in bear markets is that dividend increases for my portfolio slows down.
If you are buying companies just for capital gain, you might have some problems in a bear market. It depends on what sort of companies you own.
On my other blog I wrote yesterday about Canadian National Railway (TSX-CNR, NYSE-CNI) learn more. Tomorrow, I will write about Manitoba Telecom Services Inc. (TSX-MBT, OTC-MOBAF)... learn more.
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. Follow me on Twitter.
Tuesday, February 9, 2016
Update Notes
When I review stock price and dividends each month, I also take the opportunity to look at a bit closer at some of the stocks I cover. These some of the stocks I looked at more closely.
Dividend Changes in my Portfolio
In the last updated of the stocks that I followed, I had 3 stocks I own increased their dividends and two stocks I owned decrease their dividends.
The stock Canadian National Railway (TSX-CNR, NYSE-CNI) increased their dividend to $1.50 from 1.25 which is a 20% increase. This stock is 5.71% of my portfolio. Metro Inc. (TSX-MRU, OTC-MTRAF) increased their dividend to $0.56 from $0.4668 which is also a 20% increase. This stock is 5.84% of my portfolio. Richelieu Hardware Ltd. (TSX-RCH, OTC-RHUHF) increased their dividend from $0.64 from $0.60, which is a 6.7% increase. This stock is 1.59% of my portfolio.
Mullen Group (TSX-MTL, OTC-MLLGF) cut their dividend to $0.96 from $1.20 which is a 20% drop. This stock is 0.42% of my portfolio. TransAlta Corp (TSX-TA, NSYE-TAC) also cut their dividends to $0.16 from $0.72, a 77.8% drop. They had also decreased the dividend in 2014. This stock is 0.28% of my portfolio.
However, the net result to my income is interesting. My total income dropped 0.16%, basically a wash. This is because the big drop in dividends of TransAlta. Prior to the change TransAlta dividend yield was around 14.6%. After the drop in dividends, the dividend yield was just 3.25%.
The other thing to point out is that my total income for 2016 (if there are no further dividend changes) is 0.25% higher than last year. This is because all dividend increases and decreases in dividends after January of the year will cause total income to change in the following year. I have never had a year when my total dividend income did not increase.
Bombardier Inc. (TSX-BBD.B, OTC-BDRBF)
This company is still going down. Demetris Afxentiou of Motley Fool gives a good breakdown of the problems facing this company. He says it is incredibly risky at present and he is probably right.
Some think that the company might do a reserve split. See an article by Allison Lampert of Reuters in the Financial Post. The company has already got funding from the Quebec Government. In this article by Josh Wingrove of Bloomberg News in the Financial Post he talks about the fact that Trudeau may want a change in the control structure of the company has the Bombardier family currently controls it through special shares. Apparently there is a G&M article about China wanting to buy at least some of the company. I do not have a subscription to the G&M and therefore cannot get the article.
Mullen Group (TSX-MTL, OTC:-MLLGF)
The drop in dividends in this stock was not unexpected. It is a company that services and oil and gas industry. There is a note about this in Canadian Business . They are being prudent.
TransAlta Corp (TSX-TA, NYSE-TAC)
Last month I noted that Matt Smith of Motley Fool suggests that they will cut the dividend.
On January 14, 2016 TransAlta Corp said that they are cutting the dividend. This dividend cut is almost 78%. The new dividend on an annualized basis represents a 15% to 20% payout of Comparable Free Cash Flow based on 2016 guidance and will provide TransAlta with incremental cash of approximately $150 million annually.
The dividend cut is disappointing, but it can hardly be a surprise. But some view this as a positive move. An article on Business Wire, said Fitch Ratings views TransAlta Corporation's (TransAlta) dividend reduction as a positive signal of management's commitment to deleveraging as the company faces unfavorable equity market conditions and energy price environment.
I have had this stock a long time. I have made a 5.57% total return on this stock since 1987. I have received a lot of dividends, but I also have a capital loss.
On my other blog I wrote yesterday about Exco Technologies Ltd. (TSX-XTC, OTC-EXCOF)...learn more. Tomorrow, I will write about Canadian National Railway (TSX-CNR, NYSE-CNI)... learn more.
