The next item at the Opening Ceremonies of the Money Show for 2015 was a Globe and Mail Panel. This panel was called "What Investors Need to Know Right Now". Scott Barlow, Market Strategist; Rob Carrick, Portfolio Strategies Columnist and Jennifer Dowty, Equities Analysts were on the panel.
Scott: What new investors should be in are stable companies with steady and stable cash flows over a long term period. These will outperform in a financial crisis. These are good companies that are Blue Chip. Why you should look for stable long term cash flow is because cash flow does not lie.
Jennifer: Investing takes time. You should stagger investments. You should always have an exit strategy. Know what down side risk that you are willing to stand. You want companies for which analysts are revising estimates up. You want companies that are diversified, that is has lots of customers. Look at fundamentals and the management team.
She gave a site of www.sedi.ca to check insider information, but I must admit when I looked at this side I found it hard to use and not useful at all. I have access to INK Reports and I have no trouble finding information on these reports.
She says what you should be looking for is whether insiders are accumulating or selling shares. She says that you should use technical analysis to determine when to get into or out of a stock.
Question: What about Cash as a Portfolio Allocation?
Scott: Cash is like a put option on the market. Warren Buffet has currently lots of cash. This is even true when interest on cash is just 60 basis points.
Jennifer: Cash is something that investors should consider. Cash is the outperforming investment this year.
Rob: Online Brokerages is so cheap, so you can buy investments in small bits. Use Investment Savings Accounts in your trading account.
Scott: Do you look at cheap trading as the ability to trade more. This is a mistake. Do not trade too much. Overtrading is a mistake.
Question: Is it a stock pickers market?
Rob: Currently Mutual Funds are outperforming the market.
Scott: It is not a stock pickers market. Active management tends to outperform in down markets. It is a macro driven market, this are themes.
Jennifer: Thinks it is a stock pickers market. It is a broad based market.
Question: Is there is also a bond bubble?
Rob: The Fed will raise interest rates.
Scott: China is selling US treasuries. They are selling a lot of them but it is having no effect on the market. Going for yield is not a good thing in the long term. A lot of shale oil companies cannot pay interest on their debts. There is no bond bubble
Jennifer: What you should have is dividend stocks and a few bonds. Dividend stocks are not necessarily safe. Dividends on oil companies are in decline. Even bank stocks have risk. Royal Bank (TSX-RY) is down.
Scott: The higher the yield the higher the risk. Do not chase dividends.
Jennifer: Higher yields are not higher risk. It depends on the company. For example REITs have higher yields but are not risker. Look at the companies.
Scott: Utilities and telecoms etc. are sensitive to interest rates and he does not think that they will climb much.
Question: Diversification: What does it look like today? (60 - 40)
Scott: The reason to diversity is to reduce risk. It is better to have bonds and stocks. We could go grinding on or we could do very well. We do not know what will happen.
Jennifer: Age or risk tolerance is what we should take into account re diversification. Have no more than 10% of portfolio in one stock. Diversify by industry and country.
Rob: If you have a defined benefit pension, you should consider it as a bond.
Scott: You should still buy US stocks. We have long periods when the Canadian Market outperforms the US. Now we are into a period when the US will outperform. This will be perhaps for 10 years. He likes tech stocks. Health Care stocks will have a demographic push.
Jennifer: Hold investments outside Canada. Does not see the CDN$ to US$ rebounding in the near term. Canadian market is 30% resources so it will underperform.
Rob: Should we hedge re foreign stock?
Scott: He is not in favour of hedging for individuals. Also Mutual Funds cannot predict currencies so they should stop hedging.
Jennifer: This time there is a lot of fear in the market. There is a market sale going on. When 40% bearish, 40% neutral and 20% bullish, it is a positive indicator. CNR had a break out today. A theme of emails is loss aversion. People do not want to accept a loss. There is the cockroach rule. If there is one there are lots. If a company has a problem, there may be more problems.
Scott: Selling is very difficult. The more exciting the portfolio, the more risk. A portfolio should be boring.
Jennifer: If an investor has a concern, they should email the public relations of the company. You should also listen to the conference call.
On my other blog I am today writing about TransForce Inc. (TSX-TIF, OTC-TFIFF) ... learn more...
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.
Tuesday, November 10, 2015
Monday, November 9, 2015
Update Notes
When I review stock price and dividends each month, I also take the opportunity to look at a bit closer at some of the stocks I cover. These some of the stocks I looked at more closely.
Bombardier Inc. (TSX-BBD.B, OTC-BDRBF)
In an article in the Canadian Business Magazine, Ross Marowits of the Canadian Press talks about how Bombardier has not finished initiatives aimed at shoring up the company's financial position. Bombardier has just gotten $1-billion lifeline from the Quebec government
However, not everyone is keen about this move by the Quebec Government. See some comments about this in the Montreal Gazette.
McCoy Global Inc. (TSX-MCB, OTC-MCCRF)
This company has suspended its dividend in the third quarter of 2015 because it is uncertain when oil prices will recover. This company services the oil business. See the September 3, 2015 News Release.
TransAlta Corp (TSX-TA, NYSE-TAC)
I have had this company since 1987. I have been worried about it for a while. I was recently at the Money Show in Toronto and one speaker said that TransAlta has been destroying shareholder value for the last 15 years. This is a bit harsh. But they did reduce their dividend by some 38% in 2015 as they are having problems.
They do have a strategic plan for move this company forward. Most analysts are rather negative on this stock at present and feel that if you want to invest in the utility sector there are better choices. One analyst said that it will take them 6 months or longer to turn around.
One problem is that they are using coal to generate electricity and most governments and people want this changed. This is probably now a bigger problem with the new NDP government in Alberta.
Smart REIT (TSX-SRU.UN, OTC-CWYUF)
For whatever reason, so many sites have not updated to the new name. I went on the TD site today and they are still calling this stock in Canada as Calloway Real Estate Investment Trust (TSX-CWT.UN) although for the for the OTC entry they called this stock Smart REIT. Under another site they call the company Smart REIT but give the old TSX symbol of CWT.UN.
