This is the third part of a discussion on Dividend Growth Stocks. In August of this year I discussed first of all why you would want to buy Dividend Growth Stocks and then in Part 2 about Dividend Growth Stocks changing over time.
Today, I want to talk about dividend yields and dividend growth. I consider dividend yields in the 1% range and lower to be low yields, in the 2% to 3% ranges to be moderate yields and in the 4% to 5% ranges to be good. Be very careful of any yields above the 5% range as when yields are higher than 5% it often denotes a company in difficulties.
For dividend growth I think that growth per year up to the 7% range to be low, growth in the 8% to 15% range to be moderate and over 15% to be good. There is often a tradeoff between growth and yield. Generally speaking there is a stock with low yield would have a high growth rate and one with a good dividend yield would have a low growth rate.
For example Canadian National Railway (TSX-CNR, NYSE-CNI) has a yield of around 1.61% and the 5 and 10 year growth rates are 21.7% and 20.5% per year. REITs are generally good examples of high yields and low growth. For example Canadian Real Estate (TSX-REF.UN, OTC-CRXIF) has a yield around 4.02% and dividend growth of 5.0% and 3.5% per year over the past 5 and 10 years.
Banks tend to be in the middle with the Toronto Dominion Bank (TSX-TD, NYSE-TD) have a current yield of around 3.28% with growth over the past 5 and 10 years at 10.6% and 9.3% per year. Their yields tend to be moderate as do their growth.
Of course there are lots of exceptions to this. If you look at Loblaw Companies (TSX-L, OTC-LBLCF) and prior to 2004, it had low dividends (1% range) and high dividend increases (25% range). Today day their dividend is low still in the 1% range) but the dividend increases for the part 5 and 10 year is at 4.2% and 2.1% per year.
From 2006 and 2011 inclusive Loblaw kept the dividend level and in 2012 started to increase them again, but at a very low rate. The company put in a new supply chain computer system and it was more costly and took longer than expected. This tended to suppress profits for a number of years.
Some companies have dividends that they never seem to increase. If they have a low dividend yield and no increases, you can hardly call them dividend companies.
If you are young I think it is better to buy more stock with low dividend yields and high dividend growth rates. This is because you have to pay tax on any dividends received. The lower your dividend income the lower will be your taxes. When you start to live off your dividends, you will want to switch to more stocks with higher yields and lower growth.
I am currently living off my dividends and I have a mix of dividend yields and dividend growth. Also, you will find that companies over time have different yields and different growth rates.
On my other blog I wrote yesterday about Crescent Point Energy Corp. (TSX-CPG, NYSE-CPG)... learn more. Tomorrow, I will write about Finning International Inc. (TSX-FTT, OTC-FINGF)... learn more on Friday, December 1, 2017 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. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
Thursday, November 30, 2017
Tuesday, November 28, 2017
Trusted an Advisor
This is a story of a women who trusted her advisor and had problems. The problem I see is that she did not seem to have even glanced at her statements until it was too late.
If you have an advisor, you do have the responsibility of oversight. Why would you expect someone else to take care of your money if you show no interest in it? No matter how little or great your knowledge is of investments, if someone else is handling yours, you should ask questions. You should look at your statements. This is an absolute minimum.
Has anyone learned from the story of Madoff? Note that he only took money from people who did not question him. He also promised consistent returns every year. This alone should have set off alarm bells. No one has consistent returns when investing. It is not possible. There is an Wikipedia entry on Bernard Madoff
Because Madoff had a Ponzi scheme, anyone that he gave more back to as "profit" has to return that money. That is because Madoff never invested any money, but just gave new money that came in to people who took out their money and their "profits". That must have been a shock to those who thought that they actually earned some money investing with Madoff. All investor lost.
Just remember that no one cares about your money as much as you do. If you do not care about it, do not expect anyone else to.
On my other blog I wrote yesterday about Innergex Renewable Energy (TSX-INE, OTC-INGXF)... learn more. Next, I will write about Crescent Point Energy Corp. (TSX-CPG, NYSE-CPG)... learn more on Wednesday, November 29, 2017 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. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
If you have an advisor, you do have the responsibility of oversight. Why would you expect someone else to take care of your money if you show no interest in it? No matter how little or great your knowledge is of investments, if someone else is handling yours, you should ask questions. You should look at your statements. This is an absolute minimum.
Has anyone learned from the story of Madoff? Note that he only took money from people who did not question him. He also promised consistent returns every year. This alone should have set off alarm bells. No one has consistent returns when investing. It is not possible. There is an Wikipedia entry on Bernard Madoff
Because Madoff had a Ponzi scheme, anyone that he gave more back to as "profit" has to return that money. That is because Madoff never invested any money, but just gave new money that came in to people who took out their money and their "profits". That must have been a shock to those who thought that they actually earned some money investing with Madoff. All investor lost.
Just remember that no one cares about your money as much as you do. If you do not care about it, do not expect anyone else to.
On my other blog I wrote yesterday about Innergex Renewable Energy (TSX-INE, OTC-INGXF)... learn more. Next, I will write about Crescent Point Energy Corp. (TSX-CPG, NYSE-CPG)... learn more on Wednesday, November 29, 2017 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. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
Thursday, November 23, 2017
Being an Investor
It is not difficult to be an investor. You do not have to be perfect. Generally you need to picks a few good stocks. However, everyone makes mistakes and they will not be deadly to your portfolio. If you pick a loser or two it will not affect your long term gain if pick some mediocre stocks and a few winners.
This is assuming you are a conservative investor. The people that lose money on the stock market are the ones going after risky stocks or the next big thing. The people that lose money act on the latest hot stock tip they have heard.
Look at the Dividend Achievers Index stocks on the TSX for good picks. Also, most large Canadian Mutual Funds have the same stocks for their 10 largest investments. These are very good places to get generally good solid companies to invest in. The exception I would make is concerning resource companies. They can be on both these lists but tend to be riskier than other stocks and I would not suggest owning them.
An easy way to tell if a stock is too risky is to look at the Beta Ratio. This should be around 1.00 or below 1.00. Certainly, if it is at 1.25 and above it is probably too risky.
And remember, there are money studies that show the more often a retail investor trades, the worse are their results. This would mean that buy and hold is the order of the day. You are going to buy some dogs when buying a stock portfolio. However, that in no way will stop you from overall doing just fine.
On my other blog I wrote yesterday about IBI Group Inc. (TSX-IBG, OTC-IBIBF)... learn more. Next, I will write about PFB Corp. (TSX-PFB, OTC-PFBOF)... learn more on Friday, November 24, 2017 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. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
This is assuming you are a conservative investor. The people that lose money on the stock market are the ones going after risky stocks or the next big thing. The people that lose money act on the latest hot stock tip they have heard.
Look at the Dividend Achievers Index stocks on the TSX for good picks. Also, most large Canadian Mutual Funds have the same stocks for their 10 largest investments. These are very good places to get generally good solid companies to invest in. The exception I would make is concerning resource companies. They can be on both these lists but tend to be riskier than other stocks and I would not suggest owning them.