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. Follow me on Twitter.
Dividend Changes in my Portfolio
In the last updated of the stocks that I followed, I had 3 stocks I own increased their dividends and two stocks I owned decrease their dividends.
The stock Canadian National Railway (TSX-CNR, NYSE-CNI) increased their dividend to $1.50 from 1.25 which is a 20% increase. This stock is 5.71% of my portfolio. Metro Inc. (TSX-MRU, OTC-MTRAF) increased their dividend to $0.56 from $0.4668 which is also a 20% increase. This stock is 5.84% of my portfolio. Richelieu Hardware Ltd. (TSX-RCH, OTC-RHUHF) increased their dividend from $0.64 from $0.60, which is a 6.7% increase. This stock is 1.59% of my portfolio.
Mullen Group (TSX-MTL, OTC-MLLGF) cut their dividend to $0.96 from $1.20 which is a 20% drop. This stock is 0.42% of my portfolio. TransAlta Corp (TSX-TA, NSYE-TAC) also cut their dividends to $0.16 from $0.72, a 77.8% drop. They had also decreased the dividend in 2014. This stock is 0.28% of my portfolio.
However, the net result to my income is interesting. My total income dropped 0.16%, basically a wash. This is because the big drop in dividends of TransAlta. Prior to the change TransAlta dividend yield was around 14.6%. After the drop in dividends, the dividend yield was just 3.25%.
The other thing to point out is that my total income for 2016 (if there are no further dividend changes) is 0.25% higher than last year. This is because all dividend increases and decreases in dividends after January of the year will cause total income to change in the following year. I have never had a year when my total dividend income did not increase.
Bombardier Inc. (TSX-BBD.B, OTC-BDRBF)
This company is still going down. Demetris Afxentiou of Motley Fool gives a good breakdown of the problems facing this company. He says it is incredibly risky at present and he is probably right.
Some think that the company might do a reserve split. See an article by Allison Lampert of Reuters in the Financial Post. The company has already got funding from the Quebec Government. In this article by Josh Wingrove of Bloomberg News in the Financial Post he talks about the fact that Trudeau may want a change in the control structure of the company has the Bombardier family currently controls it through special shares. Apparently there is a G&M article about China wanting to buy at least some of the company. I do not have a subscription to the G&M and therefore cannot get the article.
Mullen Group (TSX-MTL, OTC:-MLLGF)
The drop in dividends in this stock was not unexpected. It is a company that services and oil and gas industry. There is a note about this in Canadian Business . They are being prudent.
TransAlta Corp (TSX-TA, NYSE-TAC)
Last month I noted that Matt Smith of Motley Fool suggests that they will cut the dividend.
On January 14, 2016 TransAlta Corp said that they are cutting the dividend. This dividend cut is almost 78%. The new dividend on an annualized basis represents a 15% to 20% payout of Comparable Free Cash Flow based on 2016 guidance and will provide TransAlta with incremental cash of approximately $150 million annually.
The dividend cut is disappointing, but it can hardly be a surprise. But some view this as a positive move. An article on Business Wire, said Fitch Ratings views TransAlta Corporation's (TransAlta) dividend reduction as a positive signal of management's commitment to deleveraging as the company faces unfavorable equity market conditions and energy price environment.
I have had this stock a long time. I have made a 5.57% total return on this stock since 1987. I have received a lot of dividends, but I also have a capital loss.
On my other blog I wrote yesterday about Exco Technologies Ltd. (TSX-XTC, OTC-EXCOF)...learn more. Tomorrow, I will write about Canadian National Railway (TSX-CNR, NYSE-CNI)... learn more.
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. Follow me on Twitter.
Thursday, February 4, 2016
Something to Buy February 2016
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.
For other testing, like using P/E Ratios and Price/Graham Price Ratios, you use EPS estimates or from the last reported financial quarter. When using P/S Ratios, P/CF Ratios or P/BV Ratios you are using data from the last reported financial quarter.
