Diversification

The question is how much diversification do you need? If you are just starting out and have a few thousand dollars, one stock is enough. When you have at least $10,000 you should have 3 stocks in difference sectors, like Financial, Utility and REIT. When you build your portfolio to another $10,000 you should be looking to diversify into another stock.

It is important to have stocks in different sectors. The TSX divides the TSX stocks into sectors of:

Sector	Example 1	Example 2
Consumer Discretionary	Dollarama Inc.	EnerCare Inc.
Consumer Staples	Jean Coutu Group Inc.	Loblaw Companies Ltd
Energy	ARC Resources Ltd.	Imperial Oil Limited
Financial	Bank of Montreal	Manulife Financial Corp
Health Care	Chartwell Retirement Res.	Valeant Pharmaceuticals
Industrials	Canadian National Railway	Finning International Inc.
Information Technology	BlackBerry Ltd	Computer Modelling Group Ltd.
Materials	Barrick Gold Corp	Franco-Nevada Corp
Real Estate	Brookfield Property Partners L.P.	First Capital Realty Inc.
Telecommunications	BCE Inc.	Rogers Communications Inc.
Utilities	Fortis Inc.	Superior Plus Corp.

The Investment report divides their stocks into the following sectors:

Sector	Example 1	Example 2
Manufacturing	PPG Industries	Magna International Inc
Resources	Teck Resources Ltd	Imperial Oil Ltd
Consumer	Jean Coutu Group Inc	Shaw Communications
Financial	Bank of Montreal	Manulife Financial Corp
Utility	TransCanada Corp	BCE Inc

There are theories about maximum diversification that you should do. Some hold a portfolio does not need more than 15 stocks and some say 20. But it is important to cover different sorts of companies because in different economic climates, sectors can act differently. You want to limit your exposure to any one type of asset or risk.

The sectors act differently in different parts of the economic cycle. An illustration can be seen on Bay Street. For today, some sectors are going up and some are going down. There is a good article on the Business Cycle or Economic Cycle and Investing at Wall Street Survivor.

When you are starting off and if you are a conservative investor use the Beta Ratio to help in picking stocks. Pick stocks that have a Beta Ratio of around or below 1.00. Basically this measures volatility against the TSX, so if the Beta Ratio is 1.00 it is just a volatile as the TSX. Your first stocks should have a low Beta. Also, I would not buy any in the Resources or Materials sectors as they are higher risk.

On my other blog I wrote yesterday about Obsidian Energy Ltd TSX-OBE, NYSE-OBE)... learn more. Tomorrow, I will write about Dorel Industries Inc. (TSX-DII.B, OTC-DIIBF)... learn more on Friday, July 28, 2017 around 9 am.

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.

Home Capital Group

Because I had bought some TD stock in 2009 and have made a lot of money on it, I sold some and bought some Home Capital Group on 6 March 2017 at $25.96 per share. The company had wobbled a bit when the company announced in February 2017 that it received an enforcement notice from staff of the Ontario Securities Commission.

It basically fell off a cliff in mid-March after the company reported several of its current and former executives have been served with enforcement notices from the Ontario Securities Commission over the company’s disclosure of its investigation into fraudulent mortgage documents. It hit a low of $5.85 in May 2017. This notice basically set up a run on this bank. On its way down I bought some more shares at $6.85 each and that would give me an ACB of $22.14.

The stock hit a high of $19 when Warren Buffet rode to its rescue in June 2017. It headed south again after the announcement and now resides at $14.00 plus.

At its lowest point I would have lost some 73.6% of my investment. At $19.00, my loss would have been around 14%. With today’s prices I am down some 36%. Currently analysts’ 12 month stock price ranges from $23.00 (gain of 3.9%) or a low of $12.13 (a loss of 45%) to an average of $17.69 (a loss of 20%).

I need to decide what to do with this. I will take my time and think about it. If I had panicked in May, I would have loss considerable more than I will currently lose. The thing with financials is that you can earn a lot of money investing in them but they are subject to runs. People can panic and pull out money. Banks and Financials are really confidence plays.

On my other blog I wrote yesterday about Lassonde Industries Inc. (TSX-LAS.A, OTC-LSDAF)... learn more. Tomorrow, I will write about Obsidian Energy Ltd TSX-OBE, NYSE-OBE)... learn more on Wednesday, July 26, 2017 around 5 pm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my site for an index to these blog entries and for stocks followed. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Canadian Banks

This is a great article on Canadian Banks by 5iResearch. It gives lots of great reasons why Canadian bank stocks should be part of every Canadian stock portfolio.

The Canadian banks would not make the US dividend achievers list because they have not grown their dividends for the past 10 years because they all stopped increases because of the 2008 crisis. However, they do have a very long history of dividends and dividend growth.

The banks are now on back on the Canadian Dividend Aristocrats because in Canada we have lower standards for our lists. For the Canadian Dividend Aristocrats list a company need only increase the dividends for the past 5 years.