An easy way to tell if a stock is too risky is to look at the Beta Ratio. This should be around 1.00 or below 1.00. Certainly, if it is at 1.25 and above it is probably too risky.
And remember, there are money studies that show the more often a retail investor trades, the worse are their results. This would mean that buy and hold is the order of the day. You are going to buy some dogs when buying a stock portfolio. However, that in no way will stop you from overall doing just fine.
On my other blog I wrote yesterday about IBI Group Inc. (TSX-IBG, OTC-IBIBF)... learn more. Next, I will write about PFB Corp. (TSX-PFB, OTC-PFBOF)... learn more on Friday, November 24, 2017 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. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
Tuesday, November 21, 2017
Hillsdale Investment Management
Last month my investment club held a meeting with Hillsdale Investment Management. We were treated to a very nice lunch at Ki Restaurant at Bay and Wellington.
Particular attention was paid to their Canadian Micro Cap Equity Fund. At that time the Hillsdale Canadian Micro Cap was up 10% in 2017, after all fees and expenses. This is 9% outperformance against the benchmark TSX Small Cap Total Return Index, which is up by only 1%.
I think that the thing is in an ETF world, an active fund manager could be a better choice. There is nothing wrong with passive investing. However, we may have problems if everyone is doing it. This may not show up until the next bear market. The thing with EFTs is that they buy everything. They buy the good, the bad and the indifferent. I would hope that an actively managed fund would avoid most of worst stocks and therefore do better.
Hillsdale uses computer algorithms (AI) to initially pick out stocks for investments. A human makes the final decision on what stocks to actually invest in. Computers are very fast but very dumb. They can crunch an incredible amount of data in a very short time. But, they are never going to have an "aha moment". When they get something wrong they get it very wrong. For example, an insurance policy should pay out $10M and the computer says $0.40. There is a problem with an algorithm.
On my other blog I wrote yesterday about Johnson and Johnson (NYSE-JNJ)... learn more. Next, I will write about IBI Group Inc. (TSX-IBG, OTC-IBIBF)... learn more on Wednesday, November 22, 2017 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. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
Particular attention was paid to their Canadian Micro Cap Equity Fund. At that time the Hillsdale Canadian Micro Cap was up 10% in 2017, after all fees and expenses. This is 9% outperformance against the benchmark TSX Small Cap Total Return Index, which is up by only 1%.
I think that the thing is in an ETF world, an active fund manager could be a better choice. There is nothing wrong with passive investing. However, we may have problems if everyone is doing it. This may not show up until the next bear market. The thing with EFTs is that they buy everything. They buy the good, the bad and the indifferent. I would hope that an actively managed fund would avoid most of worst stocks and therefore do better.
Hillsdale uses computer algorithms (AI) to initially pick out stocks for investments. A human makes the final decision on what stocks to actually invest in. Computers are very fast but very dumb. They can crunch an incredible amount of data in a very short time. But, they are never going to have an "aha moment". When they get something wrong they get it very wrong. For example, an insurance policy should pay out $10M and the computer says $0.40. There is a problem with an algorithm.
On my other blog I wrote yesterday about Johnson and Johnson (NYSE-JNJ)... learn more. Next, I will write about IBI Group Inc. (TSX-IBG, OTC-IBIBF)... learn more on Wednesday, November 22, 2017 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. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
Thursday, November 16, 2017
Money Show 2017 - Gordon Pape
Gordon Pape spoke in a Saturday afternoon session for on "Choosing Market Winners". Gordon Pape is the Editor and Publisher of The Income Investor and the Internet Wealth Builder. Their site is www.buildingweath.ca.
Basic concern is why am I buying this stock? The Main purpose is what do you want to gain? You should define your objective. It is capital gain, dividend income, a combination or for some other reason.
For capital gains eliminate certain classes that are not the cash flow type, like Utilities, Telecoms and REITs. You should look at up and coming companies that are providing goods and services that people want to buy. It is risky to buy IPOs. He looks for established companies with strong growth rates.
An example is NVIDIA Corporation (NASDAQ-NVDA). It has had a strong growth of 64% in last 3 months (May to September of 2017). Momentum and growth is a better indicator than P/E. Dividend is at 0.3%. It is into gaming and number one in the world entertainment. They have 200M games. They are a leader in AI. They invested GPU. They are investing in trucks with 5 in a row with one driver. There is an 85% reduction in misdiagnosis with AI. They are worth $170 now, but this is just the beginning.
Another example is Ottawa's Shopify (TSX-SHOP, NYSE-SHOP). They have grown at 380% in 1.5 years. They are at $132.30 (September 2017). You were lucky if you go in early. US investors have not yet got into it. It has a preorder platform for small and medium size companies to manage sales. They have 500,000 merchants using its platform with $40B in sales. They also have some big name clients like G.E.
They have had a 75% increase in revenue in the second quarter of 2017 (US$). There was a 64% jump in recurring revenue. They are reinvesting into the company. They have yet to make a profit but are getting closer. They have grown revenue by 65% between 2016 and 2017. The stock will go higher, but there will be pull backs.
If you have cash flow or income as your objective, you should look at dividend growth companies. A company would be Brookfield Infrastructure Partners LP (TSX-BIP.UN). This stock also trades in New York. It is a Bermuda based company that does infrastructure around the world. (This is like what the CPP is doing.) It has stable revenue. 90% is contractual or government. Revenue in September 2010 was 12.6M and in September 2017 53.78M. They had 325% capital gain which is an extra benefit. There was a 3 to 2 split.
It trades at a discount sometime during the year. It pays out 60 to70% of its earnings in Dividends. The annual increase is 13 to 14%. The main risk is a global recession. Most of the revenue is controlled by government or a contract.
Another example is TransCanada (TSX-TRP). The price went from $25.25 in 2003 to $62.94 in September 2017. That is a 150% gain, and it is not a lot over the period of time. It is well diversified into alternative energy. They have increased the dividend each year since 2000. The target is 8T to10% growth in dividend each year. Trump has approved Keystone and they have purchases a Columbia pipeline.
So to reiterate, if you want capital gains you should look for a company with consumer demand (that is producing a product or service that people want to buy), a good growth rate, that has future prospects (and they are reinvesting in the firm), a company with sound management and profitable acquisitions. You should read about the management and personnel information. If your capital gains stock doubles, then sell half so that you are not playing with your own money. Do this especially if you are not sure about a company.
If you are an income investor you should look for bottom line profits, dividend history, good management, sound balance sheet and a future dividend policy. See if the company has announced a dividend policy. Some companies do this. Brookfield pays out over 100% of EPS as payout is based on cash flow. See what a company's payout rates are based on. Brookfield is still a buy.
On my other blog I wrote yesterday about Keyera Corp. (TSX-KEY, OTC-KEYUF)... learn more. Next, I will write about Cenovus Energy Inc. (TSX-CVE, NYSE-CVE)... learn more on Friday, November 17, 2017 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. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
Basic concern is why am I buying this stock? The Main purpose is what do you want to gain? You should define your objective. It is capital gain, dividend income, a combination or for some other reason.
