Tuesday, August 30, 2016

Montreal Gazette Portfolio

This portfolio was lunched some 18 years ago with Quebec companies and $100,000. It is currently worth over $800,000. The portfolio is up some 703% or has gained 12.3% per year. This is very good and shows what can be done buying some good stocks and not trading much. The portfolio manager is Christine Décarie.

There seems to be only one rule and that is changes can only be made at the end of each month. This is not the same group of stocks she started with but neither has she changed it that much. She does not do changes every month, just some months.

Not all of the stocks are dividend stocks. However if you are building a portfolio, you do not need all dividend stocks. You do not need to make brilliant choices about what stocks you buy. What you need to do is pick some decent stocks at a reasonable price and invest for the long term. I must admit that I still get the occasional non-dividend paying stock to each some extra money for the trading account.

The stocks in this portfolio are shown below. There is a recent write-up on this portfolio by Paul Delean of the Montreal Gazette.

Company Ticker Dividend
Lumenpulse Inc. LMP 0.00%
Alimentation Couche-Tard Inc. ATD.B 0.46%
Laurentian Bank of Canada LB 4.89%
Canadian National Railway Co CNR 1.78%
Quebecor Inc. QBR.B 0.45%
Mediagrif Interactive Technologies Inc. MDF 2.21%
Uni Select Inc. UNS 1.10%
CGI Group Inc. GIB.A 0.00%
Stella-Jones Inc. SJ 0.94%
Fiera Capital Corp FSZ 5.06%
Industrial Alliance Insurance and Financial Services Inc. IAG 2.76%
Heroux-Devtek Inc. HRX 0.00%
SNC-Lavalin Group Inc. SNC 1.86%
Boralex Inc. BLX 2.97%
Canam Group Inc. CAM 1.61%


On my other blog I wrote yesterday about Superior Plus Corp. (TSX-SPB, OTC-SUUIF)... learn more. Tomorrow, I will write about Andrew Peller Ltd. (TSX-ADW.A, OTC-ADWPF)... learn more on Wednesday, August 31, 2016 around 10 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.

Thursday, August 25, 2016

Are We Still Capitalist?

Capitalism is a market system. Historically there were other market systems in Europe before capitalism, in China and the Middle East. Capitalism is noted for producing lots of capital. I wrote about this before in an article entitled Market Systems.

What I wonder is have we regulated capitalism out of existence? With what we are going doing are we only getting a few rich and that is it? One of the hall markets of a capitalist system is a large middle class. Is that really disappearing? According to a lot of articles I have read it is.

I recently read an article which said in the US more companies closing than new startup companies. Apparently this is the first time this had ever happened in the US. The following article is not the one I had read, but I just google about this subject and an interesting article came up. The link to this article is here. It does not say exactly what I had read, but it is close.

This process has been going on in Europe for some time. Europe seems to be having a hard time encouraging the formation of new companies. There is a site ranking countries and number of startups by country and US is far ahead of everyone else.

However, when it comes to ranking of Entrepreneurial Countries neither my country of Canada nor the US is in the top 15. However, we are not in the bottom 15 either but Italy, France, Spain and Germany are. There are 7 European countries in the bottom 15. However, it does look like Europe is trying to change. See this from this pamphlet from the European Digital Forum

Certainly there seems to be a lot of people that think capitalism is bad. Yet it is the system that made the Western world rich and gave us a middle class. Yes we still have poor people, but we have always had poor people. In the past there seemed to be only the rich and poor. There was never a middle class. Also, historically we are living better than we have ever lived before.

On my other blog I wrote yesterday about Evertz Technologies (TSX-ET, OTC-EVTZF)... learn more. Tomorrow, I will write about Jean Coutu Group Inc. (TSX-PJC.A, OTC-JCOUF)... learn more on Friday, August 26, 2016around 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.

Wednesday, August 24, 2016

Dividend Growth 5

I thought it might be interesting to compare older spreadsheets 5 year dividend growth rates in my spreadsheets from 2011 and later. What this spreadsheets shows that for when I compare the 5 year dividend growth rates from my 2015 spreadsheet to my current one 23.7% of the stocks show higher dividend growth, 22.3% show lower dividend growth and 54% show the same dividend growth.

For example, I have 139 stocks that are the same as 2015 as in the 2016 spreadsheet. Of these stocks 33 stocks or 23.7% had higher 5 year dividend growth, 31 stocks or 22.3% had lower 5 year dividend growth and 75 stocks or 54% had the same dividend growth.

Examples would be Canadian National Railway (TSX-CNR, NYSE-CNI) which grew its dividend. It had 5 year growth of 14.6% per year over the past 5years on my 2015 spreadsheet and 18.3% per year over the past 5years on my 2016 spreadsheet.

Ag Growth International (TSX-AFN, OTC-AGGZF) dividends declined because it had 5 year growth of 3.3% per year over the past 5years on my 2015 spreadsheet and 3.0% per year over the past 5years on my 2016 spreadsheet.