The company announced the change on July 6, 2015 and said they expected the change to be effective July 8, 2015. For their website, you get the same one whether you go to callowayreit.com or smartreit.ca. However, the usual way websites work is that if there is a name change, the address on the browser changes to the correct one when you enter an address. In this case the web address says either as callowayreit.com or smartreit.ca.
You have to wonder what the problem with this change is.
On my other blog I am today writing about TransForce Inc. (TSX-TIF, OTC-TFIFF) ... learn more...
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.
Bombardier Inc. (TSX-BBD.B, OTC-BDRBF)
In an article in the Canadian Business Magazine, Ross Marowits of the Canadian Press talks about how Bombardier has not finished initiatives aimed at shoring up the company's financial position. Bombardier has just gotten $1-billion lifeline from the Quebec government
However, not everyone is keen about this move by the Quebec Government. See some comments about this in the Montreal Gazette.
McCoy Global Inc. (TSX-MCB, OTC-MCCRF)
This company has suspended its dividend in the third quarter of 2015 because it is uncertain when oil prices will recover. This company services the oil business. See the September 3, 2015 News Release.
TransAlta Corp (TSX-TA, NYSE-TAC)
I have had this company since 1987. I have been worried about it for a while. I was recently at the Money Show in Toronto and one speaker said that TransAlta has been destroying shareholder value for the last 15 years. This is a bit harsh. But they did reduce their dividend by some 38% in 2015 as they are having problems.
They do have a strategic plan for move this company forward. Most analysts are rather negative on this stock at present and feel that if you want to invest in the utility sector there are better choices. One analyst said that it will take them 6 months or longer to turn around.
One problem is that they are using coal to generate electricity and most governments and people want this changed. This is probably now a bigger problem with the new NDP government in Alberta.
Smart REIT (TSX-SRU.UN, OTC-CWYUF)
For whatever reason, so many sites have not updated to the new name. I went on the TD site today and they are still calling this stock in Canada as Calloway Real Estate Investment Trust (TSX-CWT.UN) although for the for the OTC entry they called this stock Smart REIT. Under another site they call the company Smart REIT but give the old TSX symbol of CWT.UN.
The company announced the change on July 6, 2015 and said they expected the change to be effective July 8, 2015. For their website, you get the same one whether you go to callowayreit.com or smartreit.ca. However, the usual way websites work is that if there is a name change, the address on the browser changes to the correct one when you enter an address. In this case the web address says either as callowayreit.com or smartreit.ca.
You have to wonder what the problem with this change is.
On my other blog I am today writing about TransForce Inc. (TSX-TIF, OTC-TFIFF) ... learn more...
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.
Friday, November 6, 2015
Money Show 2015 - Mark Mills
Mark Mills was the third speaker at the Opening Ceremonies of the Money Show for 2015. His talk was called "Energy and Technology: The Virtuous Circle". He is the founder and CEO of Digital Power Group.
There is long term investing in tech and oil. There is no limit to resources and getting resources is all about tech. There was a big tech change when the MAC computer came out in 1984. There are structural changes going on currently with tech and the internet.
Everyone thinks oil is past because the price of oil is low. We are in the second year of an oil price collapse. Growth has slowed but it has not stopped. The demand for oil has collapsed. We are in the beginning of a serial glut in oil.
You can make pigs fly by pushing them off a cliff, but in the end gravity will matter. Government policies can change things, but only temporarily. We have one billion cars, in the next decade we will have one billion more cars.
Will future cars be run by batteries or oil? Per pound of batteries, a car can go one half mile. It can go 10 times further on a pound of oil fuel. Batteries will get better and they will improve. We might even triple batteries power and get 2 miles per pound of batteries. There is no path to this currently. However, we can triple miles per pound of fuel to get 10 miles per pound. This is currently possible. So, in the future cars will still use oil.
Yes, the Millennials are part of a sharing economy. However, when they get money, they buy cars. The current economy is just slowing them down.
What about the transformation in electricity from solar. If we can raise the temperature for power plans to 75 degrees we would have power plants that are 3% more efficient. If we can do that to all the power plants in America we would get 1000% more electricity than we get from all the solar power plants we now have in North America. Solar arrays will get better, but they will not get better 1000%. So oil is still going to be used in producing electricity.
Google a few years ago tried to make renewals cheaper than oil. They stopped a year and half ago because the google engineers concluded was that they would need new science to do this. It is not tech with renewables that is changing the world. It is shale oil.
Tech has made shale oil possible. This is manufacturing oil from rocks. The US is now the largest swing producer of oil. There are hundreds of companies in the US that can turn oil off and on in a matter of months or weeks. Shale boom began with oil was at $50 a barrel. Today we have better tech, so there will be a boom if oil reaches $55 a barrel.
Other tech will get better. What matters is how much Capex (capital expense) for energy out. The shale oil companies in the US have improved their Capex by around 400% in the last 5 years. This is a rate of increase 3 to5 times fast than all alternative energy technologies. The shale oil companies can do the same over the next 4 to 5 years.
Shale oil now cost $10 to $55 a barrel and if they just double the efficiencies of their rigs they can improve that to $5 to $25 per barrel. This is bullish for the US and is also bullish for Canada, as Canada has a lot of shale oil fields. He is bullish on oil; he is bullish on North America; bullish on the whole technologies sector and bullish on growth.
On my other blog I am today writing about Molson Coors Canada (TSX-TPX.B, NYSE-TAP) ... learn more...
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.
There is long term investing in tech and oil. There is no limit to resources and getting resources is all about tech. There was a big tech change when the MAC computer came out in 1984. There are structural changes going on currently with tech and the internet.
Everyone thinks oil is past because the price of oil is low. We are in the second year of an oil price collapse. Growth has slowed but it has not stopped. The demand for oil has collapsed. We are in the beginning of a serial glut in oil.
You can make pigs fly by pushing them off a cliff, but in the end gravity will matter. Government policies can change things, but only temporarily. We have one billion cars, in the next decade we will have one billion more cars.
Will future cars be run by batteries or oil? Per pound of batteries, a car can go one half mile. It can go 10 times further on a pound of oil fuel. Batteries will get better and they will improve. We might even triple batteries power and get 2 miles per pound of batteries. There is no path to this currently. However, we can triple miles per pound of fuel to get 10 miles per pound. This is currently possible. So, in the future cars will still use oil.