For capital gains eliminate certain classes that are not the cash flow type, like Utilities, Telecoms and REITs. You should look at up and coming companies that are providing goods and services that people want to buy. It is risky to buy IPOs. He looks for established companies with strong growth rates.
An example is NVIDIA Corporation (NASDAQ-NVDA). It has had a strong growth of 64% in last 3 months (May to September of 2017). Momentum and growth is a better indicator than P/E. Dividend is at 0.3%. It is into gaming and number one in the world entertainment. They have 200M games. They are a leader in AI. They invested GPU. They are investing in trucks with 5 in a row with one driver. There is an 85% reduction in misdiagnosis with AI. They are worth $170 now, but this is just the beginning.
Another example is Ottawa's Shopify (TSX-SHOP, NYSE-SHOP). They have grown at 380% in 1.5 years. They are at $132.30 (September 2017). You were lucky if you go in early. US investors have not yet got into it. It has a preorder platform for small and medium size companies to manage sales. They have 500,000 merchants using its platform with $40B in sales. They also have some big name clients like G.E.
They have had a 75% increase in revenue in the second quarter of 2017 (US$). There was a 64% jump in recurring revenue. They are reinvesting into the company. They have yet to make a profit but are getting closer. They have grown revenue by 65% between 2016 and 2017. The stock will go higher, but there will be pull backs.
If you have cash flow or income as your objective, you should look at dividend growth companies. A company would be Brookfield Infrastructure Partners LP (TSX-BIP.UN). This stock also trades in New York. It is a Bermuda based company that does infrastructure around the world. (This is like what the CPP is doing.) It has stable revenue. 90% is contractual or government. Revenue in September 2010 was 12.6M and in September 2017 53.78M. They had 325% capital gain which is an extra benefit. There was a 3 to 2 split.
It trades at a discount sometime during the year. It pays out 60 to70% of its earnings in Dividends. The annual increase is 13 to 14%. The main risk is a global recession. Most of the revenue is controlled by government or a contract.
Another example is TransCanada (TSX-TRP). The price went from $25.25 in 2003 to $62.94 in September 2017. That is a 150% gain, and it is not a lot over the period of time. It is well diversified into alternative energy. They have increased the dividend each year since 2000. The target is 8T to10% growth in dividend each year. Trump has approved Keystone and they have purchases a Columbia pipeline.
So to reiterate, if you want capital gains you should look for a company with consumer demand (that is producing a product or service that people want to buy), a good growth rate, that has future prospects (and they are reinvesting in the firm), a company with sound management and profitable acquisitions. You should read about the management and personnel information. If your capital gains stock doubles, then sell half so that you are not playing with your own money. Do this especially if you are not sure about a company.
If you are an income investor you should look for bottom line profits, dividend history, good management, sound balance sheet and a future dividend policy. See if the company has announced a dividend policy. Some companies do this. Brookfield pays out over 100% of EPS as payout is based on cash flow. See what a company's payout rates are based on. Brookfield is still a buy.
On my other blog I wrote yesterday about Keyera Corp. (TSX-KEY, OTC-KEYUF)... learn more. Next, I will write about Cenovus Energy Inc. (TSX-CVE, NYSE-CVE)... learn more on Friday, November 17, 2017 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. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
Tuesday, November 14, 2017
Money Show 2017 - Ryan Modesto
Ryan Modesto spoke in a Saturday morning session for Canadian Money Saver on "Overvalues? Undervalues? Does it Matter? A look at Markets and Why Bottom-up Investors Don't Need to Worry about them". Ryan Modesto is the CEO of 5i Research. Their site is www.5iresearch.ca. I went because Canadian Money Saver sessions have given good talks in past Money Shows. Their site is www.canadianmoneysaver.ca.
A model portfolio would have small to medium cap companies.
Are markets overvalued? Yes they are. But this does not tell you anything. Markets are never fairly valued. They are either over or under valued.
Using CAPE data which goes back to 1950, it shows markets have been overvalues since 1992. So markets have been overvalued for 25 years. Is this helpful with the question of overvaluation? Has the world changed over the past 67 years?
First the interest is a big change. The cost for investing is a lot lower. We have access to cheaper funds. Investing is globalized. Do these trends justify an adjustment to the long-term average? He is using US data as it is better and more available than Canadian data.
Current average P/E is 22.8 and the historical average is 16.55. This infers a 37% overvalued market. Post internet the average is 19.95. With current at 22.8 it implies a 14.3% overvaluation. (Note that before 1991 the historical average P/E Ratio was 11.54.) An overvaluation of 14.3% is not that bad. If the proliferation of the internet started a stark shift in valuations, why should we use a simple average?
There is an argument that a dollar is a dollar and the utility of a dollar in the past is still the same in the future. But could the potential return on a dollar change over the years? Today the cost of starting a business is cheaper. You do not need to sink as much costs in plants and employees. There is less start-up risk. There is then more room for error (and less need for lower valuations).
The markets are overvalued. But, by how much are they overvalued? Markets are always over and undervalued. Over 20% overvalued is bad. 10 to 15% overvalued can be taken care of in a year. There is less need to worry about overvaluations if you have a long time frame.
The likelihood of positive and negative returns for the market over various time periods is shown below: That is if you do not time the market. Over a 20 year time frame the market is up 100% of the time. It is best to have a 10 year time frame rather than a 5 year one.
The average life expectancy as of 2015 is 82 years. You can be 50 or 60 and have high degree of confidence in the market. Even if the market is at the top, over the long term you can come out even. Markets do go up over the long term.
There is a momentum premium. Mark Carhart found evidence of this and extended the Fama-French modal. Stocks that have upward momentum have a tendency to continue to go up. (There is a Wikipedia entry on this subject.
There is a size premium. Smaller companies tend to outperform bigger ones. Stats show this but it is debatable. Small cap is less correlated to the market. There is less analysis and investor interest in them. Small and mid-cap investors can be less concerned with the market. Smaller companies have faster growth. They can grow revenue from a small basis. A sale of $10M means more for a small company. A small company can succeed on a one deal; a large company needs more deals all the time. Growth is easier for a small company.
You can have a large company with little cash and lots of debt on its balance sheet and a smaller company with lots of cash and little debt. The smaller company is a saver. Large size does not mean safe.
Also, patience pays. A small company will mess up a quarter now and then. A small company may lack finesse, but business could be doubling or tripling. Many CEOs need quarterly results to keep their jobs.
Inefficiency can mean opportunity. Smaller companies can have less research and less defenses. They can mess up sometimes. However, more risk is more opportunity.
Companies he likes include Photon Control Inc. (TSX-PHO) which has a lot of cash and is selling at 15.5 times EPS. Another one is Crius Energy Trust (TSX-KWH.UN) which is growing revenue and dividends. It sells at 6 times cash flow. He also likes Absolute Software Corp (TSX-ABT) which has 34M in cash that is 11% of their market cap. The last ones is Knight Therapeutics Inc. (TSX-GUD) because their cash is 65% of their Market Cap and they are waiting for the right time or thing to invest.