However, no system is perfect. But if you are interested in buy 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 my spreadsheet here 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 18 stocks in the consumer discretionary category. Of these stocks, only Dorel Industries (TSX-DII.B) is showing as cheap by the historically high dividend yield. Seven (or 39%) are showing cheap by historical median dividend yield. They are Canadian Tire Corporation (TSX-CTC.A); Dorel Industries (TSX-DII.B), High Liner Foods (TSX-HLF); Leon's Furniture (TSX-LNF); Magna International Inc. (TSX-MG), Reitmans (Canada) Ltd. (TSX-RET.A) and Thomson Reuters Corp (TSX-TRI). Nothing has changed from last month.
I follow 10 Consumer Staples stocks. None are showing as cheap by the historically high dividend yield. Two stocks (or 20%) are showing cheap by historical median dividend yield. These are Jean Coutu Group Inc. (TSX-PJC.A) and Loblaw Companies (TSX-L). This is the same as for last month.
I only follow two Health Care stocks and both are US stocks. They are both cheap by the historical median dividend yield. The stocks are Johnson and Johnson (NYSE-JNJ) and Medtronic Inc. (NYSE-MDT). This is the same as for last month.
I follow 12 Real Estate stocks. Melcor Developments Inc. (TSX-MRD) is showing as cheap by the historically high dividend yield. Five stocks (or 42%) are showing cheap by historical median dividend yield. They are Artis REIT (TSX-AX.UN); FirstService Corp (TSX-FSV), Granite Real Estate (TSX-GRT.UN) H & R Real Estate Inv. Trust (TSX-HR.UN) and Melcor Developments Inc. (TSX-MRD). This is the same as for last month.
I follow 6 Bank stocks. None are showing as cheap by the historically high dividend yield. Five stocks (or .83%) are showing cheap by the historical median dividend yield. These stocks are Bank of Nova Scotia (TSX-BNS); Barclays PLC (NYSE-BCS), National Bank of Canada (TSX-NA); Royal Bank (TSX-RY) and Toronto Dominion Bank (TSX-TD). Barclays PLC (NYSE-BCS) is new to this list this month.
I follow 13 Financial Service stocks. One is showing as cheap by the historically high dividend yield and that is Home Capital Group (TSX-HCG). Nine (or 69%) stocks are showing cheap by the historical median dividend yield. These stocks are AGF Management Ltd (TSX-AGF.B); CI Financial (TSX-CIX); DirectCash Payments Inc. (TSX-DCI); Equitable Group Inc. (TSX-EQB), Gluskin Sheff + Associates Inc. (TSX-GS); Home Capital Group (TSX-HCG); IGM Financial (TSX-IGM); Power Corp (TSX-POW) and TMX Group Ltd. (TSX-X). This is the same as for last month. I recently bought some GS stock.
I follow 5 Insurance stocks. None are showing as cheap by the historically high dividend yield. Four stocks (or 80%) are showing cheap by historical median dividend yield. These stocks are Great-West Lifeco Inc. (TSX-GWO); Manulife Financial Corp (TSX-MFC); Power Financial Corp (TSX-PWF) and Sun Life Financial (TSX-SLF). There is no change from last month. I recently bought some Manulife stock.
I follow 34 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. One is cheap by the historically high dividend yield. That stock is SNC-Lavalin (TSX-SNC). Three stocks or 50% are showing as cheap by historical median dividend yield. They are Bird Construction Inc. (TSX-BTD), SNC-Lavalin (TSX-SNC) and Toromont Industries Ltd. (TSX-TIH).
I have 6 stocks I have left with the sub-index of Industrial. One is cheap by the historically high dividend yield. That stock is Finning International Inc. (TSX-FTT). Three stocks or 50% are showing as cheap by historical median dividend yield. They are Finning International Inc. (TSX-FTT), Methanex Corp. (TSX-MX), and Russel Metals (TSX-RUS).
I have 9 Manufacturing stocks. One is cheap by the historically high dividend yield. That stock is Hammond Power Solutions Inc. (TSX-HPS.A). Two stocks or 22% are showing as cheap by historical median dividend yield. They are Ag Growth International (TSX-AFN) and Hammond Power Solutions Inc. (TSX-HPS.A).
I have 15 Services stocks. None are showing as cheap by the historically high dividend yield. Six stocks or 40% are showing as cheap by historical median dividend yield. These stocks are Canadian National Railway (TSX-CNR); HNZ Group Inc. (TSX-HNZ.A); Mullen Group (TSX-MTL); Pason Systems Inc. (TSX-PSI); Pulse Seismic Inc. (TSX-PSD) and Transcontinental Inc. (TSX-TCL.A).