Yes, the Millennials are part of a sharing economy. However, when they get money, they buy cars. The current economy is just slowing them down.
What about the transformation in electricity from solar. If we can raise the temperature for power plans to 75 degrees we would have power plants that are 3% more efficient. If we can do that to all the power plants in America we would get 1000% more electricity than we get from all the solar power plants we now have in North America. Solar arrays will get better, but they will not get better 1000%. So oil is still going to be used in producing electricity.
Google a few years ago tried to make renewals cheaper than oil. They stopped a year and half ago because the google engineers concluded was that they would need new science to do this. It is not tech with renewables that is changing the world. It is shale oil.
Tech has made shale oil possible. This is manufacturing oil from rocks. The US is now the largest swing producer of oil. There are hundreds of companies in the US that can turn oil off and on in a matter of months or weeks. Shale boom began with oil was at $50 a barrel. Today we have better tech, so there will be a boom if oil reaches $55 a barrel.
Other tech will get better. What matters is how much Capex (capital expense) for energy out. The shale oil companies in the US have improved their Capex by around 400% in the last 5 years. This is a rate of increase 3 to5 times fast than all alternative energy technologies. The shale oil companies can do the same over the next 4 to 5 years.
Shale oil now cost $10 to $55 a barrel and if they just double the efficiencies of their rigs they can improve that to $5 to $25 per barrel. This is bullish for the US and is also bullish for Canada, as Canada has a lot of shale oil fields. He is bullish on oil; he is bullish on North America; bullish on the whole technologies sector and bullish on growth.
On my other blog I am today writing about Molson Coors Canada (TSX-TPX.B, NYSE-TAP) ... learn more...
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.
Thursday, November 5, 2015
Money Show 2015 - Peter Hodson
Peter Hodson was the second speaker at the Opening Ceremonies of the Money Show for 2015. His talk was called "Everything You Need to Know in 25 Minutes". He starts off with saying that with markets there is always something to look at; there is always something going on and there is always something to worry about.
He says that the thing with Doom and Gloom reports that if you keep predicting a crash you will eventually be right. People predict Interest rate panic, Equity Bubbles, Housing Bubblies, they say markets are near and new high and we have an artificial economy. Things do change and when things are bad, stocks are cheap.
For example look at Priceline Group Inc. (NASDAQ-PCLN). After the 9/11 attacks they put together travel packages. Of course at that time no one was ever going to travel again. The stock was priced at $6.60. Today the stock's price is at $1455.00.
A common mistake is saying a stock is too expensive. If a stock is a $1 more than you like pay the $1. Another mistake is gambling. It is a mistake to sell a stock too early. He waits for a pullback. Another mistake is holding on to loser and looking at where a stock has been. What a stock has been is currently irrelevant.
What you should do is buy a great company at a high price, not a mediocre company at a good price. The problem with Bay Street Analysts is that they follow trends and they are conservative. You should ignore their target prices.
There is the 20% rule. You should ignore minor price fluctuations. If there is a big move it that means change. Do not be scared off. Pull the weeds and water the flowers. That is you should sell your losers and keep good companies. A diamond is still a diamond even if it is in the garbage.
Sources of Ideas are too many to list. Looking for new highs is useful, especially if they are with high volumes. Initial dividends are significant statements. Some other places are BNN's Top picks, Canadian Business Magazine, Investor's Daily Business, increasing dividends, rising revenue with rising earnings, companies doing better, Sedar, Seeking Alpha. You should avoid internet chatrooms, newspapers and CNBC.
What you should not do. Do not follow the TSX, do not react, do no panic, do not trade too much and do not over concentrate your portfolio. You should have 20 stocks not 200 stocks in your portfolio. Also ignore target prices. The wealthiest people have concentrated portfolios. You should also sometimes take relatively high bets.
What are the best signals? One of the best is if a company announces its first dividend. Ensure that the dividend is sustainable. High yields are sometimes too good to be true. It is better to start with a small dividend and grow it.
You should look for dividend growth. You should consider payout ratios, debt/equity, interest cover and revenue/earnings growth when evaluating dividend sustainability. Be aware of various ways payout ratios can be calculated.
The Investment industry wants all of your money. They design products to sell. Dealers follow the trends and that is the exactly wrong plan. The fee grab on a $100,000 portfolio growing at 7% for 50 years makes fees of $1.8M. Over 60 years, fees will eat up 69% of your returns.
Leveraged ETFs are the very worst thing you can buy. There are high fees whether you are right or wrong. The GASL (US) ETF had a unit price of $4097 in 2011 and by 2015 the unit price was $28.16.
New closed-end Funds are the second worst thing you can buy. Startup fees are 7% plus. There are ongoing high fees. Usually there is an immediate discount to the NAV. These funds are designed to sell and move on.
Why would you buy Mutual Funds? You pay high fees for below average performance. Any fund that is hot will not stay there. This is a reversion to the mean. Mutual Funds are designed to fail and to keep your money. They are not designed to make you money.
What about Micro Caps? These are stocks with a market cap until $5 to $10M. The cost of a company going public would just eat into your capital. There will be constant dilutions (that is company selling more shares). For the company to go public it will cost around 5% of the value of the company. The odds are stacked against you big time.
Some of the best companies out there are ones that never issued more shares. Examples are Home Capital Group Inc. (TSX-HCG), Constellation Software Inc. (TSX-CSU), Enghouse Systems Ltd. (TSX-ESL), and AirBoss of America Corp. (TSX-BOS). Buy companies that do not use their shares like an ATM.
Consistency counts when you are investing in a company. If they screw-up the company is going to have a lower value. Examples are Sandvine Corp.(TSX-SVC) and WiLan Inc. (TSX-WIN).
They get 36,000 question emails and the biggest question is "Why is my Stock Down 2%?" If you are a long term investor this does not matter. Stocks go sometimes go down and it means nothing. Over a 10 year horizon, what happens today is immaterial.
In summary, you should buy companies in a strong industry; buy growing companies and ones with a competitive edge that can keep their advantage. Buy companies that are well financed, that are able to communicate to investors and have good management that own stock. Get the stock at an attractive valuation and you have a worthwhile investment. What is good amount of insider ownership is 30%.