On my other blog I wrote yesterday about Dollarama Inc. (TSX-DOL, OTC-DLMAF)... learn more. Next, I will write about Keyera Corp. (TSX-KEY, OTC-KEYUF)... learn more on Wednesday, November 15, 2017 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. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
A model portfolio would have small to medium cap companies.
Are markets overvalued? Yes they are. But this does not tell you anything. Markets are never fairly valued. They are either over or under valued.
Using CAPE data which goes back to 1950, it shows markets have been overvalues since 1992. So markets have been overvalued for 25 years. Is this helpful with the question of overvaluation? Has the world changed over the past 67 years?
First the interest is a big change. The cost for investing is a lot lower. We have access to cheaper funds. Investing is globalized. Do these trends justify an adjustment to the long-term average? He is using US data as it is better and more available than Canadian data.
Current average P/E is 22.8 and the historical average is 16.55. This infers a 37% overvalued market. Post internet the average is 19.95. With current at 22.8 it implies a 14.3% overvaluation. (Note that before 1991 the historical average P/E Ratio was 11.54.) An overvaluation of 14.3% is not that bad. If the proliferation of the internet started a stark shift in valuations, why should we use a simple average?
There is an argument that a dollar is a dollar and the utility of a dollar in the past is still the same in the future. But could the potential return on a dollar change over the years? Today the cost of starting a business is cheaper. You do not need to sink as much costs in plants and employees. There is less start-up risk. There is then more room for error (and less need for lower valuations).
The markets are overvalued. But, by how much are they overvalued? Markets are always over and undervalued. Over 20% overvalued is bad. 10 to 15% overvalued can be taken care of in a year. There is less need to worry about overvaluations if you have a long time frame.
The likelihood of positive and negative returns for the market over various time periods is shown below: That is if you do not time the market. Over a 20 year time frame the market is up 100% of the time. It is best to have a 10 year time frame rather than a 5 year one.
| Period | Positive Return | Negative Return |
|---|---|---|
| Daily | 54% | 46% |
| Quarterly | 68% | 32% |
| One year | 74% | 26% |
| Five Years | 86% | 14% |
| Ten Years | 94% | 6% |
| Twenty Years | 100% | 0% |
The average life expectancy as of 2015 is 82 years. You can be 50 or 60 and have high degree of confidence in the market. Even if the market is at the top, over the long term you can come out even. Markets do go up over the long term.
There is a momentum premium. Mark Carhart found evidence of this and extended the Fama-French modal. Stocks that have upward momentum have a tendency to continue to go up. (There is a Wikipedia entry on this subject.
There is a size premium. Smaller companies tend to outperform bigger ones. Stats show this but it is debatable. Small cap is less correlated to the market. There is less analysis and investor interest in them. Small and mid-cap investors can be less concerned with the market. Smaller companies have faster growth. They can grow revenue from a small basis. A sale of $10M means more for a small company. A small company can succeed on a one deal; a large company needs more deals all the time. Growth is easier for a small company.
You can have a large company with little cash and lots of debt on its balance sheet and a smaller company with lots of cash and little debt. The smaller company is a saver. Large size does not mean safe.
Also, patience pays. A small company will mess up a quarter now and then. A small company may lack finesse, but business could be doubling or tripling. Many CEOs need quarterly results to keep their jobs.
Inefficiency can mean opportunity. Smaller companies can have less research and less defenses. They can mess up sometimes. However, more risk is more opportunity.
Companies he likes include Photon Control Inc. (TSX-PHO) which has a lot of cash and is selling at 15.5 times EPS. Another one is Crius Energy Trust (TSX-KWH.UN) which is growing revenue and dividends. It sells at 6 times cash flow. He also likes Absolute Software Corp (TSX-ABT) which has 34M in cash that is 11% of their market cap. The last ones is Knight Therapeutics Inc. (TSX-GUD) because their cash is 65% of their Market Cap and they are waiting for the right time or thing to invest.
On my other blog I wrote yesterday about Dollarama Inc. (TSX-DOL, OTC-DLMAF)... learn more. Next, I will write about Keyera Corp. (TSX-KEY, OTC-KEYUF)... learn more on Wednesday, November 15, 2017 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. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
Thursday, November 9, 2017
Something to Buy November 2017
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.
This system does not work well for old Income Trust companies. These companies had quite high Dividend Yields which will probably never be seen again. So I started a column called VT (for Valid Test) and this applies to checking stock price using dividend yield. If not a valid test I use N to show this. For these stocks, you might be better comparing the current dividend yield to the 5 year median dividend yield.
However, no system is perfect. But if you are interested in buying 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 Something to Buy November 2017 Spreadsheet 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 22 stocks in the Consumer Discretionary category. One of these stocks is showing as cheap by the historically high dividend yield and that is Newfoundland Capital Corp (TSX-NCC.A). Eight (or 36%) are showing cheap by historical median dividend yield. They are DHX Media Ltd. (TSX-DHX.A, OTC-DHXMF), Dorel Industries (TSX-DII.B), High Liner Foods (TSX-HLF, OTC-HLNFF), Leon's Furniture (TSX-LNF); Magna International Inc. (TSX-MG), Molson Coors Canada (TSX-TPX.B, NYSE-TAP), Newfoundland Capital Corp (TSX-NCC.A) and Reitmans (Canada) Ltd. (TSX-RET.A). Goeasy Ltd. (TSX-GSY, OTC-EHMEF) is being removed from cheap by historically median dividend yield and Molson Coors Canada (TSX-TPX.B, NYSE-TAP) has been added to this list.
I follow 12 Consumer Staples stocks. No companies are showing as cheap by the historically high dividend yield. Five stocks (or 42%) are showing cheap by historical median dividend yield. These are Alimentation Couche-Tard (TSX-ATD.B, OTC-ANCUF), Empire Company Ltd (TSX-EMP.A, OTC-EMLAF), Jean Coutu Group Inc. (TSX-PJC.A, OTC-JCOUF), Loblaw Companies (TSX-L, OTC-LBLCF) and Metro Inc. (TSX-MRU, OTC-MTRAF). There is no change from last month.
I only follow two Health Care stocks and both are US stocks. None of these stocks are showing as cheap by the historically high dividend yield. 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 11 Real Estate stocks. None of these stocks are showing as cheap by the historically high dividend yield. Three stocks (or 27%) are showing cheap by historical median dividend yield. They are Artis REIT (TSX-AX.UN, OTC- ARESF); Granite Real Estate (TSX-GRT.UN, NYSE-GRP.U) and Melcor Developments Inc. (TSX-MRD, OTC-MODVF). Brookfield Asset Management (TSX-BAM.A, NYSE-BAM) has been reclassified as a Financial Service stock. This reduces the Real Estate stocks I follow from 12 to 11.
