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. Eight (or 44%) 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), Newfoundland Capital Corp (TSX-NCC.A), Reitmans (Canada) Ltd. (TSX-RET.A) and Thomson Reuters Corp (TSX-TRI).
I follow 10 Consumer Staples stocks. Of these stocks, only Empire Company Ltd. (TSX-EMP.A, OTC-EMLAF) is showing as cheap by the historically high dividend yield. This is a new addition to the stocks I cover. Three stocks (or 30%) are showing cheap by historical median dividend yield. These are Empire Company Ltd. (TSX-EMP.A, OTC-EMLAF), Jean Coutu Group Inc. (TSX-PJC.A) and Loblaw Companies (TSX-L). Jean Coutu and Loblaws are the same as last month and Empire is a new addition to the stocks I cover.
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. No stock is showing as cheap by the historically high dividend yield. Four stocks (or 33%) 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) and Melcor Developments Inc. (TSX-MRD). Melcor Developments Inc. (TSX-MRD) was showing as cheap by historically high dividend yield last month, but they have cut their dividend. H & R Real Estate Inv. Trust (TSX-HR.UN) is not longer cheap by historical median dividend yield.
I follow 7 Bank stocks. None are showing as cheap by the historically high dividend yield. Six stocks (or 86%) are showing cheap by the historical median dividend yield. These stocks are Bank of Nova Scotia (TSX-BNS); Barclays PLC (NYSE-BCS), Home Capital Group (TSX-HCG, OTC-HMCBF), National Bank of Canada (TSX-NA); Royal Bank (TSX-RY) and Toronto Dominion Bank (TSX-TD).
I follow 12 Financial Service stocks. None are showing as cheap by the historically high dividend yield. Eight (or 67%) 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); IGM Financial (TSX-IGM); Power Corp (TSX-POW) and TMX Group Ltd. (TSX-X). This is the same as for last month.
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 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. None are cheap by the historically high dividend yield. Four stocks or 67% are showing as cheap by historical median dividend yield. They are Bird Construction Inc. (TSX-BTD), SNC-Lavalin (TSX-SNC), Stantec Inc. (TSX-STN, NYSE-STN) and Toromont Industries Ltd. (TSX-TIH). Last month Stantec Inc. was also showing as cheap by historically high dividend yield.
I have 6 stocks I have left with the sub-index of Industrial. None are cheap by the historically high dividend yield. 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). Last month Finning International Inc. was also showing as cheap by the historically high dividend yield.
I have 9 Manufacturing stocks. One is cheap by the historically high dividend yield. That stock is Hammond Power Solutions Inc. (TSX-HPS.A). One stock or 11% are showing as cheap by historical median dividend yield. It is Hammond Power Solutions Inc. (TSX-HPS.A). Ag Growth International (TSX-AFN) was showing as cheap by historical median dividend yield last month.
I have 15 Services stocks. One is showing as cheap by the historically high dividend yield. That stock is Pason Systems Inc. (TSX-PSI). Four stocks or 27% are showing as cheap by historical median dividend yield. These stocks are Canadian National Railway (TSX-CNR); Mullen Group (TSX-MTL); Pason Systems Inc. (TSX-PSI, OTC-PSYTF) and Transcontinental Inc. (TSX-TCL.A). HNZ Group Inc. (TSX-HNZ.A) is no longer showing as cheap by historical median dividend yield, but Pason Systems Inc. (TSX-PSI, OTC-PSYTF) is.
I follow 10 Energy stocks. Three Stocks or (33%) are showing as cheap by the historical high dividend yield. They are Canadian Natural Resources (TSX-CNQ); Ensign Energy Services (TSX-ESI); and Suncor Energy (TSX-SU). There are three stocks (or 33%) showing cheap by historical median dividend yield. They are the three above. Husky Energy (TSX-HSE) is no longer cheap as it cut its dividends. In the future I will only be covering 9 energy stocks as Canadian Oil Sands Ltd (TSX-COS, OTC-COSWF) has been bought by Suncor.
I follow 3 Material stocks. None are showing as cheap by the historically high dividend yield. None are cheap by historical median dividend yield. 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. Four stocks (or 50%) are showing cheap by historical median dividend yield. They are AltaGas Ltd (TSX-ALA, OTC-ATGFF); Enbridge Inc. (TSX-ENB, NYSE-ENB), TransCanada Corp (TSX-TRP, NYSE-TRP) and Veresen Inc. (TSX-VSN, OTC-FCGYF). There is no change from last month.
I follow 12 of the Power type utility companies. None are showing as cheap by the historically high dividend yield. Two stocks (or 17%) are showing cheap by historical median dividend yield. They are ATCO Ltd (TSX-ACO.X, OTC-ACLLF), and Fortis Inc. (TSX-FTS, OTC-FRTSF). Canadian Utilities Ltd (TSX-CU, OTC-CDUAF) has been deleted from this list.
I follow 5 of the Telecom Service type utility companies. No stock is showing cheap by the historical high dividend yield. Last month Shaw Communications Inc. (TSX-SJR.B, NYSE-SJR) was showing as cheap by the historical high dividend yield. Three stocks (or 60%) are showing cheap by historical median dividend yield. These stocks are Shaw Communications Inc. (TSX-SJR.B, NYSE-SJR); Telus Corp. (TSX-T, NYSE-TU) and WiLan Inc. (TSX-WIN, NASDAQ-WILN). BCE (TSX-BCE) was showing as cheap historical median dividend yield last month.
The last stock I wrote about was Russel Metals Inc. (TSX-RUS, OTC-RUSMF)... learn more . The next stock I will write about will be Barrick Gold Corp. (TSX-ABX, NYSE-ABX)... learn more on Friday, April 15, 2016 around 5 pm.
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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