What do you hope to gain by your investment? Are you looking for capital gain, income or a combination of both? I often buy companies for their increasing dividend payments. The capital gain is nice, but if I never sell the stock, then I do not get this.
When a company I buy for dividends lower their dividends, then I have a decision to make. Should I sell? Should I buy more? Or, should I hold on to what I have? I bought TransCanada Corp (TSX-TRP) in 2000 when they lowered their dividend. I had been looking at the company for some time, but I had not bought it. However, they got slammed so hard, and I thought unduly, for reducing their dividend, I felt it was a good time to buy. I also felt that management was making the right decision for long term viability of the company.
I have Manulife stock (TSX-MFC) when they lowered their dividend. I, of course, reviewed the stock at that point. What I decided to do was just to hold what I had. I did not think that it presented a good buying opportunity as I did not think that the stock price unduly suffered from this move. The stock price was lowered and the company was punished for the move, but it did not seem to have been punished much.
The one cardinal rule of investing is to never make an investment that will not let you sleep at night. Another rule is to not invest money into stocks if you need that money within the next 5 years. The 5 year rule also applies to buying bonds. The good thing about bonds is that they have a maturity date. If the bond you buy matures when you need your money, then it is appropriate to buy a bond.
On my Investment Talk blog I am today writing about CCL Industries Inc. (TSX-CCL.B, OTC-CCDBF). Today, I am discussing if the stock is a good price and what analysts are saying. To read about this stock go here....
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. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.
Wednesday, November 28, 2012
Monday, November 26, 2012
Types of Dividend Stocks
Some companies vary their dividends depending on what they can pay like Goodfellow (TSX-GDL) and oil companies. A company like Leon's (TSX-LNF) has reasonable dividends (around 2.5%) with median growth around 9%, but will pay special dividends when they feel that they can, but do not feel confident enough to raise dividends.
You can buy companies with low, medium and high dividend yields that have low, medium and high dividend growth. A company like SNC-Lavalin has a low dividend, around 1.8%, but high growth in dividends, above 20%. A lot of REITs have high dividends, around 6.5%, but low dividend growth, around the rate of inflation. An example would be RioCan (TSX-REF).
Our banks tend to have median dividend yields (over 3%, but less than 5%) and median growth rates currently around 9 to 10%. However, in the past the yields would be around 3 to 4%, but growth around 10% to 17%. The past would be before the recent crisis of 2007 when all our banks stopped raising their dividends.
You might want to start with companies with low dividends and high growth and when you are to start living off you portfolio go for stocks with higher dividends. The biggest reason for this, especially if you have a trading account is taxes. If you do not need dividend income, you pay less tax on lower dividend income.
Lots of people talk about dividend growth stocks. I did an article on this subject in the past. See article on Dividend Growth Stocks.
On my Investment Talk blog I am today writing about Canada Bread Co. (TSX-CBY, OTC-CBDLF). Today, I am discussing if the stock is a good price and what analysts are saying. To read about this stock go here....
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. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.
You can buy companies with low, medium and high dividend yields that have low, medium and high dividend growth. A company like SNC-Lavalin has a low dividend, around 1.8%, but high growth in dividends, above 20%. A lot of REITs have high dividends, around 6.5%, but low dividend growth, around the rate of inflation. An example would be RioCan (TSX-REF).
Our banks tend to have median dividend yields (over 3%, but less than 5%) and median growth rates currently around 9 to 10%. However, in the past the yields would be around 3 to 4%, but growth around 10% to 17%. The past would be before the recent crisis of 2007 when all our banks stopped raising their dividends.
You might want to start with companies with low dividends and high growth and when you are to start living off you portfolio go for stocks with higher dividends. The biggest reason for this, especially if you have a trading account is taxes. If you do not need dividend income, you pay less tax on lower dividend income.
Lots of people talk about dividend growth stocks. I did an article on this subject in the past. See article on Dividend Growth Stocks.
On my Investment Talk blog I am today writing about Canada Bread Co. (TSX-CBY, OTC-CBDLF). Today, I am discussing if the stock is a good price and what analysts are saying. To read about this stock go here....
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. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.
Wednesday, November 21, 2012
Pension Plans
Are Defined Benefit Pension Plans really better than Defined Contribution plans? Personally, I do not think so.
It has been suggested that the problems with DC plans start with the fact that employees are not educated investors? I would suggest that with DB plans, employers quite possibly are not educated investors also. (There were a lot of banks (like European banks) that got caught with mortgage-backed securities that were sold on sub-prime mortgages. You might have thought that banks being financial institutions would know what they were getting. Apparently this was not so.)