I follow 8 Bank stocks. None are showing as cheap by the historically high dividend yield. One stock (or 12.5%) is showing cheap by the historical median dividend yield. This stocks is CIBC (TSX-CM, NYSE-CM). Bank of Nova Scotia (TSX-BNS, NYSE-BNS) has been deleted from this list as cheap by historical median dividend yield.
I follow 13 Financial Service stocks. None are showing as cheap by the historically high dividend yield. Eight (or 62%) stocks are showing cheap by the historical median dividend yield. These stocks are Accord Financial Corp (TSX-ACD, OTC-ACCFF), AGF Management Ltd (TSX-AGF.B), Alaris Royalty Corp (TSX-AD, OTC-ALARF), CI Financial (TSX-CIX), Equitable Group Inc. (TSX-EQB, OTC-EQGPF), Gluskin Sheff + Associates Inc. (TSX-GS), IGM Financial (TSX-IGM) and Power Corp (TSX-POW). This is the same as last month. Brookfield Asset Management (TSX-BAM.A, NYSE-BAM) has been reclassified as a Financial Service stock from a Real Estate stock so I now have 13 stocks in this category rather than 12.
I follow 5 Insurance stocks. None are showing as cheap by the historically high dividend yield. Three stocks (or 60%) are showing cheap by historical median dividend yield. These stocks are Great-West Lifeco Inc. (TSX-GWO); Manulife Financial Corp (TSX-MFC) and Power Financial Corp (TSX-PWF). There is no change from last month.
I follow 32 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 am now following Logistec Corp (TSX-LGT.B, OTC-LTKBF) an Industrial Services stock.
I have 6 Construction stocks. None are cheap by the historically high dividend yield. Two stocks or 33% are showing as cheap by historical median dividend yield. They are SNC-Lavalin (TSX-SNC, OTC-SNCAF) and Stantec Inc. (TSX-STN, NYSE-STN). There is no change from last month.
I have 3 stocks I have left with the sub-index of Industrial. None are cheap by the historically high dividend yield. Two stocks or 67% are showing as cheap by historical median dividend yield. They are Finning International Inc. (TSX-FTT, OTC-FINGF), and Russel Metals (TSX-RUS, OTC-RUSMF). There is no change from last month.
I have 7 Manufacturing stocks. None are showing as cheap by the historically high dividend yield. Four stocks or 57% are showing as cheap by historical median dividend yield. They are Exco Technologies Ltd. (TSX-XTC, OTC-EXCOF), Hammond Power Solutions Inc. (TSX-HPS.A, OTC-HMDPF), Intertape Polymer Group Inc. (TSX-ITP, OTC-ITPOF) and PFB Corp (TSX-PFB, OTC-PFBOF). There is no change from last month.
I have 16 Services stocks. None are showing as cheap by the historically high dividend yield. Four stocks or 25% are showing as cheap by historical median dividend yield. These stocks are Canadian National Railway (TSX-CNR, NYSE-CNI), Pason Systems Inc. (TSX-PSI, OTC-PSYTF), Transcontinental Inc. (TSX-TCL.A, OTC-TCLAF) and Wajax Corp (TSX-WJX, OTC-WJXFF). I am now following Logistec Corp (TSX-LGT.B, OTC-LTKBF) an Industrial Services stock so I have 16 stocks in this category rather than 15.
I follow 8 Material stocks. None are showing as cheap by the historically high dividend yield. One stock or 14% is showing as cheap by historical median dividend yield and that stock is Methanex Corp (TSX-MX, NASDAQ-MEOH). This is the same as for last month.
I follow 10 Energy stocks. Ensign Energy Services (TSX-ESI, OTC-ESVIF) is showing as cheap by the historical high dividend yield. There are four stocks (or 40%) showing cheap by historical median dividend yield. They are Canadian Natural Resources (TSX-CNQ, NYSE-CNQ), Ensign Energy Services (TSX-ESI, OTC-ESVIF); Mullen Group (TSX-MTL, OTC-MLLGF) and Suncor Energy (TSX-SU, NYSE-SU). Ensign Energy Services (TSX-ESI, OTC-ESVIF) is again showing as cheap by the historical high dividend yield.
I follow 8 Tech stocks. None are showing as cheap by historical high dividend yield. Five stocks (or 63%) are showing cheap by historical median dividend yield. They are Absolute Software Corporation (TSX-ABT, OTC-ALSWF) Computer Modelling Group Ltd. (TSX-CMG, OTC-CMDXF), Evertz Technologies (TSX-ET, OTC-EVTZF), Maxar Technologies Ltd (TSX-MAXR, NYSE-MAXR), and Sylogist Ltd (TSXV-SYZ, OTC-SYZLF). MacDonald Dettwiler & Assoc. (TSX-MDA, OTC-MDDWF) has changed its name and symbols to Maxar Technologies Ltd (TSX-MAXR, NYSE-MAXR).
I follow 7 of the Infrastructure type utility companies. None are showing as cheap by historical high dividend yield. Three stocks (or 43%) are showing cheap by historical median dividend yield. They are AltaGas Ltd (TSX-ALA, OTC-ATGFF), Enbridge Inc. (TSX-ENB, NYSE-ENB) and Enbridge Income Fund Holdings Inc. (TSX-ENF, OTC-EBGUF). Veresen Inc. (TSX-VSN, OTC-FCGYF) has been bought by Pembina Pipelines Corp (TSX-PPL, NYSE-PBA) so I am following one fewer stocks in this category.
I follow 12 of the Power type utility companies. None are showing as cheap by the historically high dividend yield. Four stock (or 33%) are showing cheap by historical median dividend yield. Those stocks are Algonquin Power & Utilities Corp (TSX-AQN, NYSE-AQN), ATCO Ltd (TSX-ACO.X, OTC-ACLLF), Canadian Utilities Ltd (TSX-CU, OTC-CDUAF) and Emera Inc. (TSX-EMA, OTC-EMRAF). There is no change from last month.
I follow 4 of the Telecom Service type utility companies. No stock is showing cheap by the historical high dividend yield. Four stocks (or 100%) are showing cheap by historical median dividend yield. These stocks are BCE (TSX-BCE, NYSE-BCE), Quarterhaill Inc. (TSX-QTRH, NASDAQ-QTRH), Shaw Communications Inc. (TSX-SJR.B, NYSE-SJR) and Telus Corp (TSX-T, NYSE-TU). There is no change from last month.
On my other blog I wrote yesterday about CCL Industries Inc. (TSX-CCL.B, OTC-CCDBF)... learn more. Next, I will write about Encana Corp. (TSX-ECA, NYSE-ECA)... learn more on Friday, November 10, 2017 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. I have three blogs. The first talks only about specific stocks and is called Investment Talk . The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
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.
This system does not work well for old Income Trust companies. These companies had quite high Dividend Yields which will probably never be seen again. So I started a column called VT (for Valid Test) and this applies to checking stock price using dividend yield. If not a valid test I use N to show this. For these stocks, you might be better comparing the current dividend yield to the 5 year median dividend yield.