On my other blog I am today writing about Pason Systems Inc. (TSX-PSI, OTC-PSYTF) ... learn more...
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.
He says that the thing with Doom and Gloom reports that if you keep predicting a crash you will eventually be right. People predict Interest rate panic, Equity Bubbles, Housing Bubblies, they say markets are near and new high and we have an artificial economy. Things do change and when things are bad, stocks are cheap.
For example look at Priceline Group Inc. (NASDAQ-PCLN). After the 9/11 attacks they put together travel packages. Of course at that time no one was ever going to travel again. The stock was priced at $6.60. Today the stock's price is at $1455.00.
A common mistake is saying a stock is too expensive. If a stock is a $1 more than you like pay the $1. Another mistake is gambling. It is a mistake to sell a stock too early. He waits for a pullback. Another mistake is holding on to loser and looking at where a stock has been. What a stock has been is currently irrelevant.
What you should do is buy a great company at a high price, not a mediocre company at a good price. The problem with Bay Street Analysts is that they follow trends and they are conservative. You should ignore their target prices.
There is the 20% rule. You should ignore minor price fluctuations. If there is a big move it that means change. Do not be scared off. Pull the weeds and water the flowers. That is you should sell your losers and keep good companies. A diamond is still a diamond even if it is in the garbage.
Sources of Ideas are too many to list. Looking for new highs is useful, especially if they are with high volumes. Initial dividends are significant statements. Some other places are BNN's Top picks, Canadian Business Magazine, Investor's Daily Business, increasing dividends, rising revenue with rising earnings, companies doing better, Sedar, Seeking Alpha. You should avoid internet chatrooms, newspapers and CNBC.
What you should not do. Do not follow the TSX, do not react, do no panic, do not trade too much and do not over concentrate your portfolio. You should have 20 stocks not 200 stocks in your portfolio. Also ignore target prices. The wealthiest people have concentrated portfolios. You should also sometimes take relatively high bets.
What are the best signals? One of the best is if a company announces its first dividend. Ensure that the dividend is sustainable. High yields are sometimes too good to be true. It is better to start with a small dividend and grow it.
You should look for dividend growth. You should consider payout ratios, debt/equity, interest cover and revenue/earnings growth when evaluating dividend sustainability. Be aware of various ways payout ratios can be calculated.
The Investment industry wants all of your money. They design products to sell. Dealers follow the trends and that is the exactly wrong plan. The fee grab on a $100,000 portfolio growing at 7% for 50 years makes fees of $1.8M. Over 60 years, fees will eat up 69% of your returns.
Leveraged ETFs are the very worst thing you can buy. There are high fees whether you are right or wrong. The GASL (US) ETF had a unit price of $4097 in 2011 and by 2015 the unit price was $28.16.
New closed-end Funds are the second worst thing you can buy. Startup fees are 7% plus. There are ongoing high fees. Usually there is an immediate discount to the NAV. These funds are designed to sell and move on.
Why would you buy Mutual Funds? You pay high fees for below average performance. Any fund that is hot will not stay there. This is a reversion to the mean. Mutual Funds are designed to fail and to keep your money. They are not designed to make you money.
What about Micro Caps? These are stocks with a market cap until $5 to $10M. The cost of a company going public would just eat into your capital. There will be constant dilutions (that is company selling more shares). For the company to go public it will cost around 5% of the value of the company. The odds are stacked against you big time.
Some of the best companies out there are ones that never issued more shares. Examples are Home Capital Group Inc. (TSX-HCG), Constellation Software Inc. (TSX-CSU), Enghouse Systems Ltd. (TSX-ESL), and AirBoss of America Corp. (TSX-BOS). Buy companies that do not use their shares like an ATM.
Consistency counts when you are investing in a company. If they screw-up the company is going to have a lower value. Examples are Sandvine Corp.(TSX-SVC) and WiLan Inc. (TSX-WIN).
They get 36,000 question emails and the biggest question is "Why is my Stock Down 2%?" If you are a long term investor this does not matter. Stocks go sometimes go down and it means nothing. Over a 10 year horizon, what happens today is immaterial.
In summary, you should buy companies in a strong industry; buy growing companies and ones with a competitive edge that can keep their advantage. Buy companies that are well financed, that are able to communicate to investors and have good management that own stock. Get the stock at an attractive valuation and you have a worthwhile investment. What is good amount of insider ownership is 30%.
On my other blog I am today writing about Pason Systems Inc. (TSX-PSI, OTC-PSYTF) ... learn more...
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.
Wednesday, November 4, 2015
Something to Buy November 2015
There is always something to buy in the stock market. On Monday, I put out a list of the stocks that I covered and showed what stock might be a good deal based on dividend yield. Now I am trying to categorize what sorts of stocks may be a good deal based on dividend yield.
The advantages to using dividend yield to judge how cheap or expensive a stock is, is that you are not using estimates or old data (like last reported quarter's data). You are using today's stock price and today's dividend yield.
For other testing, like using P/E Ratios and Price/Graham Price Ratios, you use EPS estimates or from the last reported financial quarter. When using P/S Ratios, P/CF Ratios or P/BV Ratios you are using data from the last reported financial quarter.
However, no system is perfect. But if you are interested in buy a stock a list of stocks cheap or reasonable using dividend yield data might be a good place to start.
Categorizing stocks is not as simple as it might seem. Every site you go to has categorized stocks a bit differently. I try to keep this as simple as possible. See my spreadsheet here to see what stocks are showing whether a stock is relatively cheap based on historical high dividend yields (P/Hi), historical average dividend yields (P/Ave), historical median dividend yields (P/Med) or on 5 year median dividend yields (P/5Yr).. As in other spreadsheets, you can highlight a line or a number of lines for better viewing.
In the following notes I am only going to list stocks showing as cheap using the historical high dividend yields (P/Hi) and historical median dividend yields (P/Med).
I follow 19 stocks in the consumer discretionary category. Of these stocks, only Dorel Industries (TSX-DII.B) is showing as cheap by the historically high dividend yield. Nine (or 47%) are showing cheap by historical median dividend yield. They are the one stock previously named and Canadian Tire Corporation (TSX-CTC.A); Goodfellow Inc. (TSX-GDL); High Liner Foods (TSX-HLF); Leon's Furniture (TSX-LNF); Magna International Inc. (TSX-MG0, Molson Coors Canada (TSX-TPX.B); Reitmans (Canada) Ltd. (TSX-RET.A) and Thomson Reuters Corp (TSX-TRI).
