What you might want to have a look at, at this blogger site is a list of the 2020 Best Canadian Dividend Stock. Here is the site Million Dollar Journey. This page shows the dividend increase years for a number of Canadian stocks with dividend increase links for Canadian Utilities Ltd of 47 years to Intact Financial Corp with a dividend increase streak of 13 years.
On my other blog I wrote yesterday about Savaria Corporation (TSX-SIS, OTC-SISXF) ... learn more. Next, I will write Ballard Power Systems Inc (TSX-BLDP, NASDAQ-BLDP) ... learn more on Friday, July 31, 2020 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, July 30, 2020
Tuesday, July 28, 2020
Visual Capitalist
This is always an interesting site. They show a lot of things visually. The one I picked to show you is a recently one on Stock Market Returns. You can go to this main site and see some of the recent items they have talked about. You can also subscribe here to receiving their daily emails.
On my other blog I wrote yesterday about TECSYS Inc (TSX-TCS, OTC-TCYSF) ... learn more. Next, I will write about Savaria Corporation (TSX-SIS, OTC-SISXF) ... learn more on Wednesday, July 29, 2020 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.
On my other blog I wrote yesterday about TECSYS Inc (TSX-TCS, OTC-TCYSF) ... learn more. Next, I will write about Savaria Corporation (TSX-SIS, OTC-SISXF) ... learn more on Wednesday, July 29, 2020 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, July 23, 2020
Adam Mayers, Blogger
Adam Mayers focuses a lot on America companies. However, he sometimes talks about Canadian Companies. This one is about REITs . This other article is about two Canadian Stocks . The first is Cargojet Inc. (CJT-T), which controls more than 80 per cent of Canada’s overnight air cargo market. The other is Montreal-based TFI International Inc. (TFII-T), Canada’s largest trucking company.
On my other blog I wrote yesterday about Dorel Industries Inc (TSX-DII.B, OTC-DIIBF) ... learn more. Next, I will write about Pulse Seismic Inc (TSX-PSD, OTC-PLSDF) ... learn more on Friday, July 24, 2020 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.
On my other blog I wrote yesterday about Dorel Industries Inc (TSX-DII.B, OTC-DIIBF) ... learn more. Next, I will write about Pulse Seismic Inc (TSX-PSD, OTC-PLSDF) ... learn more on Friday, July 24, 2020 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, July 21, 2020
Dividend Income and Volatility
There are several places where you will face volatility if you decide to have your income from dividend stocks. First and probably the most volatility you will face is in the value of the stock. Secondly, your overall dividend growth will change from year to year. Thirdly, an individual stock can vary in how much they will pay in dividend. In any year one company can increase dividends and another company can cut them. Different companies are affected differently by any current economic situation.
The value of your dividend stock portfolio can be calm sometimes and swing wildly other times. This can also be true of individual stocks. I do not worry about bear markets because I know all stocks are going to go down no matter how good (or bad) that they are. Generally, dividend stocks do not go down as much as the markets do, but they do go down. In bull markets, your dividend stocks will probably not gain as much as the market. My dividend stocks are volatile, but tend not to be as volatile as the market
In the last 2 bear markets my portfolio went down 30%. This happens in bear markets. It is not a time to panic. If your stocks go down in a bear market, I would not worry. I worry if my stock takes a dive when there is no bear market. My first stop to try to get a sense of what is going on if a stock of mine takes a dive is Stock Chase.
The growth in dividends will change from year to year depending on the economic climate and what is happening in the sector your stock is in. I have found in bear markets is that my overall dividend growth will decline. Sometimes because of the overall slowdown of the economy my dividend increases are low.
The lowest increase I have had is 3.9% in 2014. The year of 2010 was a low growth year with only a dividend growth of 5.3%. It has been a long slow recover from the bear market and decline of 2008 and I have had some low dividend growth years. However, dividends tend to growth more than inflation. Also my overall rate includes by RIF accounts from which I am making withdrawals and therefore has lower dividend increases or negative increase.
If I look at my Trading Account, which is the one I use for my income, my dividend growth is better. The lowest growth was 5.1% in 2017. For the last three years my dividend income growth was 13.5%, 7.59% and so far this year 8.3%.
Some company will not cut or cancel dividends unless they absolutely have to. This is because dividend investors are an unforgiving lot. Stocks that cut or cancel dividends get hammered by the market. Some companies will keep their dividends flat for a number of years if they have some financial problems. They will hope that they can resolve the problems before they have to cut dividends. Other companies regularly declare what they believe that they can afford and ignore the market. Their dividends can go up and down over time.
Know your companies and understand what their dividend policies are. Some companies will say what their dividend policy is and others you will be able to tell what it is from past history.
But all this volitivity is just background noise. If you can ignore the noise you can do well with dividend stocks over the long term. The best advice is never panic. People lose money in the stock market because they panic and do the wrong thing. Sometimes they buy because they think that they need to buy now otherwise the price of the stock will get too high in the future to buy, or they panic and sell because their stock has plummeted in price and they are afraid of losing more money. Never buy or sell because of panic. That is how you lose money.
You need to know the companies you have invested in. If you are in for the long term, then at some point a company will have problems. Most of these problems are solvable. However, I have sold companies that I have had for years. The reason is always because I have lost hope that they will recover.
On my other blog I wrote yesterday about Artis REIT (TSX-AX.UN, OTC-ARESF) ... learn more. Next, I will write about be Dorel Industries Inc (TSX-DII.B, OTC-DIIBF) ... learn more on Wednesday, July 22, 2020 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 value of your dividend stock portfolio can be calm sometimes and swing wildly other times. This can also be true of individual stocks. I do not worry about bear markets because I know all stocks are going to go down no matter how good (or bad) that they are. Generally, dividend stocks do not go down as much as the markets do, but they do go down. In bull markets, your dividend stocks will probably not gain as much as the market. My dividend stocks are volatile, but tend not to be as volatile as the market
In the last 2 bear markets my portfolio went down 30%. This happens in bear markets. It is not a time to panic. If your stocks go down in a bear market, I would not worry. I worry if my stock takes a dive when there is no bear market. My first stop to try to get a sense of what is going on if a stock of mine takes a dive is Stock Chase.
The growth in dividends will change from year to year depending on the economic climate and what is happening in the sector your stock is in. I have found in bear markets is that my overall dividend growth will decline. Sometimes because of the overall slowdown of the economy my dividend increases are low.
The lowest increase I have had is 3.9% in 2014. The year of 2010 was a low growth year with only a dividend growth of 5.3%. It has been a long slow recover from the bear market and decline of 2008 and I have had some low dividend growth years. However, dividends tend to growth more than inflation. Also my overall rate includes by RIF accounts from which I am making withdrawals and therefore has lower dividend increases or negative increase.
If I look at my Trading Account, which is the one I use for my income, my dividend growth is better. The lowest growth was 5.1% in 2017. For the last three years my dividend income growth was 13.5%, 7.59% and so far this year 8.3%.
Some company will not cut or cancel dividends unless they absolutely have to. This is because dividend investors are an unforgiving lot. Stocks that cut or cancel dividends get hammered by the market. Some companies will keep their dividends flat for a number of years if they have some financial problems. They will hope that they can resolve the problems before they have to cut dividends. Other companies regularly declare what they believe that they can afford and ignore the market. Their dividends can go up and down over time.
Know your companies and understand what their dividend policies are. Some companies will say what their dividend policy is and others you will be able to tell what it is from past history.