I follow 10 Energy stocks. Five Stocks or (50%) are showing as cheap by the historical high dividend yield. They are Canadian Natural Resources (TSX-CNQ); Encana Corp. (TSX-ECA), Ensign Energy Services (TSX-ESI); Husky Energy (TSX-HSE) and Suncor Energy (TSX-SU). There are six stocks (or 60%) showing cheap by historical median dividend yield. They are the five above and Cenovus Energy Inc. (TSX-CVE). This has not changed from last month.
I follow 2 Material stocks. None are showing as cheap by the historically high dividend yield. One is cheap by historical median dividend yield and that is Teck Resources Ltd. (TSX-TCK.B). This has not changed from last month.
I follow 8 Tech stocks. None are showing as cheap by historical median dividend yield. Four stocks (or 50%) are showing cheap by historical median dividend yield. They are Absolute Software Corporation (TSX-ABT); Calian Technologies Ltd (TSX-CTY), Computer Modelling Group Ltd. (TSX-CMG) and Evertz Technologies (TSX-ET). There is no change from last month.
I follow 8 of the infrastructure type utility companies. None are showing as cheap by historical high dividend yield. Three stocks (or 38%) are showing cheap by historical median dividend yield. They are AltaGas Ltd (TSX-ALA); Enbridge Inc. (TSX- ENB) and Veresen Inc. (TSX-VSN). TransCanada Corp (TSX-TRP) was deleted from this list.
I follow 12 of the power type utility companies. None are showing as cheap by the historically high dividend yield. Only one stock (or 8%) is showing cheap by historical median dividend yield. That stock is ATCO Ltd (TSX-ACO.X).
I follow 5 of the Telecom Service type utility companies. One stock is showing cheap by the historical high dividend yield and that is Shaw Communications Inc. (TSX-SJR.B). Four stocks (or 80%) are showing cheap by historical median dividend yield. These stocks are BCE (TSX-BCE); Shaw Communications Inc. (TSX-SJR.B); Telus Corp. (TSX-T) and WiLan Inc. (TSX-WIN). This has not changed from last month.
On my other blog I wrote yesterday about Shaw Communications Inc. (TSX-SJR, NYSE-SJR)... learn more. Tomorrow, I will write about AGF Management Ltd. (TSX-AGF, OTC-AGFMF)... learn more.
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. Follow me on Twitter.
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.
For other testing, like using P/E Ratios and Price/Graham Price Ratios, you use EPS estimates or from the last reported financial quarter. When using P/S Ratios, P/CF Ratios or P/BV Ratios you are using data from the last reported financial quarter.
However, no system is perfect. But if you are interested in buy 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 my spreadsheet here 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 18 stocks in the consumer discretionary category. Of these stocks, only Dorel Industries (TSX-DII.B) is showing as cheap by the historically high dividend yield. Seven (or 39%) are showing cheap by historical median dividend yield. They are Canadian Tire Corporation (TSX-CTC.A); Dorel Industries (TSX-DII.B), High Liner Foods (TSX-HLF); Leon's Furniture (TSX-LNF); Magna International Inc. (TSX-MG), Reitmans (Canada) Ltd. (TSX-RET.A) and Thomson Reuters Corp (TSX-TRI). Nothing has changed from last month.
I follow 10 Consumer Staples stocks. None are showing as cheap by the historically high dividend yield. Two stocks (or 20%) are showing cheap by historical median dividend yield. These are Jean Coutu Group Inc. (TSX-PJC.A) and Loblaw Companies (TSX-L). This is the same as for last month.
I only follow two Health Care stocks and both are US stocks. They are both cheap by the historical median dividend yield. The stocks are Johnson and Johnson (NYSE-JNJ) and Medtronic Inc. (NYSE-MDT). This is the same as for last month.
