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 March 2016. On this list,
- I have 9 stocks with a dividend yield higher than the historical high dividend yield,
- I have 45 stocks with a dividend yield higher than the historical average dividend yield
- I have 68 stocks with a dividend yield higher than the historical median dividend yield and
- 65 stocks with a dividend yield higher than the 5 year average dividend yield.
- 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 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.
Bank of Nova Scotia (TSX-BNS, NYSE-BNS)
BCE (TSX-BCE, NYSE-BCE)
Brookfield Asset Management (TSX-BAM.A, NYSE-BAM)
CCL Industries (TSX-CCL.B, OTC-CCDBF)
Exco Technologies Ltd. (TSX-XTC, OTC-EXCOF)
FirstService Corp. (TSX-FSV, NASDAQ-FSV)
Great-West Lifeco Inc. (TSX-GWO, OTC-GWLIF)
Home Capital Group (TSX-HCG, OTC-HMCBF)
Innergex Renewable Energy (TSX-INE, OTC-INGXF)
Intact Financial Corp. (TSX-IFC, OTC-IFCZF)
Magna International Inc. (TSX-MG, NYSE-MGA)
Manulife Financial Corp (TSX-MFC, NYSE-MFC)
Royal Bank (TSX-RY, NYSE-RY)
Stantec Inc. (TSX-STN, NYSE-STN)
Thomson Reuters Corp (TSX-TRI, NYSE-TRI)
Toromont Industries Ltd. (TSX-TIH, OTC-TMTNF)
Toronto Dominion Bank (TSX-TD, NYSE-TD)
TransCanada Corp (TSX-TRP, NYSE-TRP)
For Colliers International Group Inc. (TSX-CIG, NASDAQ-CIGI) both TD Bank's WebBroker and G&M Investor site says that the dividend on this stock is now $0.22 USD. However, I cannot find anything from Colliers to support this. The most recent news I find is the decrease in dividends to $0.08 USD. The company has said that they will in the future be able to give good dividend increases.
I have kept the dividend at $0.08 USD as I have found in the past that sometimes these sites can be wrong for various reasons. Other sites are quoting a yield of 0.02%, which implies a dividend of $0.08 USD. I have denoted this dividend in light purple.
I am also unsure of what the dividends will be for Barclays PLC (LSE-BARC, NYSE-BCS). They are changing the dividends back to semi-annual from quarterly. They have always had one large dividends usually paid at the beginning of the year and the others were much smaller. The large dividend at the beginning of the year was declared at the end of the previous year and reflected how well the bank did for that year.
If they again pay a smaller dividend at the end of the year then the dividends would be decreased. However, I do not know what they are going to do. On the other hand, the bank says that they expect to pay out a significant proportion of earnings in dividends to shareholders in the longer term.
Of the stocks I follow Richelieu Hardware Ltd. (TSX-RCH, OTC-RHUHF) have split their shares 3 for 1.
Of the stocks that I follow 3 companies have decreased their dividends. I have denoted these dividends in red. The stocks are shown below.
ARC Resources Ltd. (TSX-ARX, OTC-AETUF)
Cenovus Energy Inc. (TSX-CVE, NYSE-CVE)
Encana Corp. (TSX- ECA, OTC-ECA)
Of the stocks that I follow 2 companies have suspended their dividends. I have denoted these dividends in red. The stocks are shown below.
Penn West Petroleum (TSX-PWT, NYSE-PWE)
Pulse Seismic Inc. (TSX-PSD, OTC-PLSDF)
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 Allied Properties Real Estate Investment Trust (TSX-AP.UN, OTC-APYRF)... learn more. Tomorrow, I will write about will be RioCan Real Estate (TSX-REI.UN, OTC- RIOCF)... learn more on Wednesday, March 9, 2016 around 5 pm.
Also, on my book blog I have put a review of the book 100 Million Years of Food by Stephen Le, 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.
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