However, no system is perfect. But if you are interested in buying 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 Something to Buy November 2017 Spreadsheet 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 22 stocks in the Consumer Discretionary category. One of these stocks is showing as cheap by the historically high dividend yield and that is Newfoundland Capital Corp (TSX-NCC.A). Eight (or 36%) are showing cheap by historical median dividend yield. They are DHX Media Ltd. (TSX-DHX.A, OTC-DHXMF), Dorel Industries (TSX-DII.B), High Liner Foods (TSX-HLF, OTC-HLNFF), Leon's Furniture (TSX-LNF); Magna International Inc. (TSX-MG), Molson Coors Canada (TSX-TPX.B, NYSE-TAP), Newfoundland Capital Corp (TSX-NCC.A) and Reitmans (Canada) Ltd. (TSX-RET.A). Goeasy Ltd. (TSX-GSY, OTC-EHMEF) is being removed from cheap by historically median dividend yield and Molson Coors Canada (TSX-TPX.B, NYSE-TAP) has been added to this list.
I follow 12 Consumer Staples stocks. No companies are showing as cheap by the historically high dividend yield. Five stocks (or 42%) are showing cheap by historical median dividend yield. These are Alimentation Couche-Tard (TSX-ATD.B, OTC-ANCUF), Empire Company Ltd (TSX-EMP.A, OTC-EMLAF), Jean Coutu Group Inc. (TSX-PJC.A, OTC-JCOUF), Loblaw Companies (TSX-L, OTC-LBLCF) and Metro Inc. (TSX-MRU, OTC-MTRAF). There is no change from last month.
I only follow two Health Care stocks and both are US stocks. None of these stocks are showing as cheap by the historically high dividend yield. 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 11 Real Estate stocks. None of these stocks are showing as cheap by the historically high dividend yield. Three stocks (or 27%) are showing cheap by historical median dividend yield. They are Artis REIT (TSX-AX.UN, OTC- ARESF); Granite Real Estate (TSX-GRT.UN, NYSE-GRP.U) and Melcor Developments Inc. (TSX-MRD, OTC-MODVF). Brookfield Asset Management (TSX-BAM.A, NYSE-BAM) has been reclassified as a Financial Service stock. This reduces the Real Estate stocks I follow from 12 to 11.
I follow 8 Bank stocks. None are showing as cheap by the historically high dividend yield. One stock (or 12.5%) is showing cheap by the historical median dividend yield. This stocks is CIBC (TSX-CM, NYSE-CM). Bank of Nova Scotia (TSX-BNS, NYSE-BNS) has been deleted from this list as cheap by historical median dividend yield.
I follow 13 Financial Service stocks. None are showing as cheap by the historically high dividend yield. Eight (or 62%) stocks are showing cheap by the historical median dividend yield. These stocks are Accord Financial Corp (TSX-ACD, OTC-ACCFF), AGF Management Ltd (TSX-AGF.B), Alaris Royalty Corp (TSX-AD, OTC-ALARF), CI Financial (TSX-CIX), Equitable Group Inc. (TSX-EQB, OTC-EQGPF), Gluskin Sheff + Associates Inc. (TSX-GS), IGM Financial (TSX-IGM) and Power Corp (TSX-POW). This is the same as last month. Brookfield Asset Management (TSX-BAM.A, NYSE-BAM) has been reclassified as a Financial Service stock from a Real Estate stock so I now have 13 stocks in this category rather than 12.
I follow 5 Insurance stocks. None are showing as cheap by the historically high dividend yield. Three stocks (or 60%) are showing cheap by historical median dividend yield. These stocks are Great-West Lifeco Inc. (TSX-GWO); Manulife Financial Corp (TSX-MFC) and Power Financial Corp (TSX-PWF). There is no change from last month.
I follow 32 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 am now following Logistec Corp (TSX-LGT.B, OTC-LTKBF) an Industrial Services stock.
I have 6 Construction stocks. None are cheap by the historically high dividend yield. Two stocks or 33% are showing as cheap by historical median dividend yield. They are SNC-Lavalin (TSX-SNC, OTC-SNCAF) and Stantec Inc. (TSX-STN, NYSE-STN). There is no change from last month.
I have 3 stocks I have left with the sub-index of Industrial. None are cheap by the historically high dividend yield. Two stocks or 67% are showing as cheap by historical median dividend yield. They are Finning International Inc. (TSX-FTT, OTC-FINGF), and Russel Metals (TSX-RUS, OTC-RUSMF). There is no change from last month.
I have 7 Manufacturing stocks. None are showing as cheap by the historically high dividend yield. Four stocks or 57% are showing as cheap by historical median dividend yield. They are Exco Technologies Ltd. (TSX-XTC, OTC-EXCOF), Hammond Power Solutions Inc. (TSX-HPS.A, OTC-HMDPF), Intertape Polymer Group Inc. (TSX-ITP, OTC-ITPOF) and PFB Corp (TSX-PFB, OTC-PFBOF). There is no change from last month.
I have 16 Services stocks. None are showing as cheap by the historically high dividend yield. Four stocks or 25% are showing as cheap by historical median dividend yield. These stocks are Canadian National Railway (TSX-CNR, NYSE-CNI), Pason Systems Inc. (TSX-PSI, OTC-PSYTF), Transcontinental Inc. (TSX-TCL.A, OTC-TCLAF) and Wajax Corp (TSX-WJX, OTC-WJXFF). I am now following Logistec Corp (TSX-LGT.B, OTC-LTKBF) an Industrial Services stock so I have 16 stocks in this category rather than 15.
I follow 8 Material stocks. None are showing as cheap by the historically high dividend yield. One stock or 14% is showing as cheap by historical median dividend yield and that stock is Methanex Corp (TSX-MX, NASDAQ-MEOH). This is the same as for last month.
I follow 10 Energy stocks. Ensign Energy Services (TSX-ESI, OTC-ESVIF) is showing as cheap by the historical high dividend yield. There are four stocks (or 40%) showing cheap by historical median dividend yield. They are Canadian Natural Resources (TSX-CNQ, NYSE-CNQ), Ensign Energy Services (TSX-ESI, OTC-ESVIF); Mullen Group (TSX-MTL, OTC-MLLGF) and Suncor Energy (TSX-SU, NYSE-SU). Ensign Energy Services (TSX-ESI, OTC-ESVIF) is again showing as cheap by the historical high dividend yield.
I follow 8 Tech stocks. None are showing as cheap by historical high dividend yield. Five stocks (or 63%) are showing cheap by historical median dividend yield. They are Absolute Software Corporation (TSX-ABT, OTC-ALSWF) Computer Modelling Group Ltd. (TSX-CMG, OTC-CMDXF), Evertz Technologies (TSX-ET, OTC-EVTZF), Maxar Technologies Ltd (TSX-MAXR, NYSE-MAXR), and Sylogist Ltd (TSXV-SYZ, OTC-SYZLF). MacDonald Dettwiler & Assoc. (TSX-MDA, OTC-MDDWF) has changed its name and symbols to Maxar Technologies Ltd (TSX-MAXR, NYSE-MAXR).