But all this volitivity is just background noise. If you can ignore the noise you can do well with dividend stocks over the long term. The best advice is never panic. People lose money in the stock market because they panic and do the wrong thing. Sometimes they buy because they think that they need to buy now otherwise the price of the stock will get too high in the future to buy, or they panic and sell because their stock has plummeted in price and they are afraid of losing more money. Never buy or sell because of panic. That is how you lose money.
You need to know the companies you have invested in. If you are in for the long term, then at some point a company will have problems. Most of these problems are solvable. However, I have sold companies that I have had for years. The reason is always because I have lost hope that they will recover.
On my other blog I wrote yesterday about Artis REIT (TSX-AX.UN, OTC-ARESF) ... learn more. Next, I will write about be Dorel Industries Inc (TSX-DII.B, OTC-DIIBF) ... learn more on Wednesday, July 22, 2020 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, July 16, 2020
Why Black Wealth Matters
Why Black Wealth Matters in White America
… and what blacks must learn to survive this new economy
By Solomon Ali, Private Equity Investor
The general population, otherwise known as the 99%, have a love/hate relationship with wealth. They resent those who have it, but spend their lives attempting to get it for themselves, all the while self-sabotaging that effort in ways that are avoidable if they knew the rules of the rich. Yes, the rich have rules. The reason most individuals, and certainly the majority of Black Americans, never accumulate any substantial savings is because they do not understand the nature of money and how it works.
Much of this lack of understanding and lack of access to financial education comes down to systemic racism that has been passed down from generation to generation within the black community. Most Black Americans, throughout American history, were shut out of our financial system, thereby not gaining the access or opportunity to accumulate wealth or an understanding of money that could have been passed down through the generations. Well, the time to start is now. More generational wealth means more societal influence and less vulnerability to the ills of civil rights infringements. In short, wealth equals life. Our very survival depends upon it.
The Wealthy Have A Different Mindset
Earning a lot of money does not make you wealthy. You will never out earn your lack of financial education or your bad money habits. It is like trying to out exercise your lack of nutritional knowledge or your bad eating habits; it is exhausting to take two steps forward and three steps back, not to mention futile. Being wealthy is much more about your financial behaviors and your financial intelligence quotient, than it is about how much income you earn. Wealth is also not an aesthetic pursuit. Driving an expensive car, buying a house you cannot afford, and wearing high end fashion labels doesn't make you wealthy. In fact, for most folks who have not yet attained enough steady wealth to afford those things comfortably, it can surely make you go broke.
Let's take a look at a well-known billionaire. Sir Richard Branson has a current estimated net worth of $4.3 billion, accumulated from his Virgin brand and an additional portfolio of assets. As with many wealthy people, the wealth they have accumulated is not an accident. If you took all that money away from him, he would still retain the same knowledge and behavioral patterns that made him wealthy in the first place. He would still understand how to raise capital, develop, and scale businesses, and invest his money with wisdom. If he had to begin today from ground zero, I am quite sure he would have a large net worth, once again, in less than five years' time.
Conversely, an individual who has poor money habits and wins the lottery, still does not understand how money works or the behaviors needed to grow and sustain wealth. There is a good chance he or she will be flat broke in less than five years. Although they were gifted a giant windfall, they were not rich, because they did not know the rules of the wealthy. Ever wonder why so many professional athletes and recording artists have gained enormous riches only to then lose it all?
To bring this lesson home, a person who earns $100,000 per year and spends $100,000 per year will prosper far less than a person who earns $40,000 per year and spends only $20,000 per year. The latter person is on the path towards building wealth, whereas the prior person is spinning his or her wheels and making no progress towards achieving wealth. In fact, bankruptcy could be in his or her future if there is an abrupt loss of income. You now have the idea. Wealth is the result of applied knowledge, discipline, behavioral patterns, and time, more than it is about a specific income. The higher the income, the more opportunities to save and invest, but behavior, values and discipline are the ultimate deciding factors.
Flash Does Not Equal Cash – It Mostly Equals Broke
Now let's take a look at Black American money habits and the value we have brought to this country's economy. In recent decades, Black Americans' value to corporations has largely been in the volume of goods they consume, which is greater than the average American. With a handful of exceptions, we have traditionally been consumers rather than creators.
According to the Selig Center for Economic Growth at the University of Georgia, “black buying power will rise from $1.3 trillion in 2017 up to $1.54 trillion by 2022. This estimate for 2022 reflects a 5.4% increase over a five-year estimate and reaching $1.46 trillion by 2021. The 108% increase in black buying power between 2000 and 2017 outperformed the 87% rise in white buying power and the 97% increase in total buying power (all races combined) during the same time period.”
Based on anecdotal evidence that I have observed, Black Americans are the largest consumers. We have been emotionally conditioned to believe that acquiring material things makes us wealthy, rather than producing, saving, and investing. Great for corporations, bad for black wealth.
If you look at money as energy and the exchange of energy, that is a lot of energy that is being freely handed over by black people in this country. Black people have been all too eager to relinquish their resources, aka their wealth building tools, in exchange for the next newest, greatest thing being marketed to them. Things like shoes, clothes, leased luxury cars, handbags and other flashy accoutrements will never make you wealthy, because they are not income producing assets.
The wealthy are not consumers. Yes, we all consume to some degree, but the wealthy are measured and strategic with how, when, and why they make a purchase. Their bank accounts' bottom line is far more important to them than the visual appearance of wealth. Once they have obtained some wealth and they do decide to make purchases within the luxury market, it is measured and typically amounts to a small percentage of their total net worth. The ultra-wealthy (think multi-millionaires or billionaires) do have the ability to purchase the highest-end luxury items that amount to a small percentage of their total net worth.
We Now Know That Aesthetics Do Not Equal Wealth. How is Wealth Really Defined?
The longer you can go without working and still have the ability to meet your financial obligations and retain your current lifestyle, the wealthier you are. Could you go one month, three months, six months, a year, without working? Or do you need that next paycheck to make ends meet and keep your creditors at bay? The wealthy always save and invest a portion of their income, because they know that money equals freedom. Money also equals the ability to make more money. This is when your money starts to work for you, rather than the other way around.
Wealthy and Poor People Focus Their Attention on Different Types of Money
There are 3 types of money. Earned money is the result of performing a job (you are exchanging your time, labor and energy for money), portfolio money is the result of money generated from income already earned that is now gaining value from individual stocks or bonds, or a diversified investment portfolio. Passive money is income that is earned from real estate, intellectual property/royalties, or multi-level marketing businesses with a workforce actively selling underneath you. With the last two types of income, portfolio income and passive income, you are essentially getting paid over and over for work that has already been done, or income that has already been earned. You have income-producing assets. Our people need more of the second and third types of money.
"Work and Spend" is a paradigm that is no longer sustainable for us. First, you only get compensated when you work, and there are a fixed number of hours in the day and a fixed amount of energy you can output to perform that work. That means there is a cap on how much money you can make through earned income. We exchange our energy for money. You only have so much energy. Earned W2 income through an employer is also heavily taxed. Your salary or wages are taxed by the federal government, your state's government (with a handful of exceptions) and social security. When all is said and done, you are lucky if you hold onto 50% to 60% of the money you have worked for. Then, if you overspend what you do bring home in a misguided effort to obtain the aesthetics of the wealthy, you are forfeiting any real power and keeping yourself on a hamster wheel. This disparity in how money is seen and utilized is why poor and middle-class individuals attempt to get rich by working more and working harder.