Note: Showing Le Chateau (TSX-CTU.A) as cheap last month was a mistake.
I follow 10 Consumer Staples stocks. None are showing as cheap by the historically high dividend yield. Two stocks (or 20%) are showing cheap by historical median dividend yield. These are Jean Coutu Group Inc. (TSX-PJC.A) and Loblaw Companies (TSX-L).
I only follow two Health Care stocks and both are US stocks. They are both cheap by the historical median dividend yield. The stocks are Johnson and Johnson (NYSE-JNJ) and Medtronic Inc. (NYSE-MDT).
I follow 12 Real Estate stocks. None are showing as cheap by the historically high dividend yield. Four stocks (or 33%) are showing cheap historical median dividend yield. They are Artis REIT (TSX-AX.UN); FirstService Corp (TSX-FSV), Granite Real Estate (TSX-GRT.UN) and Melcor Developments Inc. (TSX-MRD).
I follow 6 Bank stocks. None are showing as cheap by the historically high dividend yield. Five stocks (or 83%) are showing cheap by the historical median dividend yield. These stocks are Bank of Nova Scotia (TSX-BNS); Barclays PLC (NYSE-BCS), National Bank of Canada (TSX-NA); Royal Bank (TSX-RY) and Toronto Dominion Bank (TSX-TD).
I follow 12 Financial Service stocks. One is showing as cheap by the historically high dividend yield and that is Home Capital Group. Eight (or 67%) stocks are showing cheap by the historical median dividend yield. These stocks are AGF Management Ltd (TSX-AGF.B); CI Financial (TSX-CIX); DirectCash Payments Inc. (TSX-DCI); Gluskin Sheff + Associates Inc. (TSX-GS); Home Capital Group (TSX-HCG); IGM Financial (TSX-IGM); Power Corp (TSX-POW) and TMX Group Ltd. (TSX-X).
I follow 5 Insurance stocks. None are showing as cheap by the historically high dividend yield. Four stocks (or 80%) are showing cheap by historical median dividend yield. These stocks are Great-West Lifeco Inc. (TSX-GWO); Manulife Financial Corp (TSX-MFC); Power Financial Corp (TSX-PWF) and Sun Life Financial (TSX-SLF).
I follow 34 Industrial stocks. Three are now showing as cheap by the historically high dividend yield (or 9%). These stocks are Finning International Inc. (TSX-FTT); Hammond Power Solutions Inc. (TSX-HPS.A) and Pason Systems Inc. (TSX-PSI).
Eleven Industrial stocks (or 32%) are showing cheap by historical median dividend yield. These stocks are Ag Growth International (TSX-AFN); Canadian National Railway (TSX-CNR); Finning International Inc. (TSX-FTT); Hammond Power Solutions Inc. (TSX-HPS.A); HNZ Group Inc. (TSX-HNZ.A); Mullen Group (TSX-MTL); Pason Systems Inc. (TSX-PSI); Russel Metals (TSX-RUS); SNC-Lavalin (TSX-SNC); Toromont Industries Ltd. (TSX-TIH) and Transcontinental Inc. (TSX-TCL.A).
I follow 8 Tech stocks. One is showing as cheap by the historically high dividend yield and it is Calian Technologies Ltd. (TSX-CTY). Three stocks (or 38%) are showing cheap by historical median dividend yield. They are Absolute Software Corporation (TSX-ABT); Calian Technologies Ltd (TSX-CTY) and Evertz Technologies (TSX-ET).
I follow 10 Energy stocks. Four Stocks or (40%) are showing as cheap by the historical high dividend yield. They are Canadian Natural Resources (TSX-CNQ); Ensign Energy Services (TSX-ESI); Husky Energy (TSX-HSE) and Suncor Energy (TSX-SU). There are six stocks (or 60%) showing cheap by historical median dividend yield. They are the four above and Cenovus Energy Inc. (TSX-CVE) and Encana Corp (TSX-ECA).
I follow 2 Material stocks. One is showing as cheap by the historically high dividend yield and that is Teck Resources Ltd. It is also the only one that is cheap by historical median dividend yield.
I follow 8 of the infrastructure type utility companies. None are showing as cheap by historical high dividend yield. Three stocks (or 38%) are showing cheap by historical median dividend yield. They are AltaGas Ltd (TSX-ALA); TransCanada Corp (TSX-TRP) and Veresen Inc. (TSX-VSN).
I follow 12 of the power type utility companies. One is now showing as cheap by the historically high dividend yield and that is TransAlta Corp. Three stock (or 25%) are showing cheap by historical median dividend yield. These stocks are the one above plus ATCO Ltd (TSX-ACO.X) and Fortis Inc. (TSX-FTS).
I follow 5 of the Telecom Service type utility companies. One stock (or 20%) is showing cheap by the historical high dividend yield and that stock is WiLan Inc. (TSX-WIN). Three stocks (or 60%) are showing cheap by historical median dividend yield. These stocks are BCE (TSX-BCE); Shaw Communications Inc. (TSX-SJR.B); and WiLan Inc. (TSX-WIN).
On my other blog I am today writing about Pason Systems Inc. (TSX-PSI, OTC-PSYTF) ... learn more...
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.
The advantages to using dividend yield to judge how cheap or expensive a stock is, is that you are not using estimates or old data (like last reported quarter's data). You are using today's stock price and today's dividend yield.
For other testing, like using P/E Ratios and Price/Graham Price Ratios, you use EPS estimates or from the last reported financial quarter. When using P/S Ratios, P/CF Ratios or P/BV Ratios you are using data from the last reported financial quarter.
However, no system is perfect. But if you are interested in buy a stock a list of stocks cheap or reasonable using dividend yield data might be a good place to start.
Categorizing stocks is not as simple as it might seem. Every site you go to has categorized stocks a bit differently. I try to keep this as simple as possible. See my spreadsheet here to see what stocks are showing whether a stock is relatively cheap based on historical high dividend yields (P/Hi), historical average dividend yields (P/Ave), historical median dividend yields (P/Med) or on 5 year median dividend yields (P/5Yr).. As in other spreadsheets, you can highlight a line or a number of lines for better viewing.
