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.
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