Wealthy individuals on the other hand focus on the other two types of money: portfolio money and passive income money. These forms of income are not dependent upon the number of hours in a day or your personal energy output, so they grow indefinitely, and are taxed less. According to Forbes, The current long-term capital gains tax rate ranges from 0% - 20%. Short-term capital gains tax is higher, though short-term investment losses can be deducted from your total tax liability for the year, offsetting, and any gains you earn. Point being, a person who is solely dependent upon a W2 salaried income who makes at least $50,000 per year is in the 22% tax bracket, higher than a wealthy person's capital gains income tax bracket. If you earn $100,000 in exchange for your work, you find yourself in the 25% tax bracket. You are earning less than the wealthy and paying more of a percentage of your income to Uncle Sam.
It is important for Black Americans to understand that if you invest some money for 13 months you will pay less on that investment income in the form of capital gains tax than you will on your earned salaried income. The more that pyramid flips in the favor of investment income or passive income, the less tax you will pay.
"The Borrower is Slave to the Lender" - Proverbs 22:7
As Black Americans, we are a spiritual people and always have been. It is ironic that one of the most repeated and taught bible verses about the borrower being slave to the lender has largely fallen on deaf ears in our community. Proverbs 22:7 clearly states that "the borrower is slave to the lender." Yet, many of us have chosen to continue to enslave ourselves in the form of credit card debt, government assistance and subprime interest rate loans that prevent us from building any real wealth and keep us beholden to a system that has marginalized us. As a Black American man, I have made the conscious choice to structure my finances to be a lender, and not a borrower.
Here is what you need to know. You will want to set a goal of building strong credit that you use sparingly, and only for the purpose of generating income producing assets. For example, you can purchase a car with financing once you have saved enough money to put down a minimum of 20% on the car at signing. The car's total purchase price should be no more than 15% of your total household income. Endless payments at high interest rates will leave you spinning your wheels and are to be avoided. We are talking about a certified car with a transparent warranty that you can purchase with a solid down payment, pay off within one year, and then drive for 4-5 years with no monthly payment. As you make your monthly payments over the course of one year you will also watch your credit score skyrocket. At the end of that year, you now own an asset, free and clear. The car payment that no longer exists can now be invested into a high interest yielding Roth IRA mutual fund, or, if you lack a liquid emergency fund in a savings account, you can start applying it towards that. Now you are working towards building wealth. Although a car is a depreciating asset, not having a monthly car payment is a wealth building asset, as is the trade-in value or sale value of that car.
A home is another potential wealth producing asset, since home ownership allows you to bypass rent payments that do not build equity. If held onto until the market is favorable for sellers, you can likely sell this asset for a profit. You can also rent it out to a qualified tenant at a modest monthly profit to earn yourself some rental income. If you are not yet able to purchase a home, your rent should be no higher than 25% of your total household income, so that you can work towards home ownership, or invest in other income producing assets.
Strong credit can also be used to leverage borrowed money into net profit, so that you are not servicing the debt of that borrowed money. The gross profits generated through leveraging that borrowed money is servicing the debt, while you pocket the net profits leveraged from that debt.
The beautiful thing about earning asset-based income is that it does not require your physical presence like a job does. Employment is trading time for money with little leverage. Borrowing at high interest rates and making indefinite payments on debt also offers no financial leverage to our community.
When you strategically borrow money to acquire income producing assets, rather than for the sake of consumerism, you make money off of the difference between the borrowed line of credit and the profit you earn by leveraging that borrowed line of credit. If I get a $10 million credit line from the bank and they are charging me $1 million in interest per year, but I can leverage that $10 million in credit to earn myself $3 million per year, I am earning a net profit of $2 million per year, while my income producing asset is servicing the debt, not me.
Let's scale the example to a more down to earth number. If you borrowed $30,000 from the bank to either invest in an existing business, improve upon your home, or start a business, and your interest rate is 5%. You are paying $1,500 in yearly interest on that loan. If you clear a profit of $3,000 in your first year, you have achieved a net profit of $1,500 (better than you could get from many traditional bank account), and the other half of your gross profit is servicing the debt for you until that debt is paid off. You have now leveraged debt into passive or portfolio income, or equity income if you are actively working that business.
Leverage is described in the dictionary as "the mechanical advantage or power gained by using a lever, or the power of action." Leverage merely compounds ones' strength and effectiveness. The ability to be paid for work that you do not do, is the result of leverage. It engages a multiplier effect as an asset develops in value.
The most important thing you will ever hear about building wealth is this: getting wealthy is not easy, but it is simple. It is not easy, because it requires the ability to delay gratification, however, the rules are quite simple. The second most important thing you will hear about building wealth is: there is no excuse to not save and invest. The third thing is not as readily known, but also important: banks always win, and the strategy I have adopted with my own finances is that I always prefer to position myself as a "bank." In other words, whether I am investing my own money or I borrow money to invest, I position myself as the lender in some capacity because the lender always wins.
How Do I Borrow or Lend Money as a Banker or Creditor if I Am Not (Yet) Wealthy?
If you are not wealthy (yet), the best approach is to leverage your creativity, intelligence, and your network. Pool your resources and partner with people to accomplish the same end, and you would hire someone to form your own company and structure your group deal. People would put in what they can afford and get their pro rata share based on the amount of their investment; whether real estate, small business, stock portfolio, or into a currently undervalued assets with a high potential for growth. My personal belief is to position yourself as the creditor in whatever you invest your money into. You are still considered to be an investor, but you are not investing in equity, you are loaning out money as a creditor so that you stay in first position to collect, no matter the outcome.
In my opinion, like it or not, the fate of your finances, your retirement, and ultimately your ability to establish generational wealth comes down to your commitment to the concepts laid out above. Purchase less than you can afford (and definitely not more than you can afford), shun consumerism for its own sake, avoid unsecured/credit card debt, save, and invest in portfolio and/or passive streams of income, and only borrow money to leverage into income producing assets.
It is time for us to win with money.
Mr. Ali is currently host of the podcast , MBA: Minority Business Access. Visit SolomonRCAli.info.
On my other blog I wrote yesterday about Obsidian Energy Ltd (TSX-OBE, NYSE-OBE) ... learn more. Next, I will write about Atlantic Power Corp (TSX-ATP, NYSE-AT) ... learn more on Friday, July 17, 2020 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.
… and what blacks must learn to survive this new economy
By Solomon Ali, Private Equity Investor
The general population, otherwise known as the 99%, have a love/hate relationship with wealth. They resent those who have it, but spend their lives attempting to get it for themselves, all the while self-sabotaging that effort in ways that are avoidable if they knew the rules of the rich. Yes, the rich have rules. The reason most individuals, and certainly the majority of Black Americans, never accumulate any substantial savings is because they do not understand the nature of money and how it works.
Much of this lack of understanding and lack of access to financial education comes down to systemic racism that has been passed down from generation to generation within the black community. Most Black Americans, throughout American history, were shut out of our financial system, thereby not gaining the access or opportunity to accumulate wealth or an understanding of money that could have been passed down through the generations. Well, the time to start is now. More generational wealth means more societal influence and less vulnerability to the ills of civil rights infringements. In short, wealth equals life. Our very survival depends upon it.
The Wealthy Have A Different Mindset
Earning a lot of money does not make you wealthy. You will never out earn your lack of financial education or your bad money habits. It is like trying to out exercise your lack of nutritional knowledge or your bad eating habits; it is exhausting to take two steps forward and three steps back, not to mention futile. Being wealthy is much more about your financial behaviors and your financial intelligence quotient, than it is about how much income you earn. Wealth is also not an aesthetic pursuit. Driving an expensive car, buying a house you cannot afford, and wearing high end fashion labels doesn't make you wealthy. In fact, for most folks who have not yet attained enough steady wealth to afford those things comfortably, it can surely make you go broke.