In the following notes I am only going to list stocks showing as cheap using the historical high dividend yields (P/Hi) and historical median dividend yields (P/Med).
I follow 19 stocks in the consumer discretionary category. Of these stocks, only Dorel Industries (TSX-DII.B) is showing as cheap by the historically high dividend yield. Nine (or 47%) are showing cheap by historical median dividend yield. They are the one stock previously named and Canadian Tire Corporation (TSX-CTC.A); Goodfellow Inc. (TSX-GDL); High Liner Foods (TSX-HLF); Leon's Furniture (TSX-LNF); Magna International Inc. (TSX-MG0, Molson Coors Canada (TSX-TPX.B); Reitmans (Canada) Ltd. (TSX-RET.A) and Thomson Reuters Corp (TSX-TRI).
Note: Showing Le Chateau (TSX-CTU.A) as cheap last month was a mistake.
I follow 10 Consumer Staples stocks. None are showing as cheap by the historically high dividend yield. Two stocks (or 20%) are showing cheap by historical median dividend yield. These are Jean Coutu Group Inc. (TSX-PJC.A) and Loblaw Companies (TSX-L).
I only follow two Health Care stocks and both are US stocks. They are both cheap by the historical median dividend yield. The stocks are Johnson and Johnson (NYSE-JNJ) and Medtronic Inc. (NYSE-MDT).
I follow 12 Real Estate stocks. None are showing as cheap by the historically high dividend yield. Four stocks (or 33%) are showing cheap historical median dividend yield. They are Artis REIT (TSX-AX.UN); FirstService Corp (TSX-FSV), Granite Real Estate (TSX-GRT.UN) and Melcor Developments Inc. (TSX-MRD).
I follow 6 Bank stocks. None are showing as cheap by the historically high dividend yield. Five stocks (or 83%) are showing cheap by the historical median dividend yield. These stocks are Bank of Nova Scotia (TSX-BNS); Barclays PLC (NYSE-BCS), National Bank of Canada (TSX-NA); Royal Bank (TSX-RY) and Toronto Dominion Bank (TSX-TD).
I follow 12 Financial Service stocks. One is showing as cheap by the historically high dividend yield and that is Home Capital Group. Eight (or 67%) stocks are showing cheap by the historical median dividend yield. These stocks are AGF Management Ltd (TSX-AGF.B); CI Financial (TSX-CIX); DirectCash Payments Inc. (TSX-DCI); Gluskin Sheff + Associates Inc. (TSX-GS); Home Capital Group (TSX-HCG); IGM Financial (TSX-IGM); Power Corp (TSX-POW) and TMX Group Ltd. (TSX-X).
I follow 5 Insurance stocks. None are showing as cheap by the historically high dividend yield. Four stocks (or 80%) are showing cheap by historical median dividend yield. These stocks are Great-West Lifeco Inc. (TSX-GWO); Manulife Financial Corp (TSX-MFC); Power Financial Corp (TSX-PWF) and Sun Life Financial (TSX-SLF).
I follow 34 Industrial stocks. Three are now showing as cheap by the historically high dividend yield (or 9%). These stocks are Finning International Inc. (TSX-FTT); Hammond Power Solutions Inc. (TSX-HPS.A) and Pason Systems Inc. (TSX-PSI).
Eleven Industrial stocks (or 32%) are showing cheap by historical median dividend yield. These stocks are Ag Growth International (TSX-AFN); Canadian National Railway (TSX-CNR); Finning International Inc. (TSX-FTT); Hammond Power Solutions Inc. (TSX-HPS.A); HNZ Group Inc. (TSX-HNZ.A); Mullen Group (TSX-MTL); Pason Systems Inc. (TSX-PSI); Russel Metals (TSX-RUS); SNC-Lavalin (TSX-SNC); Toromont Industries Ltd. (TSX-TIH) and Transcontinental Inc. (TSX-TCL.A).
I follow 8 Tech stocks. One is showing as cheap by the historically high dividend yield and it is Calian Technologies Ltd. (TSX-CTY). Three stocks (or 38%) are showing cheap by historical median dividend yield. They are Absolute Software Corporation (TSX-ABT); Calian Technologies Ltd (TSX-CTY) and Evertz Technologies (TSX-ET).
I follow 10 Energy stocks. Four Stocks or (40%) are showing as cheap by the historical high dividend yield. They are Canadian Natural Resources (TSX-CNQ); Ensign Energy Services (TSX-ESI); Husky Energy (TSX-HSE) and Suncor Energy (TSX-SU). There are six stocks (or 60%) showing cheap by historical median dividend yield. They are the four above and Cenovus Energy Inc. (TSX-CVE) and Encana Corp (TSX-ECA).
I follow 2 Material stocks. One is showing as cheap by the historically high dividend yield and that is Teck Resources Ltd. It is also the only one that is cheap by historical median dividend yield.
I follow 8 of the infrastructure type utility companies. None are showing as cheap by historical high dividend yield. Three stocks (or 38%) are showing cheap by historical median dividend yield. They are AltaGas Ltd (TSX-ALA); TransCanada Corp (TSX-TRP) and Veresen Inc. (TSX-VSN).
I follow 12 of the power type utility companies. One is now showing as cheap by the historically high dividend yield and that is TransAlta Corp. Three stock (or 25%) are showing cheap by historical median dividend yield. These stocks are the one above plus ATCO Ltd (TSX-ACO.X) and Fortis Inc. (TSX-FTS).
I follow 5 of the Telecom Service type utility companies. One stock (or 20%) is showing cheap by the historical high dividend yield and that stock is WiLan Inc. (TSX-WIN). Three stocks (or 60%) are showing cheap by historical median dividend yield. These stocks are BCE (TSX-BCE); Shaw Communications Inc. (TSX-SJR.B); and WiLan Inc. (TSX-WIN).
On my other blog I am today writing about Pason Systems Inc. (TSX-PSI, OTC-PSYTF) ... learn more...
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.