I think that one of the biggest mistakes made by most pension plans is that they took premium holidays or increased benefits or in some way used the "extra" money in pension plans when they were declared overfunded in the 1990's.
There was a big move up in the stock market between about 1982 and 1999 which is called a secular bull market. Since 2000 we have been in a secular bear market and the market has not done much for anyone. Most pension plans are underfunded or underwater, as it is generally called.
Secular markets last a long time. You will at least have one during the time you should be building up your pension plan. If you were in a DC plan, money would have continued into the plan as the secular bull market continued to play out in the 1990's. You need these markets to build up a decent pension.
The other thing I like about DC plans is that you do not need to worry about your company getting into financial trouble and having problems getting your pension money. With DC plans the money comes into your hands when your company makes a contribution.
When I had the chance to change from a DB to DC I did so. That was because I was not planning on working at the company until retirement. It is easier to move money from DC plans then DB plans. If you move money from a DB plan, you basically get little unless you are older. Everyone under DC plan gets the same amount of money each year.
DB plans are such that older employees get more money put towards their retirement than younger ones. There can be a big difference in what you get if you stop working for a company and ask for your pension to be transferred to a Locked-In RRSP. (That is someone asking for this that has worked for a company for 20 years and is 60 will get a lot more than someone who has worked for a company for 20 years and is 40.)
I think that DC plans are good for companies also. It is a pay as you go pension plan for them. They will not end up with a big pension liability. This is one of the things that brought down the auto companies.
I think that the solution is that we all need to have financial education. If you are not working for the same employer until retirement, you are better off with a DC plan. In today's employment market, how many people can count to work for one employer until retirement? I would guess very few, especially if you do not work for the government.
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. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.
It has been suggested that the problems with DC plans start with the fact that employees are not educated investors? I would suggest that with DB plans, employers quite possibly are not educated investors also. (There were a lot of banks (like European banks) that got caught with mortgage-backed securities that were sold on sub-prime mortgages. You might have thought that banks being financial institutions would know what they were getting. Apparently this was not so.)
I think that one of the biggest mistakes made by most pension plans is that they took premium holidays or increased benefits or in some way used the "extra" money in pension plans when they were declared overfunded in the 1990's.
There was a big move up in the stock market between about 1982 and 1999 which is called a secular bull market. Since 2000 we have been in a secular bear market and the market has not done much for anyone. Most pension plans are underfunded or underwater, as it is generally called.
Secular markets last a long time. You will at least have one during the time you should be building up your pension plan. If you were in a DC plan, money would have continued into the plan as the secular bull market continued to play out in the 1990's. You need these markets to build up a decent pension.
The other thing I like about DC plans is that you do not need to worry about your company getting into financial trouble and having problems getting your pension money. With DC plans the money comes into your hands when your company makes a contribution.
When I had the chance to change from a DB to DC I did so. That was because I was not planning on working at the company until retirement. It is easier to move money from DC plans then DB plans. If you move money from a DB plan, you basically get little unless you are older. Everyone under DC plan gets the same amount of money each year.
DB plans are such that older employees get more money put towards their retirement than younger ones. There can be a big difference in what you get if you stop working for a company and ask for your pension to be transferred to a Locked-In RRSP. (That is someone asking for this that has worked for a company for 20 years and is 60 will get a lot more than someone who has worked for a company for 20 years and is 40.)
I think that DC plans are good for companies also. It is a pay as you go pension plan for them. They will not end up with a big pension liability. This is one of the things that brought down the auto companies.
I think that the solution is that we all need to have financial education. If you are not working for the same employer until retirement, you are better off with a DC plan. In today's employment market, how many people can count to work for one employer until retirement? I would guess very few, especially if you do not work for the government.
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. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.
Monday, November 19, 2012
Investors: Geniuses When Market Goes Up
Investors often think of themselves as smart or "Geniuses" when the market goes up and they gain money. However, the same investors are likely to blame others when the market goes down and they lose money.
The thing that happens a lot in dealing with the stock markets is that people never ask where the money comes from when they make money in the stock market, such as when the market goes up. However, everyone wants to know where their money has gone when the market goes down. Sometimes we are too inclined to accept anything we make as something we personally have done, but anything we lose as someone else's fault. However, no one has forced anyone into investing. People invest of their own free will.