Let's take a look at a well-known billionaire. Sir Richard Branson has a current estimated net worth of $4.3 billion, accumulated from his Virgin brand and an additional portfolio of assets. As with many wealthy people, the wealth they have accumulated is not an accident. If you took all that money away from him, he would still retain the same knowledge and behavioral patterns that made him wealthy in the first place. He would still understand how to raise capital, develop, and scale businesses, and invest his money with wisdom. If he had to begin today from ground zero, I am quite sure he would have a large net worth, once again, in less than five years' time.
Conversely, an individual who has poor money habits and wins the lottery, still does not understand how money works or the behaviors needed to grow and sustain wealth. There is a good chance he or she will be flat broke in less than five years. Although they were gifted a giant windfall, they were not rich, because they did not know the rules of the wealthy. Ever wonder why so many professional athletes and recording artists have gained enormous riches only to then lose it all?
To bring this lesson home, a person who earns $100,000 per year and spends $100,000 per year will prosper far less than a person who earns $40,000 per year and spends only $20,000 per year. The latter person is on the path towards building wealth, whereas the prior person is spinning his or her wheels and making no progress towards achieving wealth. In fact, bankruptcy could be in his or her future if there is an abrupt loss of income. You now have the idea. Wealth is the result of applied knowledge, discipline, behavioral patterns, and time, more than it is about a specific income. The higher the income, the more opportunities to save and invest, but behavior, values and discipline are the ultimate deciding factors.
Flash Does Not Equal Cash – It Mostly Equals Broke
Now let's take a look at Black American money habits and the value we have brought to this country's economy. In recent decades, Black Americans' value to corporations has largely been in the volume of goods they consume, which is greater than the average American. With a handful of exceptions, we have traditionally been consumers rather than creators.
According to the Selig Center for Economic Growth at the University of Georgia, “black buying power will rise from $1.3 trillion in 2017 up to $1.54 trillion by 2022. This estimate for 2022 reflects a 5.4% increase over a five-year estimate and reaching $1.46 trillion by 2021. The 108% increase in black buying power between 2000 and 2017 outperformed the 87% rise in white buying power and the 97% increase in total buying power (all races combined) during the same time period.”
Based on anecdotal evidence that I have observed, Black Americans are the largest consumers. We have been emotionally conditioned to believe that acquiring material things makes us wealthy, rather than producing, saving, and investing. Great for corporations, bad for black wealth.
If you look at money as energy and the exchange of energy, that is a lot of energy that is being freely handed over by black people in this country. Black people have been all too eager to relinquish their resources, aka their wealth building tools, in exchange for the next newest, greatest thing being marketed to them. Things like shoes, clothes, leased luxury cars, handbags and other flashy accoutrements will never make you wealthy, because they are not income producing assets.
The wealthy are not consumers. Yes, we all consume to some degree, but the wealthy are measured and strategic with how, when, and why they make a purchase. Their bank accounts' bottom line is far more important to them than the visual appearance of wealth. Once they have obtained some wealth and they do decide to make purchases within the luxury market, it is measured and typically amounts to a small percentage of their total net worth. The ultra-wealthy (think multi-millionaires or billionaires) do have the ability to purchase the highest-end luxury items that amount to a small percentage of their total net worth.
We Now Know That Aesthetics Do Not Equal Wealth. How is Wealth Really Defined?
The longer you can go without working and still have the ability to meet your financial obligations and retain your current lifestyle, the wealthier you are. Could you go one month, three months, six months, a year, without working? Or do you need that next paycheck to make ends meet and keep your creditors at bay? The wealthy always save and invest a portion of their income, because they know that money equals freedom. Money also equals the ability to make more money. This is when your money starts to work for you, rather than the other way around.
Wealthy and Poor People Focus Their Attention on Different Types of Money
There are 3 types of money. Earned money is the result of performing a job (you are exchanging your time, labor and energy for money), portfolio money is the result of money generated from income already earned that is now gaining value from individual stocks or bonds, or a diversified investment portfolio. Passive money is income that is earned from real estate, intellectual property/royalties, or multi-level marketing businesses with a workforce actively selling underneath you. With the last two types of income, portfolio income and passive income, you are essentially getting paid over and over for work that has already been done, or income that has already been earned. You have income-producing assets. Our people need more of the second and third types of money.
"Work and Spend" is a paradigm that is no longer sustainable for us. First, you only get compensated when you work, and there are a fixed number of hours in the day and a fixed amount of energy you can output to perform that work. That means there is a cap on how much money you can make through earned income. We exchange our energy for money. You only have so much energy. Earned W2 income through an employer is also heavily taxed. Your salary or wages are taxed by the federal government, your state's government (with a handful of exceptions) and social security. When all is said and done, you are lucky if you hold onto 50% to 60% of the money you have worked for. Then, if you overspend what you do bring home in a misguided effort to obtain the aesthetics of the wealthy, you are forfeiting any real power and keeping yourself on a hamster wheel. This disparity in how money is seen and utilized is why poor and middle-class individuals attempt to get rich by working more and working harder.
Wealthy individuals on the other hand focus on the other two types of money: portfolio money and passive income money. These forms of income are not dependent upon the number of hours in a day or your personal energy output, so they grow indefinitely, and are taxed less. According to Forbes, The current long-term capital gains tax rate ranges from 0% - 20%. Short-term capital gains tax is higher, though short-term investment losses can be deducted from your total tax liability for the year, offsetting, and any gains you earn. Point being, a person who is solely dependent upon a W2 salaried income who makes at least $50,000 per year is in the 22% tax bracket, higher than a wealthy person's capital gains income tax bracket. If you earn $100,000 in exchange for your work, you find yourself in the 25% tax bracket. You are earning less than the wealthy and paying more of a percentage of your income to Uncle Sam.
It is important for Black Americans to understand that if you invest some money for 13 months you will pay less on that investment income in the form of capital gains tax than you will on your earned salaried income. The more that pyramid flips in the favor of investment income or passive income, the less tax you will pay.
"The Borrower is Slave to the Lender" - Proverbs 22:7
As Black Americans, we are a spiritual people and always have been. It is ironic that one of the most repeated and taught bible verses about the borrower being slave to the lender has largely fallen on deaf ears in our community. Proverbs 22:7 clearly states that "the borrower is slave to the lender." Yet, many of us have chosen to continue to enslave ourselves in the form of credit card debt, government assistance and subprime interest rate loans that prevent us from building any real wealth and keep us beholden to a system that has marginalized us. As a Black American man, I have made the conscious choice to structure my finances to be a lender, and not a borrower.
Here is what you need to know. You will want to set a goal of building strong credit that you use sparingly, and only for the purpose of generating income producing assets. For example, you can purchase a car with financing once you have saved enough money to put down a minimum of 20% on the car at signing. The car's total purchase price should be no more than 15% of your total household income. Endless payments at high interest rates will leave you spinning your wheels and are to be avoided. We are talking about a certified car with a transparent warranty that you can purchase with a solid down payment, pay off within one year, and then drive for 4-5 years with no monthly payment. As you make your monthly payments over the course of one year you will also watch your credit score skyrocket. At the end of that year, you now own an asset, free and clear. The car payment that no longer exists can now be invested into a high interest yielding Roth IRA mutual fund, or, if you lack a liquid emergency fund in a savings account, you can start applying it towards that. Now you are working towards building wealth. Although a car is a depreciating asset, not having a monthly car payment is a wealth building asset, as is the trade-in value or sale value of that car.