I follow 7 of the Infrastructure type utility companies. None are showing as cheap by historical high dividend yield. Three stocks (or 43%) are showing cheap by historical median dividend yield. They are AltaGas Ltd (TSX-ALA, OTC-ATGFF), Enbridge Inc. (TSX-ENB, NYSE-ENB) and Enbridge Income Fund Holdings Inc. (TSX-ENF, OTC-EBGUF). Veresen Inc. (TSX-VSN, OTC-FCGYF) has been bought by Pembina Pipelines Corp (TSX-PPL, NYSE-PBA) so I am following one fewer stocks in this category.
I follow 12 of the Power type utility companies. None are showing as cheap by the historically high dividend yield. Four stock (or 33%) are showing cheap by historical median dividend yield. Those stocks are Algonquin Power & Utilities Corp (TSX-AQN, NYSE-AQN), ATCO Ltd (TSX-ACO.X, OTC-ACLLF), Canadian Utilities Ltd (TSX-CU, OTC-CDUAF) and Emera Inc. (TSX-EMA, OTC-EMRAF). There is no change from last month.
I follow 4 of the Telecom Service type utility companies. No stock is showing cheap by the historical high dividend yield. Four stocks (or 100%) are showing cheap by historical median dividend yield. These stocks are BCE (TSX-BCE, NYSE-BCE), Quarterhaill Inc. (TSX-QTRH, NASDAQ-QTRH), Shaw Communications Inc. (TSX-SJR.B, NYSE-SJR) and Telus Corp (TSX-T, NYSE-TU). There is no change from last month.
On my other blog I wrote yesterday about CCL Industries Inc. (TSX-CCL.B, OTC-CCDBF)... learn more. Next, I will write about Encana Corp. (TSX-ECA, NYSE-ECA)... learn more on Friday, November 10, 2017 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. I have three blogs. The first talks only about specific stocks and is called Investment Talk . The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
Tuesday, November 7, 2017
Dividend Stocks November 2017
First I want to point out that not all of the stocks I follow are great investments. I follow a diverse selection of stocks. There are some that I would never invest in personally. I follow a number of resource stocks even though I personally have little invested in this area. I follow what I find interesting and with resource stocks, I think it is important for Canadians to know what is happening in the resource area. On the other hand I do follow of good number of great dividend growth 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 or historical median yield. See my spreadsheet at dividend growth stocks that I just updated for November 2017.
On this list,
AltaGas Ltd (TSX-ALA, OTC-ATGFF)
Emera Inc. (TSX-EMA, OTC-EMRAF)
Fortis Inc. (TSX-FTS, OTC-FRTSF)
Pembina Pipelines Corp (TSX-PPL, NYSE-PBA)
Waste Connections Inc. (TSX-WCN, NYSE-WCN)
In October 2017 MacDonald, Dettwiler & Associates (TSX-MDA, OTC-MDDWF) became Maxar Technologies Ltd (TSX-MAXR NYSE-MAXR). MDA took over DigitalGlobe Inc. MDA and DigitalGlobe combine to create Maxar Technologies, a leader in space technology.
I had Brookfield Asset Management (TSX-BAM.A, NYSE-BAM) listed as a real estate company. However, TSX and Globe and Mail list it as a Financial under Financial Services. I have changed this classification of this stock accordingly.
Also, of the stocks that I follow, 0 stocks decreased or suspended their dividends.
Most of my stocks started out as Dividend Payers. Currently 13 stocks are not paying any dividends and this would be some 10.3% of the stocks that I follow. Three of these stocks never had dividends, so 8.39% of the stocks I follow have suspended their dividends. The three stocks that never paid dividends are Ballard Power Systems Inc. (TSX-BLD, NASDAQ-BLDP0, Blackberry Ltd. (TSX-BB, NASDAQ-BBRY) and Trigon Metals Inc. (TSX-TM, OTC-PNTZF).
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. I also started a column called VT (for Valid Test) and this applies to checking stock price using dividend yield. If not a valid test I use N to show this.
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 Brookfield Asset Management Inc. (TSX-BAM.A, NYSE-BAM)... learn more. Next, I will write about CCL Industries Inc. (TSX-CCL.B, OTC-CCDBF)... learn more on Wednesday, November 8, 2017 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 website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram with #walktoronto.
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 November 2017.
On this list,
- I have 2 stocks with a dividend yield higher than the historical high dividend yield,
- I have 32 stocks with a dividend yield higher than the historical average dividend yield
- I have 62 stocks with a dividend yield higher than the historical median dividend yield and
- 60 stocks with a dividend yield higher than the 5 year average dividend yield.
- I have 1 stocks with a dividend yield higher than the historical high dividend yield,
- I have 36 stocks with a dividend yield higher than the historical average dividend yield
- I have 63 stocks with a dividend yield higher than the historical median dividend yield and
- 59 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.
AltaGas Ltd (TSX-ALA, OTC-ATGFF)
Emera Inc. (TSX-EMA, OTC-EMRAF)
Fortis Inc. (TSX-FTS, OTC-FRTSF)
Pembina Pipelines Corp (TSX-PPL, NYSE-PBA)
Waste Connections Inc. (TSX-WCN, NYSE-WCN)
In October 2017 MacDonald, Dettwiler & Associates (TSX-MDA, OTC-MDDWF) became Maxar Technologies Ltd (TSX-MAXR NYSE-MAXR). MDA took over DigitalGlobe Inc. MDA and DigitalGlobe combine to create Maxar Technologies, a leader in space technology.
I had Brookfield Asset Management (TSX-BAM.A, NYSE-BAM) listed as a real estate company. However, TSX and Globe and Mail list it as a Financial under Financial Services. I have changed this classification of this stock accordingly.
Also, of the stocks that I follow, 0 stocks decreased or suspended their dividends.
Most of my stocks started out as Dividend Payers. Currently 13 stocks are not paying any dividends and this would be some 10.3% of the stocks that I follow. Three of these stocks never had dividends, so 8.39% of the stocks I follow have suspended their dividends. The three stocks that never paid dividends are Ballard Power Systems Inc. (TSX-BLD, NASDAQ-BLDP0, Blackberry Ltd. (TSX-BB, NASDAQ-BBRY) and Trigon Metals Inc. (TSX-TM, OTC-PNTZF).
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. I also started a column called VT (for Valid Test) and this applies to checking stock price using dividend yield. If not a valid test I use N to show this.
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 Brookfield Asset Management Inc. (TSX-BAM.A, NYSE-BAM)... learn more. Next, I will write about CCL Industries Inc. (TSX-CCL.B, OTC-CCDBF)... learn more on Wednesday, November 8, 2017 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 website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram with #walktoronto.