Tuesday, November 3, 2015
Money Show 2015 - Andrew Busch
I was at the Toronto Money Show last Friday and Saturday. I will be publishing my notes as I transcribe them.
There were a number of speakers in the Opening Ceremonies of the Money Show for 2015. The first speaker was Andrew Busch whose talk was called "What's Next for the US Dollar, Euro and Currency Wars. He has a free web site.
First he said that it is the central banks that drive currencies. The ECB has started QE (Quantitative Easing). The BOJ (Bank of Japan) continues QE and the PBOC (People's Bank of China) had cut interest rates.
In the US, the Fed (Janet Yellen) is looking to raise interest rates. The underemployment rate is below 5%, inflation is low and the US dollar is strong. He also points out the effect of a rising currency is the same as rising interest rates. He said the US is looking for GDP growth of 2 to 2.5%. The Fed has ended its QE.
The last time the US raised interest rates was 2006. However, with unemployment below 5% this should drive up wages, but this is only happening in pockets. Congress has just passed the Budget and it raised the Debt Ceiling. The Debt Ceiling will not now be a problem now for a couple of years.
Why is the Fed waiting to go from an emergency period to a normal period? Part of the problem is that there is not much transparency with the Federal Reserve's policy. The US economy continues to have GDP growth of around 2%. It is better than in a lot of other places.
The US PCE Inflation (Price Index) is falling with the price of oil. Texas, North Dakota and Alberta are not doing well, but airplane travel is.
The Fed has said that they will raise rates at the next meeting (in December). If they do not they will lose creditability. It is only the Fed that is contemplating raising rates. The Fed is standing alone with what they are doing.
With the ECB (European Central Bank) they have just started QE. EU unemployment is at 11%. The GDP growth is 1.6% and the CPI is at a negative .1%. They have deflationary problems and they want to devalue their currency. Their QE should be around €60 Billion a month until it reaches some €1.1 Trillion. The goal is low interest rates and a weak Euro to the US Dollar.
He talked about "Unpacking the ECB". QE is working but reforms are needed. The Euro is weak. There are risks in the on-going crisis.
The BOJ is maintaining QE at ¥80Trillion per year. Deflation is a problem as CPI is at 0.2%. The ¥80Trillion a year is the solution to Japan's problems. They are a large shareholder in large ETFs and they want to increase the value of the stock market. A weak Yen is the target.
He talked about "Unpacking the BOJ". Japan must reform. Abe has not been able to do reform.
The PBOC have cut rates and they have added to QE 6 times since November. They said GDP growth is 7%, 7% and 6.9%. They have devalued the currency for the first time and this left uncertainty. We cannot believe their GDP figures. Unemployment is at 4%. Their target GDP growth is 7.1% and they say they are getting 6.9%.
He talked about "Unpacking the PBOC". China has panicked over the stock market and GDP growth. The Chinese government has a hand in the stock market. So you can never tell what the actual value of the market is really at. In August the Chinese Government did everything they could to stop the stock market from falling, but it still went down.
In the US, the US dollar is rising. Also there is good news in that the US is starting to do Tax Reform. It is also good new that Paul Ryan, is now speaker of the House of Representatives. Also with shale production, it is easy to turn it off and on.
Canada has problems in housing and energy. Housing costs are 165% of deposable income and it is too high. Energy price are not going anywhere.
All countries have to reform. The problem is that reform is very hard for politicians.
On my other blog I am today writing about The North West Company (TSX-NWC, OTC-NWTUF) ... learn more...
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.
There were a number of speakers in the Opening Ceremonies of the Money Show for 2015. The first speaker was Andrew Busch whose talk was called "What's Next for the US Dollar, Euro and Currency Wars. He has a free web site.
First he said that it is the central banks that drive currencies. The ECB has started QE (Quantitative Easing). The BOJ (Bank of Japan) continues QE and the PBOC (People's Bank of China) had cut interest rates.
In the US, the Fed (Janet Yellen) is looking to raise interest rates. The underemployment rate is below 5%, inflation is low and the US dollar is strong. He also points out the effect of a rising currency is the same as rising interest rates. He said the US is looking for GDP growth of 2 to 2.5%. The Fed has ended its QE.
The last time the US raised interest rates was 2006. However, with unemployment below 5% this should drive up wages, but this is only happening in pockets. Congress has just passed the Budget and it raised the Debt Ceiling. The Debt Ceiling will not now be a problem now for a couple of years.
Why is the Fed waiting to go from an emergency period to a normal period? Part of the problem is that there is not much transparency with the Federal Reserve's policy. The US economy continues to have GDP growth of around 2%. It is better than in a lot of other places.
The US PCE Inflation (Price Index) is falling with the price of oil. Texas, North Dakota and Alberta are not doing well, but airplane travel is.
The Fed has said that they will raise rates at the next meeting (in December). If they do not they will lose creditability. It is only the Fed that is contemplating raising rates. The Fed is standing alone with what they are doing.
With the ECB (European Central Bank) they have just started QE. EU unemployment is at 11%. The GDP growth is 1.6% and the CPI is at a negative .1%. They have deflationary problems and they want to devalue their currency. Their QE should be around €60 Billion a month until it reaches some €1.1 Trillion. The goal is low interest rates and a weak Euro to the US Dollar.
He talked about "Unpacking the ECB". QE is working but reforms are needed. The Euro is weak. There are risks in the on-going crisis.
The BOJ is maintaining QE at ¥80Trillion per year. Deflation is a problem as CPI is at 0.2%. The ¥80Trillion a year is the solution to Japan's problems. They are a large shareholder in large ETFs and they want to increase the value of the stock market. A weak Yen is the target.
He talked about "Unpacking the BOJ". Japan must reform. Abe has not been able to do reform.
The PBOC have cut rates and they have added to QE 6 times since November. They said GDP growth is 7%, 7% and 6.9%. They have devalued the currency for the first time and this left uncertainty. We cannot believe their GDP figures. Unemployment is at 4%. Their target GDP growth is 7.1% and they say they are getting 6.9%.
He talked about "Unpacking the PBOC". China has panicked over the stock market and GDP growth. The Chinese government has a hand in the stock market. So you can never tell what the actual value of the market is really at. In August the Chinese Government did everything they could to stop the stock market from falling, but it still went down.