A home is another potential wealth producing asset, since home ownership allows you to bypass rent payments that do not build equity. If held onto until the market is favorable for sellers, you can likely sell this asset for a profit. You can also rent it out to a qualified tenant at a modest monthly profit to earn yourself some rental income. If you are not yet able to purchase a home, your rent should be no higher than 25% of your total household income, so that you can work towards home ownership, or invest in other income producing assets.
Strong credit can also be used to leverage borrowed money into net profit, so that you are not servicing the debt of that borrowed money. The gross profits generated through leveraging that borrowed money is servicing the debt, while you pocket the net profits leveraged from that debt.
The beautiful thing about earning asset-based income is that it does not require your physical presence like a job does. Employment is trading time for money with little leverage. Borrowing at high interest rates and making indefinite payments on debt also offers no financial leverage to our community.
When you strategically borrow money to acquire income producing assets, rather than for the sake of consumerism, you make money off of the difference between the borrowed line of credit and the profit you earn by leveraging that borrowed line of credit. If I get a $10 million credit line from the bank and they are charging me $1 million in interest per year, but I can leverage that $10 million in credit to earn myself $3 million per year, I am earning a net profit of $2 million per year, while my income producing asset is servicing the debt, not me.
Let's scale the example to a more down to earth number. If you borrowed $30,000 from the bank to either invest in an existing business, improve upon your home, or start a business, and your interest rate is 5%. You are paying $1,500 in yearly interest on that loan. If you clear a profit of $3,000 in your first year, you have achieved a net profit of $1,500 (better than you could get from many traditional bank account), and the other half of your gross profit is servicing the debt for you until that debt is paid off. You have now leveraged debt into passive or portfolio income, or equity income if you are actively working that business.
Leverage is described in the dictionary as "the mechanical advantage or power gained by using a lever, or the power of action." Leverage merely compounds ones' strength and effectiveness. The ability to be paid for work that you do not do, is the result of leverage. It engages a multiplier effect as an asset develops in value.
The most important thing you will ever hear about building wealth is this: getting wealthy is not easy, but it is simple. It is not easy, because it requires the ability to delay gratification, however, the rules are quite simple. The second most important thing you will hear about building wealth is: there is no excuse to not save and invest. The third thing is not as readily known, but also important: banks always win, and the strategy I have adopted with my own finances is that I always prefer to position myself as a "bank." In other words, whether I am investing my own money or I borrow money to invest, I position myself as the lender in some capacity because the lender always wins.
How Do I Borrow or Lend Money as a Banker or Creditor if I Am Not (Yet) Wealthy?
If you are not wealthy (yet), the best approach is to leverage your creativity, intelligence, and your network. Pool your resources and partner with people to accomplish the same end, and you would hire someone to form your own company and structure your group deal. People would put in what they can afford and get their pro rata share based on the amount of their investment; whether real estate, small business, stock portfolio, or into a currently undervalued assets with a high potential for growth. My personal belief is to position yourself as the creditor in whatever you invest your money into. You are still considered to be an investor, but you are not investing in equity, you are loaning out money as a creditor so that you stay in first position to collect, no matter the outcome.
In my opinion, like it or not, the fate of your finances, your retirement, and ultimately your ability to establish generational wealth comes down to your commitment to the concepts laid out above. Purchase less than you can afford (and definitely not more than you can afford), shun consumerism for its own sake, avoid unsecured/credit card debt, save, and invest in portfolio and/or passive streams of income, and only borrow money to leverage into income producing assets.
It is time for us to win with money.
Mr. Ali is currently host of the podcast , MBA: Minority Business Access. Visit SolomonRCAli.info.
On my other blog I wrote yesterday about Obsidian Energy Ltd (TSX-OBE, NYSE-OBE) ... learn more. Next, I will write about Atlantic Power Corp (TSX-ATP, NYSE-AT) ... learn more on Friday, July 17, 2020 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, July 14, 2020
Ontario Securities Commission
The OSC has a web site called Get Smarter About Money . You can sign up for their Newsletter. They have a section on Investing Basics. Under this section, they have a good article about bear markets.
On my other blog I wrote yesterday about TMX Group Ltd (TSX-X, OTC-TMXXF) ... learn more. Next, I will write about Obsidian Energy Ltd (TSX-OBE, NYSE-OBE) ... learn more on Wednesday, July 15, 2020 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.
On my other blog I wrote yesterday about TMX Group Ltd (TSX-X, OTC-TMXXF) ... learn more. Next, I will write about Obsidian Energy Ltd (TSX-OBE, NYSE-OBE) ... learn more on Wednesday, July 15, 2020 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, July 9, 2020
Evergreen Gavekal
The newsletters from Evergreen Gavekal are always interesting. This one had a wonderful new term of COPS for crazy-overpriced stocks. I have signed up to get their e-letters every week. They always have something interesting to say.
On my other blog I wrote yesterday about Morneau Shepell Inc (TSX-MSI, OTC-MSIXF) ... learn more. Next, I will write about Inter Pipeline Ltd (TSX-IPL, OTC-IPPLF) ... learn more on Friday, July 10, 2020 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.
On my other blog I wrote yesterday about Morneau Shepell Inc (TSX-MSI, OTC-MSIXF) ... learn more. Next, I will write about Inter Pipeline Ltd (TSX-IPL, OTC-IPPLF) ... learn more on Friday, July 10, 2020 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, July 7, 2020
Royal Caribbean
Jason Clark on Money Show has written an interesting article on the Royal Caribbean (NYSE-RCL). I think we are all wondering what will happen to this company and all the cruise lines.
On my other blog I wrote yesterday about Suncor Energy Inc (TSX-SU, NYSE-SU) ... learn more. Next, I will write about Morneau Shepell Inc (TSX-MSI, OTC-MSIXF) ... learn more on Wednesday, July 07, 2020 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.
On my other blog I wrote yesterday about Suncor Energy Inc (TSX-SU, NYSE-SU) ... learn more. Next, I will write about Morneau Shepell Inc (TSX-MSI, OTC-MSIXF) ... learn more on Wednesday, July 07, 2020 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, July 2, 2020
Something to Buy July 2020
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 dividend yield test in this note is a quick way of finding possible stock buys.
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. However, this is just a place to start. It is a good idea to check the stock with other tests, especially the P/S Ratio test.
For other testing, like P/E Ratios, P/S Ratios, P/CF Ratios, P/BV Ratios and Price/Graham Price Ratios, you use estimates or data from the last reported financial quarter.
If a stock is showing as a buy using the dividend yield test, I usually like to verify it is a buy by doing a P/S Ratio test. Here you compare the current P/S Ratio to the 10 year median P/S Ratio. If the current P/S Ratio is lower than the 10 year median, then the stock is a buy. I note that Morningstar gives a current P/S Ratio. The 10 year median ratio is shown in my review of a stock. The 10 year median ratio in a review is good for one year from the date of review.
This historical dividend yield test 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 it is not a valid test, I use N to show this. For these stocks, you might be better comparing the current dividend yield to the 10 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 July 2020 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 23 stocks in the Consumer Discretionary category. Four of these stocks (17%) are showing as cheap by the historically high dividend yield and they are Canadian Tire Corp (TSX-CTC.A, OTC-CDNAF), Leon's Furniture (TSX-LNF, OTC-LEFUF), Magna International Inc. (TSX-MG, NYSE-MGA), and Stingray Digital Group Inc (TSX-RAY.A). There is no change from last month.