I follow 12 Real Estate stocks. Melcor Developments Inc. (TSX-MRD) is showing as cheap by the historically high dividend yield. Five stocks (or 42%) are showing cheap by historical median dividend yield. They are Artis REIT (TSX-AX.UN); FirstService Corp (TSX-FSV), Granite Real Estate (TSX-GRT.UN) H & R Real Estate Inv. Trust (TSX-HR.UN) and Melcor Developments Inc. (TSX-MRD). This is the same as for last month.
I follow 6 Bank stocks. None are showing as cheap by the historically high dividend yield. Five stocks (or .83%) are showing cheap by the historical median dividend yield. These stocks are Bank of Nova Scotia (TSX-BNS); Barclays PLC (NYSE-BCS), National Bank of Canada (TSX-NA); Royal Bank (TSX-RY) and Toronto Dominion Bank (TSX-TD). Barclays PLC (NYSE-BCS) is new to this list this month.
I follow 13 Financial Service stocks. One is showing as cheap by the historically high dividend yield and that is Home Capital Group (TSX-HCG). Nine (or 69%) stocks are showing cheap by the historical median dividend yield. These stocks are AGF Management Ltd (TSX-AGF.B); CI Financial (TSX-CIX); DirectCash Payments Inc. (TSX-DCI); Equitable Group Inc. (TSX-EQB), Gluskin Sheff + Associates Inc. (TSX-GS); Home Capital Group (TSX-HCG); IGM Financial (TSX-IGM); Power Corp (TSX-POW) and TMX Group Ltd. (TSX-X). This is the same as for last month. I recently bought some GS stock.
I follow 5 Insurance stocks. None are showing as cheap by the historically high dividend yield. Four stocks (or 80%) are showing cheap by historical median dividend yield. These stocks are Great-West Lifeco Inc. (TSX-GWO); Manulife Financial Corp (TSX-MFC); Power Financial Corp (TSX-PWF) and Sun Life Financial (TSX-SLF). There is no change from last month. I recently bought some Manulife stock.
I follow 34 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. One is cheap by the historically high dividend yield. That stock is SNC-Lavalin (TSX-SNC). Three stocks or 50% are showing as cheap by historical median dividend yield. They are Bird Construction Inc. (TSX-BTD), SNC-Lavalin (TSX-SNC) and Toromont Industries Ltd. (TSX-TIH).
I have 6 stocks I have left with the sub-index of Industrial. One is cheap by the historically high dividend yield. That stock is Finning International Inc. (TSX-FTT). Three stocks or 50% are showing as cheap by historical median dividend yield. They are Finning International Inc. (TSX-FTT), Methanex Corp. (TSX-MX), and Russel Metals (TSX-RUS).
I have 9 Manufacturing stocks. One is cheap by the historically high dividend yield. That stock is Hammond Power Solutions Inc. (TSX-HPS.A). Two stocks or 22% are showing as cheap by historical median dividend yield. They are Ag Growth International (TSX-AFN) and Hammond Power Solutions Inc. (TSX-HPS.A).
I have 15 Services stocks. None are showing as cheap by the historically high dividend yield. Six stocks or 40% are showing as cheap by historical median dividend yield. These stocks are Canadian National Railway (TSX-CNR); HNZ Group Inc. (TSX-HNZ.A); Mullen Group (TSX-MTL); Pason Systems Inc. (TSX-PSI); Pulse Seismic Inc. (TSX-PSD) and Transcontinental Inc. (TSX-TCL.A).
I follow 10 Energy stocks. Five Stocks or (50%) are showing as cheap by the historical high dividend yield. They are Canadian Natural Resources (TSX-CNQ); Encana Corp. (TSX-ECA), Ensign Energy Services (TSX-ESI); Husky Energy (TSX-HSE) and Suncor Energy (TSX-SU). There are six stocks (or 60%) showing cheap by historical median dividend yield. They are the five above and Cenovus Energy Inc. (TSX-CVE). This has not changed from last month.
I follow 2 Material stocks. None are showing as cheap by the historically high dividend yield. One is cheap by historical median dividend yield and that is Teck Resources Ltd. (TSX-TCK.B). This has not changed from last month.
I follow 8 Tech stocks. None are showing as cheap by historical median dividend yield. Four stocks (or 50%) are showing cheap by historical median dividend yield. They are Absolute Software Corporation (TSX-ABT); Calian Technologies Ltd (TSX-CTY), Computer Modelling Group Ltd. (TSX-CMG) and Evertz Technologies (TSX-ET). There is no change from last month.