Therefore, any loss is your problem and your responsibility, wholly. To become a better investor, you must accept responsibility for what you have lost. If you do not, you will not learn anything and will never become a better investor.
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. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.
The thing that happens a lot in dealing with the stock markets is that people never ask where the money comes from when they make money in the stock market, such as when the market goes up. However, everyone wants to know where their money has gone when the market goes down. Sometimes we are too inclined to accept anything we make as something we personally have done, but anything we lose as someone else's fault. However, no one has forced anyone into investing. People invest of their own free will.
Therefore, any loss is your problem and your responsibility, wholly. To become a better investor, you must accept responsibility for what you have lost. If you do not, you will not learn anything and will never become a better investor.
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. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.
Wednesday, November 14, 2012
Beating the Market
As an individual investor do you really think that your goal should be to "Beat the Market"? I think that if individual investors are asking themselves that they are asking the wrong question. The real question is "Are you making any money"? Is your return higher than inflation?
By trying to "Beat the Market", investors might be applying short term thinking. I think that when individuals are out to do this that they will only be thinking short term. I think that to do well in buying stocks, especially the dividend paying kind, you should be thinking long term.
You do not want to get so tied up trying to beat the market, you do not do what you really want to do and that is make money.
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. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.
By trying to "Beat the Market", investors might be applying short term thinking. I think that when individuals are out to do this that they will only be thinking short term. I think that to do well in buying stocks, especially the dividend paying kind, you should be thinking long term.
You do not want to get so tied up trying to beat the market, you do not do what you really want to do and that is make money.
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. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.
Monday, November 12, 2012
Dividend Growth
I have something like 54 dividend paying stocks in my portfolio. It is not as bad as it sounds, my top 5 stocks are 30% of my portfolio and my top 20 are 75%. I am putting any new money into new stocks and buying some dividend paying small caps and such.
Anyway, what I wanted to point out is that in July and August of this year, no stock I had raised their dividends. This is very unusual for my portfolio. I had two stocks raise their dividends in September (Calian Technologies Ltd (TSX-CTY) and Saputo Inc. (TSX-SAP). October was better with dividend raises from AltaGas Ltd. (TSX-ALA), BCE (TSX-BCE), TECSYS (TSX-0TCS), and Toronto Dominion Bank (TSX-TD).
The thing is, is that I think that my 5 year median dividend increase is coming down. It used to be 12% to 15% per year. Last year my 5 year median dividend increase was 11%. Currently it is running at 9%.
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. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.
Anyway, what I wanted to point out is that in July and August of this year, no stock I had raised their dividends. This is very unusual for my portfolio. I had two stocks raise their dividends in September (Calian Technologies Ltd (TSX-CTY) and Saputo Inc. (TSX-SAP). October was better with dividend raises from AltaGas Ltd. (TSX-ALA), BCE (TSX-BCE), TECSYS (TSX-0TCS), and Toronto Dominion Bank (TSX-TD).
The thing is, is that I think that my 5 year median dividend increase is coming down. It used to be 12% to 15% per year. Last year my 5 year median dividend increase was 11%. Currently it is running at 9%.
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. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.
Wednesday, November 7, 2012
Investors: Individuals and Mobs
If you invest in the stock market, you have to realize that investors sometimes act like individuals and sometimes act like a mob. When investors have been acting very mob like, I check my stocks to ensure that they are solid. You will lose if you stock goes bankrupt. You will also lose if your stock is materially damaged. If investors are acting mob-like, you want to have strong solid companies in your investment portfolio.
The current financial crisis was first brought to our notice in 2007. The investors, in their mob-like wisdom did some panicking in the fall of 2007, then they only, periodically, did some panicking until September 2008. In September 2008, there was a full blown panic. There is something about September (and October) that causes investors to panic. This happens a lot.
On my Investment Talk blog I am today writing about Ballard Power Systems Inc. (TSX-BLD, NASDAQ-BLDP), Today, I am discussing the stock. To read about this stock go here....
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. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.
The current financial crisis was first brought to our notice in 2007. The investors, in their mob-like wisdom did some panicking in the fall of 2007, then they only, periodically, did some panicking until September 2008. In September 2008, there was a full blown panic. There is something about September (and October) that causes investors to panic. This happens a lot.
On my Investment Talk blog I am today writing about Ballard Power Systems Inc. (TSX-BLD, NASDAQ-BLDP), Today, I am discussing the stock. To read about this stock go here....
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. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.
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