Eight (35%) of Consumer Discretionary are showing cheap by historical median dividend yield. They are Canadian Tire Corp (TSX-CTC.A, OTC-CDNAF), Goeasy Ltd (TSX-GSY, OTC-EHMEF), Goodfellow Inc (TSX-GDL, OTC-GFELF), High Liner Foods (TSX-HLF, OTC-HLNFF), Leon's Furniture (TSX-LNF, OTC-LEFUF), Magna International Inc. (TSX-MG, NYSE-MGA), Savaria Corporation (TSX-SIS, OTC-SISXF), and Stingray Digital Group Inc (TSX-RAY.A). Linamar Corporation (TSX-LNR, OTC-LIMAF) has been removed from this list. Savaria Corporation (TSX-SIS, OTC-SISXF) has been added to this list.
I follow 10 Consumer Staples stocks. No stocks are showing as cheap by the historically high dividend yield. There is no change from last month.
Five stocks (50%) 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), Loblaw Companies (TSX-L, OTC-LBLCF), Metro Inc (TSX-MRU, OTC-MTRAF), and Saputo Inc. (TSX-SAP, OTC-SAPIF). North West Company (TSX-NWC, OTC-NWTUF) has been removed from this list.
I follow Five Health Care stocks. One stock (20%) is showing as cheap by the historically high dividend yield. It is Sienna Senior Living Inc (TSX-SIA, OTC-LWSCF). There is no change from last month.
Four stocks (80%) are cheap by the historical median dividend yield. The stocks are HLS Therapeutics Inc (TSX-HLS, OTC-HLTRF), Johnson and Johnson (NYSE-JNJ), Medtronic Inc. (NYSE-MDT), and Sienna Senior Living Inc (TSX-SIA, OTC-LWSCF). Chartwell Retirement Residences (TSX-CSH.UN, NYSE-CWSRF) has been removed from this list.
I follow 10 Energy stocks. One stock (10%) is showing as cheap by the historical high dividend yield. It is Canadian Natural Resources (TSX-CNQ, NYSE-CNQ). There is no change from last month.
There are four stocks (40%) showing as cheap by historical median dividend yield. They are Canadian Natural Resources (TSX-CNQ, NYSE-CNQ), Mullen Group (TSX-MTL, OTC-MLLGF), Ovintiv Inc (TSX-OVV, OTC-OVV), and Suncor Energy (TSX-SU, NYSE-SU). There is no change from last month.
I follow 8 Bank stocks. One stock (13%) is showing as cheap by the historically high dividend yield and it is and Toronto Dominion Bank (TSX-TD, NYSE-TD). There is no change from last month.
Six stocks (88%) are showing cheap by historical median dividend yield. They are Bank of Montreal (TSX-BMO, NYSE-BMO), Bank of Nova Scotia (TSX-BNS, NYSE-BNS), CIBC (TSX-CM, NYSE-CM), National Bank of Canada (TSX-NA, OTC-NTIOF), Royal Bank (TSX-RY, NYSE-RY), and Toronto Dominion Bank (TSX-TD, NYSE-TD). There is no change from last month.
I follow 14 Financial Service stocks. Two stocks (7%) are showing as cheap by the historically high dividend yield. They are Power Corp (TSX-POW, OTC-PWCDF), and Atrium Mortgage Investment Corp (TSX-AI, OTC-AMIVF). Atrium Mortgage Investment Corp (TSX-AI, OTC-AMIVF) has been added to this list.
Nine stocks (64%) are showing as cheap by the historical median dividend yield. These stocks are Accord Financial Corp (TSX-ACD, OTC-ACCFF), AGF Management Ltd (TSX-AGF.B, OTC-AGFMF), Alaris Royalty Corp (TSX-AD, OTC-ALARF), Atrium Mortgage Investment Corp (TSX-AI, OTC-AMIVF), CI Financial (TSX-CIX, OTC-CIFAF), Equitable Group Inc (TSX-EQB, OTC-EQGPF), IGM Financial (TSX-IGM, OTC-IGIFF), Onex Corp (TSX-ONEX, OTC-ONEXF) and Power Corp (TSX-POW, OTC-PWCDF). Chesswood Group (TSX-CHW, OTC-CHWWF) has been removed from this list.
I follow 5 Insurance stocks. Two stocks (40%) are showing as cheap by the historically high dividend yield. They are Great-West Lifeco Inc. (TSX-GWO, OTC-GWLIF), and Manulife Financial Corp (TSX-MFC, NYSE-MFC). There is no change from last month.
Four stocks (83%) are showing as cheap by historical median dividend yield. These stocks are Great-West Lifeco Inc. (TSX-GWO, OTC-GWLIF), IA Financial Corp (TSX-IAG, OTC-IDLLF), Manulife Financial Corp (TSX-MFC, NYSE-MFC), and Sun Life Financial (TSX-SLF, NYSE-SLF). 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 have 6 Construction stocks. None are showing as cheap by the historically high dividend yield. There is no change from last month.
Three stocks (50%) are showing as cheap by historical median dividend yield. They are Bird Construction Inc (TSX-BDT, OTC-BIRDF), Stantec Inc. (TSX-STN, NYSE-STN), and Toromont Industries Ltd (TSX-TIH, OTC-TMTNF). There is no change from last month.
I have 3 stocks I have left with the sub-index of Industrial. One stock (33%) as cheap by the historically high dividend yield. It is Finning International Inc. (TSX-FTT, OTC-FINGF). Russel Metals (TSX-RUS, OTC-RUSMF) has been removed from this list.
Three stocks (100%) are showing as cheap by historical median dividend yield. They are Exchange Income Corp (TSX-EIF, OTC-EIFZF), 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. Three stocks (43%) are showing as cheap by the historically high dividend yield. They are Exco Technologies Ltd. (TSX-XTC, OTC-EXCOF), Hammond Power Solutions Inc (TSX-HPS.A, OTC-HMDPF), and Intertape Polymer Group Inc (TSX-ITP, OTC-ITPOF). There is no change from last month.
Four stocks (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 follow 16 Services stocks. One stocks (6%) is showing as cheap by the historically high dividend yield. It is Pason Systems Inc. (TSX-PSI, OTC-PSYTF). Transcontinental Inc (TSX-TCL.A, OTC-TCLAF) has been removed from this list.
Six stocks (38%) are showing as cheap by historical median dividend yield. These stocks are Canadian National Railway (TSX-CNR, NYSE-CNI), Parkland Fuel Corp (TSX-PKI, OTC-PKIUF), Pason Systems Inc. (TSX-PSI, OTC-PSYTF), Ritchie Bros Auctioneers Inc (TSX-RBA, NYSE-RBA), Transcontinental Inc (TSX-TCL.A, OTC-TCLAF) and Wajax Corp (TSX-WJX, OTC-WJXFF). Parkland Fuel Corp (TSX-PKI, OTC-PKIUF), and Ritchie Bros Auctioneers Inc (TSX-RBA, NYSE-RBA) have been added to this list.
I follow 10 Material stocks. One stock (10%) is showing as cheap by the historically high dividend yield. It is Kirkland Lake Gold (TSX-KL, NYSE-KL). There is no change from last month.
Five stock (50%) are showing as cheap by historical median dividend yield. The stocks are Barrick Gold Corp (TSX-ABX, NYSE-ABX), Chemtrade Logistics Inc. Fund (TSX-CHE.UN, OTC-CGIFF), Hardwoods Distribution Inc. (TSX-HDI, OTC-HDIUF), Kirkland Lake Gold (TSX-KL, NYSE-KL), and Stella-Jones (TSX-SJ, OTC-STLJF). There is no change from last month.
I follow 10 Real Estate stocks. No stocks are showing as cheap by historically high dividend yield. There is no change from last month.