The reason we have lower standards on dividend achievers is that there are far fewer stocks in Canada than in the US. We do have companies that have increased their dividends for the past 10 or even 25 years, but our lists are very short.

On my other blog I wrote yesterday about Atlantic Power Corp (TSX-ATP, NYSE-AT)... learn more. Tomorrow, I will write about Alaris Royalty Corp (TSX-AD, OTC-ALARF)... learn more on Friday, July 21, 2017 around 5 pm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my site for an index to these blog entries and for stocks followed. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Do Not Panic

The best advice when investing in stocks is never ever panic. Let the stock market or your individual stock do what it wants, but do not panic no matter what happens. That is how you lose money on the stock market. I was at lunch the other day and a lady said she was worried about the stock market and so she sold all her shares. This is exactly how you lose money on the stock market.

I have been through a number of bear markets and individual stocks that tanked, but overall my portfolio has done well over the years. Maybe I left it late to sell stocks that have tanked, but still over all I did well and my dividend income has only gone up.

More to the point maybe is my son's portfolio which is relatively small. He has investments in some 15 stocks. So far he has two duds in stocks, Reitmans and TransAlta. His portfolio was increasing in value and in dividend income. When problems occurred in Reitmans and TransAlta the increase in dividends and value paused and then continued even though he still kept these stocks.

On my other blog I wrote yesterday about Artis REIT (TSX-AX.UN, OTC-ARESF)... learn more. Tomorrow, I will write about Atlantic Power Corp (TSX-ATP, NYSE-AT)... learn more on Wednesday, July 19, 2017 around 5 pm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my site for an index to these blog entries and for stocks followed. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Dividend Achievers

You can find a great list of Canadian Dividend Achievers with the blogger Instagram. He gives a list Canadian Stocks with at least 10 years of dividend growth. If you are looking for some Canadian Stocks to buy, this would be a great place to starting looking for a stock.

There is a lot of really good information on quite a number of Canadian Stocks on this site. It is worthwhile downloading his spreadsheets to have a look at them and the information he has on quite a number of Canadian stocks. If you want to follow him on twitter go to @DividendEarner.

In the US, the Dividend Aristocrats have to have 25 years of dividend growth and the Dividend Achievers have to have 10 years of dividend growth. In Canada the Dividend Aristocrats list on the TSX have to only have 5 years of dividend growth. The list that is here is for 10 years of dividend growth.

I personally like dividend growth companies. I do not insist that they increase their dividends every year, but I like to see some nice growth over time.

On my other blog I wrote yesterday about Inter Pipeline Ltd (TSX-IPL, OTC-IPPLF)... learn more. Tomorrow, I will write about TMX Group Ltd (TSX-X, OTC-TMXXF)... learn more on Friday, July 14, 2017 around 5 pm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my site for an index to these blog entries and for stocks followed. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

New Flyer Industries Inc.

I started to look at this stock of New Flyer Industries Inc. (TSX-NFI, OTC- NFYEF) but ran into problems in for the year of 2011. Basically what seemed to have happen is that people who held subordinate notes got some 89% of the company while the original shareholders got 11% of the company.

It is difficult to reconstruct what was going on with the company prior to 2011. There is not much information online about dividends or stock prices prior to this and lots of it makes no sense. I do not like stocks that are overly complex and I have already spent too much time on this stock trying to sort out how the changes in 2011 affect the shareholders. Certainly it was not a good outcome for the shareholders.

If I only do a spreadsheet on what happened after 2011, this will not give a full picture of this stock. It certainly seems to be doing well currently, but past history does count and I do not think it I can ignore it. If I do just from after 2011 it would appear to be a far better stock in the past than it actually was. It would give a very false impression of this company.

I am not willing to spend any more time on this stock. They obviously had difficulties in 2011 for the people holding subordinate notes to really take over the company. It is not a company I would want to invest in so this will not be one of the new companies I will be covering in the future.

I have started to investigate Logistec Corp which was also on my list of stock suggestions .

On my other blog I wrote yesterday about Morneau Shepell Inc. (TSX-MSI, OTC-MSIXF)... learn more. Tomorrow, I will write about Inter Pipeline Ltd (TSX-IPL, OTC-IPPLF)... learn more on Wednesday, July 12, 2017 around 5 pm

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my site for an index to these blog entries and for stocks followed. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Dividend Stocks July 2017

First I want to point out that not all of the stocks I follow are great investments. I follow a diverse selection of stocks. There are some that I would never invest in personally. I follow a number of resource stocks even though I personally have little invested in this area. I follow what I find interesting and with resource stocks, I think it is important for Canadians to know what is happening in the resource area. On the other hand I do follow of good number of great dividend growth stocks.

The theory is that you should use the dividend yield to see if a dividend stock is selling at a stock price that is relatively cheap. A stock price is considered cheap if it is selling at a dividend yield higher than the historical high yield or higher than the historical average yield or historical median yield. See my spreadsheet at dividend growth stocks that I just updated for July 2017.