I follow 8 of the infrastructure type utility companies. None are showing as cheap by historical high dividend yield. Three stocks (or 38%) are showing cheap by historical median dividend yield. They are AltaGas Ltd (TSX-ALA); Enbridge Inc. (TSX- ENB) and Veresen Inc. (TSX-VSN). TransCanada Corp (TSX-TRP) was deleted from this list.
I follow 12 of the power type utility companies. None are showing as cheap by the historically high dividend yield. Only one stock (or 8%) is showing cheap by historical median dividend yield. That stock is ATCO Ltd (TSX-ACO.X).
I follow 5 of the Telecom Service type utility companies. One stock is showing cheap by the historical high dividend yield and that is Shaw Communications Inc. (TSX-SJR.B). Four stocks (or 80%) are showing cheap by historical median dividend yield. These stocks are BCE (TSX-BCE); Shaw Communications Inc. (TSX-SJR.B); Telus Corp. (TSX-T) and WiLan Inc. (TSX-WIN). This has not changed from last month.
On my other blog I wrote yesterday about Shaw Communications Inc. (TSX-SJR, NYSE-SJR)... learn more. Tomorrow, I will write about AGF Management Ltd. (TSX-AGF, OTC-AGFMF)... learn more.
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. Follow me on Twitter.
Tuesday, February 2, 2016
Dividend Stocks February 2016
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 2016.
On this list,
If you had one share of each stock, total dividends last month would be $146.54. This month dividends would be $146.30. Of the stock that I follow 5 stocks has raised their dividends since last month. Dividends raises are denoted in green. Those stocks are shown below.
ATCO Ltd. (ACO.X, OTC-ACLLF)
Canadian National Railway (TSX-CNR, NYSE-CNI)
Canadian Utilities Ltd. (TSX-CU, OTC-CDUAF)
Metro Inc. (TSX-MRU, OTC-MTRAF)
Richelieu Hardware Ltd. (TSX-RCH, OTC-RHUHF)
Of the stocks that I follow 2 companies have decreased their dividends. I have denoted these dividends in red. The stocks are shown below.
Mullen Group (TSX-MTL, OTC-MLLGF)
TransAlta Corp. (TSX-TA, NSYE-TAC)
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.
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 Valener Inc. (TSX-VNR, OTC-VNRCF)... learn more. Tomorrow, I will write about Shaw Communications Inc. (TSX-SJR, NYSE-SJR)... learn more.
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. Follow me on Twitter.
- I have 12 stocks with a dividend yield higher than the historical high dividend yield,
- I have 49 stocks with a dividend yield higher than the historical average dividend yield
- I have 67 stocks with a dividend yield higher than the historical median dividend yield and
- 73 stocks with a dividend yield higher than the 5 year average dividend yield.
- I have 11 stocks with a dividend yield higher than the historical high dividend yield,
- I have 52 stocks with a dividend yield higher than the historical average dividend yield
- I have 69 stocks with a dividend yield higher than the historical median dividend yield and
- 69 stocks with a dividend yield higher than the 5 year average dividend yield.
- 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 $146.54. This month dividends would be $146.30. Of the stock that I follow 5 stocks has raised their dividends since last month. Dividends raises are denoted in green. Those stocks are shown below.
ATCO Ltd. (ACO.X, OTC-ACLLF)
Canadian National Railway (TSX-CNR, NYSE-CNI)
Canadian Utilities Ltd. (TSX-CU, OTC-CDUAF)
Metro Inc. (TSX-MRU, OTC-MTRAF)
Richelieu Hardware Ltd. (TSX-RCH, OTC-RHUHF)
Of the stocks that I follow 2 companies have decreased their dividends. I have denoted these dividends in red. The stocks are shown below.
Mullen Group (TSX-MTL, OTC-MLLGF)
TransAlta Corp. (TSX-TA, NSYE-TAC)
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.
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 Valener Inc. (TSX-VNR, OTC-VNRCF)... learn more. Tomorrow, I will write about Shaw Communications Inc. (TSX-SJR, NYSE-SJR)... learn more.
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. Follow me on Twitter.
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