Five stocks (50%) are showing as cheap by historical median dividend yield. They are Choice Properties REIT (TSX-CHP.UN, OTC-PPRQF), First Capital Realty (TSX-FCR.UN, OTC-FCXXF), H & R REIT (TSX-HR.UN, OTC-HRUFF), Melcor Developments Inc. (TSX-MRD, OTC-MODVF), and SmartCentres REIT (TSX-SRU.UN, OTC-CWYUF). There is no change from last month.
I follow 3 of the Telecom Service stocks. One stock (33%) is showing as cheap by historically high dividend yield and it is Shaw Communications Inc. (TSX-SJR.B, NYSE-SJR). There is no change from last month
Three stocks (100%) are showing cheap by historical median dividend yield. These stocks are BCE (TSX-BCE, NYSE-BCE), Shaw Communications Inc (TSX-SJR.B, NYSE-SJR) and Telus Corp (TSX-T, NYSE-TU). There is no change from last month.
I follow 9 Tech stocks. One stock (11%) is show as showing as cheap by historical high dividend yield. It is Evertz Technologies (TSX-ET, OTC-EVTZF). Evertz Technologies (TSX-ET, OTC-EVTZF) has been added to this list.
Three stocks (33%) are showing cheap by historical median dividend yield. They are Computer Modelling Group Ltd. (TSX-CMG, OTC-CMDXF), Evertz Technologies (TSX-ET, OTC-EVTZF), and Sylogist Ltd (TSXV-SYZ, OTC-SYZLF). There is no change from last month.
I follow 7 of the Infrastructure type utility companies. One stock (14%) is showing as cheap by historical high dividend yield. It is Enbridge Inc. (TSX-ENB, NYSE-ENB). Enbridge Inc. (TSX-ENB, NYSE-ENB) has been added to this list
Five stocks (71%) are showing cheap by historical median dividend yield. They are AltaGas Ltd (TSX-ALA, OTC-ATGFF), Enbridge Inc. (TSX-ENB, NYSE-ENB), Keyera Corp (TSX-KEY, OTC-KEYUF), Pembina Pipeline Corp (TSX-PPL, NYSE-PBA) and TC Energy Corp (TSX-TRP, NYSE-TRP). Brookfield Infrastructure Partners (TSX-BIP.UN, NYSE-BIP) have been removed from this list.
I follow 10 of the Power type utility companies. One stock (10%) is showing as cheap by historical high dividend yield. It is ATCO Ltd (TSX-ACO.X, OTC-ACLLF). Canadian Utilities Ltd (TSX-CU, OTC-CDUAF) has been removed from this list.
Two stocks (20%) are showing cheap by historical median dividend yield. Those stocks are ATCO Ltd (TSX-ACO.X, OTC-ACLLF), and Canadian Utilities Ltd (TSX-CU, OTC-CDUAF). There is no change from last month.
On my other blog I wrote today about Empire Company Ltd (TSX-EMP.A, OTC-EMLAF) ... learn more. Next, I will write about Premium Brands Holdings Corp (TSX-PBH, OTC-PRBZF) ... learn more on Friday, July 03, 2020 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. However, this is just a place to start. It is a good idea to check the stock with other tests, especially the P/S Ratio test.
For other testing, like P/E Ratios, P/S Ratios, P/CF Ratios, P/BV Ratios and Price/Graham Price Ratios, you use estimates or data from the last reported financial quarter.
If a stock is showing as a buy using the dividend yield test, I usually like to verify it is a buy by doing a P/S Ratio test. Here you compare the current P/S Ratio to the 10 year median P/S Ratio. If the current P/S Ratio is lower than the 10 year median, then the stock is a buy. I note that Morningstar gives a current P/S Ratio. The 10 year median ratio is shown in my review of a stock. The 10 year median ratio in a review is good for one year from the date of review.
This historical dividend yield test 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 it is not a valid test, I use N to show this. For these stocks, you might be better comparing the current dividend yield to the 10 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 July 2020 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 23 stocks in the Consumer Discretionary category. Four of these stocks (17%) are showing as cheap by the historically high dividend yield and they are Canadian Tire Corp (TSX-CTC.A, OTC-CDNAF), Leon's Furniture (TSX-LNF, OTC-LEFUF), Magna International Inc. (TSX-MG, NYSE-MGA), and Stingray Digital Group Inc (TSX-RAY.A). There is no change from last month.
Eight (35%) of Consumer Discretionary are showing cheap by historical median dividend yield. They are Canadian Tire Corp (TSX-CTC.A, OTC-CDNAF), Goeasy Ltd (TSX-GSY, OTC-EHMEF), Goodfellow Inc (TSX-GDL, OTC-GFELF), High Liner Foods (TSX-HLF, OTC-HLNFF), Leon's Furniture (TSX-LNF, OTC-LEFUF), Magna International Inc. (TSX-MG, NYSE-MGA), Savaria Corporation (TSX-SIS, OTC-SISXF), and Stingray Digital Group Inc (TSX-RAY.A). Linamar Corporation (TSX-LNR, OTC-LIMAF) has been removed from this list. Savaria Corporation (TSX-SIS, OTC-SISXF) has been added to this list.
I follow 10 Consumer Staples stocks. No stocks are showing as cheap by the historically high dividend yield. There is no change from last month.
Five stocks (50%) 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), Loblaw Companies (TSX-L, OTC-LBLCF), Metro Inc (TSX-MRU, OTC-MTRAF), and Saputo Inc. (TSX-SAP, OTC-SAPIF). North West Company (TSX-NWC, OTC-NWTUF) has been removed from this list.
I follow Five Health Care stocks. One stock (20%) is showing as cheap by the historically high dividend yield. It is Sienna Senior Living Inc (TSX-SIA, OTC-LWSCF). There is no change from last month.
Four stocks (80%) are cheap by the historical median dividend yield. The stocks are HLS Therapeutics Inc (TSX-HLS, OTC-HLTRF), Johnson and Johnson (NYSE-JNJ), Medtronic Inc. (NYSE-MDT), and Sienna Senior Living Inc (TSX-SIA, OTC-LWSCF). Chartwell Retirement Residences (TSX-CSH.UN, NYSE-CWSRF) has been removed from this list.
I follow 10 Energy stocks. One stock (10%) is showing as cheap by the historical high dividend yield. It is Canadian Natural Resources (TSX-CNQ, NYSE-CNQ). There is no change from last month.
There are four stocks (40%) showing as cheap by historical median dividend yield. They are Canadian Natural Resources (TSX-CNQ, NYSE-CNQ), Mullen Group (TSX-MTL, OTC-MLLGF), Ovintiv Inc (TSX-OVV, OTC-OVV), and Suncor Energy (TSX-SU, NYSE-SU). There is no change from last month.
I follow 8 Bank stocks. One stock (13%) is showing as cheap by the historically high dividend yield and it is and Toronto Dominion Bank (TSX-TD, NYSE-TD). There is no change from last month.
Six stocks (88%) are showing cheap by historical median dividend yield. They are Bank of Montreal (TSX-BMO, NYSE-BMO), Bank of Nova Scotia (TSX-BNS, NYSE-BNS), CIBC (TSX-CM, NYSE-CM), National Bank of Canada (TSX-NA, OTC-NTIOF), Royal Bank (TSX-RY, NYSE-RY), and Toronto Dominion Bank (TSX-TD, NYSE-TD). There is no change from last month.
I follow 14 Financial Service stocks. Two stocks (7%) are showing as cheap by the historically high dividend yield. They are Power Corp (TSX-POW, OTC-PWCDF), and Atrium Mortgage Investment Corp (TSX-AI, OTC-AMIVF). Atrium Mortgage Investment Corp (TSX-AI, OTC-AMIVF) has been added to this list.