• I have 1 stocks with a dividend yield higher than the historical high dividend yield,
• I have 36 stocks with a dividend yield higher than the historical average dividend yield
• I have 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.

When I did my list last list in June 2017,

• I have 2 stocks with a dividend yield higher than the historical high dividend yield,
• I have 40 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
• 54 stocks with a dividend yield higher than the 5 year average dividend yield.

When I did my list in January 2014,

• 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.

If you had one share of each stock, total dividends last month would be $161.34. This month dividends would be $157.56. However this is being reset because of splits occurring this month. Of the stock that I follow 4 stocks has raised their dividends since last month. Dividends raises are denoted in green. Those stocks are shown below.

Andrew Peller Ltd (TSX-ADW.A, OTC-ADWPF)
Canadian Pacific Railway (TSX-CP, NYSE-CP)
Empire Company Ltd. (TSX-EMP.A, (OTC-EMLAF)
Medtronic PCL (NYSE-MDT)

Of the stocks that I follow no company has decreased their dividends. Of the stocks that I follow one company has suspended their dividends because as I understand it, the HCG has suspended their dividend although site like TD and G&M are still showing a dividend.

Home Capital Group (TSX-HCG, OTC-HMCBF).

For Power Corp (TSX-POW, OTC-PWCDF) I had dividends as $1.34 on the spreadsheet last month and they should be $1.43. CCL Industries (TSX-CCL.B, OTC-CCDBF) has done a 5 to 1 split. Waste Connections Inc. (TSX-WCN, NYSE-WCN) has done a 3 to 2 split. Penn West Petroleum (TSX-PWT, NYSE-PWE) is now Obsidian Energy Ltd. (TSX-OBE, NYSE-OBE)

Canyon Services Group (TSX-FRC, OTC-CYSVF) has a plan of arrangement with Trican Well Service Ltd (TSX-TCW, OTC-TOLWF) for 1.7 shares of Trican for each share of Canyon. So now I am following Trican from Canyon stock. DH Corporation (TSX-DH, OTC-DHIFF) has been acquired by Vista Equity Partners and so deleted from my list.

Most of my stocks started out as Dividend Payers. Currently 13 stocks are not paying any dividends and this would be some 10.3% of the stocks that I follow. Three of these stocks never had dividends, so 8.39% of the stocks I follow have suspended their dividends. The three stocks that never paid dividends are Ballard Power Systems Inc. (TSX-BLD, NASDAQ-BLDP0, Blackberry Ltd. (TSX-BB, NASDAQ-BBRY) and Trigon Metals Inc. (TSX-TM, OTC-PNTZF) (that used to be Kombat Copper Inc. (TSX-KBT, OTC-PNTZF).

I am showing whether a stock is relatively cheap based on historical high dividend yields (P/Hi), historical average dividend yields (P/Ave), historical median dividend yields (P/Med) or on 5 year median dividend yields (P/5Yr). See these fields on the right side of the file. You can highlight a particular stock using your cursor to highlight the appropriate line.

There are always some stocks to buy because they are priced reasonably. There are always stocks to currently avoid because they are overpriced. Looking at dividend growth stocks that are selling at stock prices that give them a dividend yield above the historical median dividend yield are probably the best bet.

The stocks that are selling at prices that give them a dividend yield above the historical high yield could be good stocks to buy. However, these stocks may be selling so cheap because of current troubles, especially financial troubles and should be treated with caution. Do not forget that I have all the stocks I follow on this spreadsheet and some are much better investments than others.

You should always investigate a stock before you buy. Sometimes different stocks in certain sectors are just out of favour or the stock market is just in one of its declines. However, a stock may be relatively cheap because it has problems. That is why you should always investigate a stock before buying.

Looking at stock this way is equivalent to a stock filter. A main problem I know of is for the old income trusts. These companies have generally lowered their dividend yields forever and they will probably never get back to the old dividend yield highs they made as an income trust company. For these stocks, you might be better comparing the current dividend yield to the 5 year median dividend yield. I also started a column called VT (for Valid Test) and this applies to checking stock price using dividend yield. If not a valid test I use N to show this.

Also, on some stocks I have a lot more information years in my spreadsheets than for other stocks. So, finding a stock on the list as "cheap" is only the first step in finding a stock to buy. This is the same with any other sort of stock filters that you can use.

The last thing to remember is that I have entering figures into a spreadsheet. I could put them in incorrectly, I can transpose figures and I can misread figures. This is another great reason why you should check a stock out before investing. As this is just a filter, it works better on some stocks than on others.

See my entry on my methodology in establishing the historical dividend yield highs and lows for the stocks that I cover. I have an entry on my introduction to Dividend Growth. You might want to look at my original entry on Dividend Growth Stocks. I have also written about why I like Dividend Growth companies.

On my other blog I wrote yesterday about Premium Brands Holdings Corp (TSX-PBH, OTC-PRBZF)... learn more. Tomorrow, I will write about Suncor Energy Inc. (TSX-SU, NYSE-SU)... learn more on Wednesday, July 5, 2017 around 5 pm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram with #walktoronto