Thursday, November 2, 2017
Money Show 2017 - Keith Richards
Keith Richards spoke in a Saturday morning session for Canadian Money Saver on "How to Profit from Fear and Greed". Keith Richards is the Portfolio Manager of Value Trend Wealth Management and World Source Securities Corp. Their site is www.valuetrend.ca. I went because Canadian Money Saver sessions have given good talks in past Money Shows. Their site is www.canadianmoneysaver.ca.
He wrote a book called Smartbounce: 3 Actions Steps to Portfolio Recovery. You can see this on Amazon.
He says you can profit from fear and greed by using the bear-o-meter. What is important is capital growth and preservation; keeping costs low; low portfolio turnover and monitoring your portfolio. There is always risk. Sometimes risk is higher than at other times. We do not know the future but we can measure risk.
The bear-o-meter has 9 facts. There are 2 trend indicators, 4 breadth indicators, 1 value factor and 3 sentiments and 1 scalability. There are 8 points on the bear-o-meter. 8 means less risk and 0 mean more risk.
The 2 trend facts are a downward trend that has lower highs and higher lows and an upward trend that has higher highs and higher lows. The 200 day moving average is more important than the 50 day moving average. So for the 50 day moving average there is plus or minus 1 point and for the 200 day moving average there is plus or minus 2 points.
Breadth participation means that certain stocks have more influence than others. An example is when Nortel was big in the market. You line up the advancing stocks against the declining stocks in an index. If AD is going down and index is up that is bad. If AD is going up and so is the index this is good. It does not necessarily mean the market is going to go down if AD is down and Index is up. If there is a divergence this could mean a problem.
Breadth momentum is percentage of stocks over 50 moving average and are stock trending up or trending down. The site stockcharts.com gives this indicator. You need a wall of worry. If too many stocks are down people are depressed too much and if too many stocks are up people are too happy.
Look at overbought or oversold stocks. The value factor is the P/E Ratio. Overbought or oversold is shown by P/E Ratio of less than 13 or greater than 25. So oversold is a stock with a P/E Ratio of less than 13. An overbought stock would be one with a P/E Ratio greater than 25. If the P/E Ratio is greater than 25 there is more risk.
Sentiment investing is contrarian investing with smart money and dumb money. Warren Buffett and the Teachers Fund are smarter than us. What are the smart people doing? What are the dumb people doing? The dumb people are us. Smart selling and dumb buying is a problem. You can get information on sentiment trading at sentimenttrading.com for $600 a year.
VIX Options is trading volatility. If the VIX options are too high then people are too pessimistic or too scared. If VIX options are too low then people are too complacent. They are not scared enough. When people are too complacent then there is more risk. VIX Option puts are bearish and VIX Option calls are bullish. If there are too many puts it is a sign people are too scared.
There are seasonal best 6 months and this has held from 1950 to 2016. The best 6 months is from October 28 to May 5 when investments will grow. The worst are from May 6 to October 27 when you will get investment losses.
If the bear-o-meter is at 3 it means that there is higher risk and we are on the cusp. Bearish numbers are 0, 1 and 2. Bullish are 6, 7 and 8. Neutral numbers are 3, 4 and 5. Currently we are in an OK environment with slightly higher risk. He uses fundamentals as well as Technicals when buying stocks.
The P/E Ratio is used far too much and is not a great indicator. Even with a P/E Ratio of 20 or 25, a stock could grow. There is no one indicator to say what is happening. For an example if a stock breaks below the 200 day moving average it can still change direction and move higher. It is a good indicator but by itself it does not necessarily tell you all you need to know.
On my other blog I wrote yesterday about Pason Systems Inc. (TSX-PSI, OTC-PSYTF)... learn more. Next, I will write about Next, I will write about Molson Coors Canada (TSX-TPX.B, NYSE-TAP)... learn more on Friday, November 3 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. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
He wrote a book called Smartbounce: 3 Actions Steps to Portfolio Recovery. You can see this on Amazon.
He says you can profit from fear and greed by using the bear-o-meter. What is important is capital growth and preservation; keeping costs low; low portfolio turnover and monitoring your portfolio. There is always risk. Sometimes risk is higher than at other times. We do not know the future but we can measure risk.
The bear-o-meter has 9 facts. There are 2 trend indicators, 4 breadth indicators, 1 value factor and 3 sentiments and 1 scalability. There are 8 points on the bear-o-meter. 8 means less risk and 0 mean more risk.
The 2 trend facts are a downward trend that has lower highs and higher lows and an upward trend that has higher highs and higher lows. The 200 day moving average is more important than the 50 day moving average. So for the 50 day moving average there is plus or minus 1 point and for the 200 day moving average there is plus or minus 2 points.
Breadth participation means that certain stocks have more influence than others. An example is when Nortel was big in the market. You line up the advancing stocks against the declining stocks in an index. If AD is going down and index is up that is bad. If AD is going up and so is the index this is good. It does not necessarily mean the market is going to go down if AD is down and Index is up. If there is a divergence this could mean a problem.
Breadth momentum is percentage of stocks over 50 moving average and are stock trending up or trending down. The site stockcharts.com gives this indicator. You need a wall of worry. If too many stocks are down people are depressed too much and if too many stocks are up people are too happy.
Look at overbought or oversold stocks. The value factor is the P/E Ratio. Overbought or oversold is shown by P/E Ratio of less than 13 or greater than 25. So oversold is a stock with a P/E Ratio of less than 13. An overbought stock would be one with a P/E Ratio greater than 25. If the P/E Ratio is greater than 25 there is more risk.
Sentiment investing is contrarian investing with smart money and dumb money. Warren Buffett and the Teachers Fund are smarter than us. What are the smart people doing? What are the dumb people doing? The dumb people are us. Smart selling and dumb buying is a problem. You can get information on sentiment trading at sentimenttrading.com for $600 a year.
VIX Options is trading volatility. If the VIX options are too high then people are too pessimistic or too scared. If VIX options are too low then people are too complacent. They are not scared enough. When people are too complacent then there is more risk. VIX Option puts are bearish and VIX Option calls are bullish. If there are too many puts it is a sign people are too scared.
There are seasonal best 6 months and this has held from 1950 to 2016. The best 6 months is from October 28 to May 5 when investments will grow. The worst are from May 6 to October 27 when you will get investment losses.
If the bear-o-meter is at 3 it means that there is higher risk and we are on the cusp. Bearish numbers are 0, 1 and 2. Bullish are 6, 7 and 8. Neutral numbers are 3, 4 and 5. Currently we are in an OK environment with slightly higher risk. He uses fundamentals as well as Technicals when buying stocks.
The P/E Ratio is used far too much and is not a great indicator. Even with a P/E Ratio of 20 or 25, a stock could grow. There is no one indicator to say what is happening. For an example if a stock breaks below the 200 day moving average it can still change direction and move higher. It is a good indicator but by itself it does not necessarily tell you all you need to know.
On my other blog I wrote yesterday about Pason Systems Inc. (TSX-PSI, OTC-PSYTF)... learn more. Next, I will write about Next, I will write about Molson Coors Canada (TSX-TPX.B, NYSE-TAP)... learn more on Friday, November 3 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. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
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