Nine stocks (64%) are showing as cheap by the historical median dividend yield. These stocks are Accord Financial Corp (TSX-ACD, OTC-ACCFF), AGF Management Ltd (TSX-AGF.B, OTC-AGFMF), Alaris Royalty Corp (TSX-AD, OTC-ALARF), Atrium Mortgage Investment Corp (TSX-AI, OTC-AMIVF), CI Financial (TSX-CIX, OTC-CIFAF), Equitable Group Inc (TSX-EQB, OTC-EQGPF), IGM Financial (TSX-IGM, OTC-IGIFF), Onex Corp (TSX-ONEX, OTC-ONEXF) and Power Corp (TSX-POW, OTC-PWCDF). Chesswood Group (TSX-CHW, OTC-CHWWF) has been removed from this list.
I follow 5 Insurance stocks. Two stocks (40%) are showing as cheap by the historically high dividend yield. They are Great-West Lifeco Inc. (TSX-GWO, OTC-GWLIF), and Manulife Financial Corp (TSX-MFC, NYSE-MFC). There is no change from last month.
Four stocks (83%) are showing as cheap by historical median dividend yield. These stocks are Great-West Lifeco Inc. (TSX-GWO, OTC-GWLIF), IA Financial Corp (TSX-IAG, OTC-IDLLF), Manulife Financial Corp (TSX-MFC, NYSE-MFC), and Sun Life Financial (TSX-SLF, NYSE-SLF). 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 have 6 Construction stocks. None are showing as cheap by the historically high dividend yield. There is no change from last month.
Three stocks (50%) are showing as cheap by historical median dividend yield. They are Bird Construction Inc (TSX-BDT, OTC-BIRDF), Stantec Inc. (TSX-STN, NYSE-STN), and Toromont Industries Ltd (TSX-TIH, OTC-TMTNF). There is no change from last month.
I have 3 stocks I have left with the sub-index of Industrial. One stock (33%) as cheap by the historically high dividend yield. It is Finning International Inc. (TSX-FTT, OTC-FINGF). Russel Metals (TSX-RUS, OTC-RUSMF) has been removed from this list.
Three stocks (100%) are showing as cheap by historical median dividend yield. They are Exchange Income Corp (TSX-EIF, OTC-EIFZF), 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. Three stocks (43%) are showing as cheap by the historically high dividend yield. They are Exco Technologies Ltd. (TSX-XTC, OTC-EXCOF), Hammond Power Solutions Inc (TSX-HPS.A, OTC-HMDPF), and Intertape Polymer Group Inc (TSX-ITP, OTC-ITPOF). There is no change from last month.
Four stocks (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 follow 16 Services stocks. One stocks (6%) is showing as cheap by the historically high dividend yield. It is Pason Systems Inc. (TSX-PSI, OTC-PSYTF). Transcontinental Inc (TSX-TCL.A, OTC-TCLAF) has been removed from this list.
Six stocks (38%) are showing as cheap by historical median dividend yield. These stocks are Canadian National Railway (TSX-CNR, NYSE-CNI), Parkland Fuel Corp (TSX-PKI, OTC-PKIUF), Pason Systems Inc. (TSX-PSI, OTC-PSYTF), Ritchie Bros Auctioneers Inc (TSX-RBA, NYSE-RBA), Transcontinental Inc (TSX-TCL.A, OTC-TCLAF) and Wajax Corp (TSX-WJX, OTC-WJXFF). Parkland Fuel Corp (TSX-PKI, OTC-PKIUF), and Ritchie Bros Auctioneers Inc (TSX-RBA, NYSE-RBA) have been added to this list.
I follow 10 Material stocks. One stock (10%) is showing as cheap by the historically high dividend yield. It is Kirkland Lake Gold (TSX-KL, NYSE-KL). There is no change from last month.
Five stock (50%) are showing as cheap by historical median dividend yield. The stocks are Barrick Gold Corp (TSX-ABX, NYSE-ABX), Chemtrade Logistics Inc. Fund (TSX-CHE.UN, OTC-CGIFF), Hardwoods Distribution Inc. (TSX-HDI, OTC-HDIUF), Kirkland Lake Gold (TSX-KL, NYSE-KL), and Stella-Jones (TSX-SJ, OTC-STLJF). There is no change from last month.
I follow 10 Real Estate stocks. No stocks are showing as cheap by historically high dividend yield. There is no change from last month.
Five stocks (50%) are showing as cheap by historical median dividend yield. They are Choice Properties REIT (TSX-CHP.UN, OTC-PPRQF), First Capital Realty (TSX-FCR.UN, OTC-FCXXF), H & R REIT (TSX-HR.UN, OTC-HRUFF), Melcor Developments Inc. (TSX-MRD, OTC-MODVF), and SmartCentres REIT (TSX-SRU.UN, OTC-CWYUF). There is no change from last month.
I follow 3 of the Telecom Service stocks. One stock (33%) is showing as cheap by historically high dividend yield and it is Shaw Communications Inc. (TSX-SJR.B, NYSE-SJR). There is no change from last month
Three stocks (100%) are showing cheap by historical median dividend yield. These stocks are BCE (TSX-BCE, NYSE-BCE), Shaw Communications Inc (TSX-SJR.B, NYSE-SJR) and Telus Corp (TSX-T, NYSE-TU). There is no change from last month.
I follow 9 Tech stocks. One stock (11%) is show as showing as cheap by historical high dividend yield. It is Evertz Technologies (TSX-ET, OTC-EVTZF). Evertz Technologies (TSX-ET, OTC-EVTZF) has been added to this list.
Three stocks (33%) are showing cheap by historical median dividend yield. They are Computer Modelling Group Ltd. (TSX-CMG, OTC-CMDXF), Evertz Technologies (TSX-ET, OTC-EVTZF), and Sylogist Ltd (TSXV-SYZ, OTC-SYZLF). There is no change from last month.
I follow 7 of the Infrastructure type utility companies. One stock (14%) is showing as cheap by historical high dividend yield. It is Enbridge Inc. (TSX-ENB, NYSE-ENB). Enbridge Inc. (TSX-ENB, NYSE-ENB) has been added to this list
Five stocks (71%) are showing cheap by historical median dividend yield. They are AltaGas Ltd (TSX-ALA, OTC-ATGFF), Enbridge Inc. (TSX-ENB, NYSE-ENB), Keyera Corp (TSX-KEY, OTC-KEYUF), Pembina Pipeline Corp (TSX-PPL, NYSE-PBA) and TC Energy Corp (TSX-TRP, NYSE-TRP). Brookfield Infrastructure Partners (TSX-BIP.UN, NYSE-BIP) have been removed from this list.
I follow 10 of the Power type utility companies. One stock (10%) is showing as cheap by historical high dividend yield. It is ATCO Ltd (TSX-ACO.X, OTC-ACLLF). Canadian Utilities Ltd (TSX-CU, OTC-CDUAF) has been removed from this list.
Two stocks (20%) are showing cheap by historical median dividend yield. Those stocks are ATCO Ltd (TSX-ACO.X, OTC-ACLLF), and Canadian Utilities Ltd (TSX-CU, OTC-CDUAF). There is no change from last month.
On my other blog I wrote today about Empire Company Ltd (TSX-EMP.A, OTC-EMLAF) ... learn more. Next, I will write about Premium Brands Holdings Corp (TSX-PBH, OTC-PRBZF) ... learn more on Friday, July 03, 2020 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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