In the US, the US dollar is rising. Also there is good news in that the US is starting to do Tax Reform. It is also good new that Paul Ryan, is now speaker of the House of Representatives. Also with shale production, it is easy to turn it off and on.
Canada has problems in housing and energy. Housing costs are 165% of deposable income and it is too high. Energy price are not going anywhere.
All countries have to reform. The problem is that reform is very hard for politicians.
On my other blog I am today writing about The North West Company (TSX-NWC, OTC-NWTUF) ... learn more...
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.
Monday, November 2, 2015
Dividend Stocks November 2015
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 2015.
On this list,
Absolute Software Corporation (TSX-ABT, OTC-ALSWF)
AltaGas Ltd. (TSX-ALA, OTC-ATGFF)
Fortis Inc. (TSX-FTS, OTC-FRTSF)
Smart REIT (TSX-SRU.UN, OTC-CWYUF)
Of the stock that I follow 1 stock has suspended their dividends since last month. That stock is McCoy Global Inc. (TSX-MCB, OTC-MCCRF).
I am showing whether a stock is relatively cheap based on historical high dividend yields (P/Hi), historical average dividend yields (P/Ave), historical median dividend yields (P/Med) or on 5 year median dividend yields (P/5Yr). See these fields on the right side of the file. You can highlight a particular stock using your cursor to highlight the appropriate line.
There are always some stocks to buy because they are priced reasonably. There are always stocks to currently avoid because they are overpriced. Looking at dividend growth stocks that are selling at stock prices that give them a dividend yield above the historical median dividend yield are probably the best bet.
The stocks that are selling at prices that give them a dividend yield above the historical high yield could be good stocks to buy. However, these stocks may be selling so cheap because of current troubles, especially financial troubles and should be treated with caution. Do not forget that I have all the stocks I follow on this spreadsheet and some are much better investments than others.
You should always investigate a stock before you buy. Sometimes different stocks in certain sectors are just out of favour or the stock market is just in one of its declines. However, a stock may be relatively cheap because it has problems. That is why you should always investigate a stock before buying.
Looking at stock this way is equivalent to a stock filter. A main problem I know of is for the old income trusts. These companies have generally lowered their dividend yields forever and they will probably never get back to the old dividend yield highs they made as an income trust company. For these stocks, you might be better comparing the current dividend yield to the 5 year median dividend yield.
Also, on some stocks I have a lot more information years in my spreadsheets than for other stocks. So, finding a stock on the list as "cheap" is only the first step in finding a stock to buy. This is the same with any other sort of stock filters that you can use.
The last thing to remember is that I have entering figures into a spreadsheet. I could put them in incorrectly, I can transpose figures and I can misread figures. This is another great reason why you should check a stock out before investing. As this is just a filter, it works better on some stocks than on others.
See my entry on my methodology in establishing the historical dividend yield highs and lows for the stocks that I cover. I have an entry on my introduction to Dividend Growth. You might want to look at my original entry on Dividend Growth Stocks. I have also written about why I like Dividend Growth companies.
On my other blog I am today writing about The North West Company (TSX-NWC, OTC-NWTUF) ... learn more...
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.
On this list,
- I have 12 stocks with a dividend yield higher than the historical high dividend yield,
- I have 47 stocks with a dividend yield higher than the historical average dividend yield
- I have 64 stocks with a dividend yield higher than the historical median dividend yield and
- 61 stocks with a dividend yield higher than the 5 year average dividend yield.
- I have 16 stocks with a dividend yield higher than the historical high dividend yield,
- I have 54 stocks with a dividend yield higher than the historical average dividend yield
- I have 67 stocks with a dividend yield higher than the historical median dividend yield and
- 70 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.
Absolute Software Corporation (TSX-ABT, OTC-ALSWF)
AltaGas Ltd. (TSX-ALA, OTC-ATGFF)
Fortis Inc. (TSX-FTS, OTC-FRTSF)
Smart REIT (TSX-SRU.UN, OTC-CWYUF)
Of the stock that I follow 1 stock has suspended their dividends since last month. That stock is McCoy Global Inc. (TSX-MCB, OTC-MCCRF).
I am showing whether a stock is relatively cheap based on historical high dividend yields (P/Hi), historical average dividend yields (P/Ave), historical median dividend yields (P/Med) or on 5 year median dividend yields (P/5Yr). See these fields on the right side of the file. You can highlight a particular stock using your cursor to highlight the appropriate line.
There are always some stocks to buy because they are priced reasonably. There are always stocks to currently avoid because they are overpriced. Looking at dividend growth stocks that are selling at stock prices that give them a dividend yield above the historical median dividend yield are probably the best bet.
The stocks that are selling at prices that give them a dividend yield above the historical high yield could be good stocks to buy. However, these stocks may be selling so cheap because of current troubles, especially financial troubles and should be treated with caution. Do not forget that I have all the stocks I follow on this spreadsheet and some are much better investments than others.
You should always investigate a stock before you buy. Sometimes different stocks in certain sectors are just out of favour or the stock market is just in one of its declines. However, a stock may be relatively cheap because it has problems. That is why you should always investigate a stock before buying.
Looking at stock this way is equivalent to a stock filter. A main problem I know of is for the old income trusts. These companies have generally lowered their dividend yields forever and they will probably never get back to the old dividend yield highs they made as an income trust company. For these stocks, you might be better comparing the current dividend yield to the 5 year median dividend yield.
Also, on some stocks I have a lot more information years in my spreadsheets than for other stocks. So, finding a stock on the list as "cheap" is only the first step in finding a stock to buy. This is the same with any other sort of stock filters that you can use.
The last thing to remember is that I have entering figures into a spreadsheet. I could put them in incorrectly, I can transpose figures and I can misread figures. This is another great reason why you should check a stock out before investing. As this is just a filter, it works better on some stocks than on others.
See my entry on my methodology in establishing the historical dividend yield highs and lows for the stocks that I cover. I have an entry on my introduction to Dividend Growth. You might want to look at my original entry on Dividend Growth Stocks. I have also written about why I like Dividend Growth companies.
On my other blog I am today writing about The North West Company (TSX-NWC, OTC-NWTUF) ... learn more...
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.
Subscribe to:
Posts (Atom)