Bank of Nova Scotia (TSX-BNS, NYSE-BNS) dividends were the same because it had 5 year growth of 7.6% per year over the past 5years on my 2015 spreadsheet and 7.6% per year over the past 5years on my 2016 spreadsheet.

Compared to Current Spreadsheet 2015 2014 2013 2012 2011
Dividend growth increased 23.74% 59.70% 45.31% 42.11% 33.65%
Dividend growth decreased 22.30% 35.82% 51.56% 56.14% 65.38%
Dividend growth same 53.96% 4.48% 3.13% 1.75% 0.96%


We seem to be in a time of lower dividend growth. This can hardly be surprising. Our economies have not been doing that well. It has been a very long, very slow recovery from 2008.

On my other blog I wrote Monday, August 22, 2016 about ONEX Corp. (TSX-OCX, OTC-ONEXF)... learn more. Today, I will write about Evertz Technologies (TSX-ET, OTC-EVTZF)... learn more on Wednesday, August 24, 2016 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.

Tuesday, August 23, 2016

My computer is being fixed

My computer is being fixed, so I will have to publish again when I get my computer back. Hopefully I will get it back tomorrow.

Thursday, August 18, 2016

FFO, AFFO

FFO is Funds from Operations and AFFO stands for Adjusted Funds from Operations. These measures of fund flows are often used for REITs and Utility stocks like pipelines. These measures used to also be used for income trust companies, but these no longer exist. AFFO and FFO are generally used to gauge a company's profit.

A problem with AFFO is that it does not have a standard definition. Generally the FFO is adjusted for recurring capital expenditures to maintain the REITs or Utilities assets. The calculation of both FFO and AFFO has changed over time so it is not that easy to see the real growth in what companies can pay out. The calculation used to be called Distributable Cash. Then we had FFO and currently people are switching to using AFFO, but may also look at FFO too.

The main reason for the use of FFO and AFFO is to decide if a company has enough money on hand to pay for dividends or distributions. Generally speaking a distribution ratio of 75% to 95% is considered the best. For some companies it is useful to look at Price/FFO Ratio or Price/AFFO Ratio in place of Price/Earnings per Share Ratio (P/EPS) to determine if the current stock price is reasonable.

David Harper wrote a recent article on Investopedia about REIT investments and using FFO and AFFO. Michael Bowman in a 2013 article in the Globe & Mail talked about using AFFO to look at pricing Utilities and their payout.

On my other blog I wrote yesterday about EnerCare Inc. (TSX-ECI, OTC-CSUWF)... learn more. Tomorrow, I will write about BlackBerry Ltd. (TSX-BB, NASDAQ-BBRY)... learn more on Friday, August 19, 2016 around 5 pm.

Also, on my book blog I have put a review of the book The Geography of Bliss by Eric Weiner 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. 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.

Tuesday, August 16, 2016

Job Creation

From what I have learned from history, the answer to creating jobs is capitalism. Europe has almost strangled it completely with red tape. In Canada and the US we are not far behind. When Europe had their big explosion in population, they were industrializing under capitalism and created enough jobs.

I recently read an article which said in the US more companies closing than new startup companies. Apparently this is the first time this had ever happened in the US. The following article is not the one I had read, but I just google about this subject and an interesting article came up. The link to this article is here. It does not say exactly what I had read, but it is close.

Yes, there needs to be rules governing business. Government need to protect workers and protect the consumer. . However, you have to have some balance between rules governing business and letting business get on with business.

Europe has gone too far in protecting workers in the past. Now the protection only applies to older workers and the very few lucky young ones that can land a protected job. What is happening in Europe is that the youth are paying for the protection of older workers. There are no jobs for them.

And, it is the young that is expected to pay for the pension and health care of the old. I cannot see that working out. Pension and health care plans are on a pay as you go basis. That is money coming in is being used to pay for pensions and health care. If the young have no jobs how are they going to pay for these benefits?

On my other blog I wrote yesterday about Newfoundland Capital Corp. (TSX-NCC, OTC-none)... learn more. Tomorrow, I will write about EnerCare Inc. (TSX-ECI, OTC-CSUWF)... learn more on Wednesday, August 17, 2016 date 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.

Thursday, August 11, 2016

5 Year Running Averages

Sometimes using the 5 year running averages can put things is better perspective. It can show if there has been any growth over the past 5 year when a company has recent problems. The 5 year running averages for the past 5 years compare the average for the past 5 years to the average for past years of 6 to 10. The 5 year running averages for the past 10 years compare the average for the past 5 years to the average for the past years of 11 to 15.

For example, say I use 5 year running averages for EPS to 2015. The 5 year running average for the past 5 years looks at the 5 year average EPS in year 2015 to the 5 year average EPS in the year 2010. The 5 year running average for the past 10 years looks at the 5 year average EPS in year 2015 to the 5 year average EPS in the year 2005.

The 5 year running average calculation is simple. I am using Dorel Industries as an example. Here I use the EPS for the 5 years of 2011 to 2015 inclusive and dividend it by 5. So if the EPS for years 2011 to 2015 is $3.21, $3.39, $1.79, -$0.66, and $0.79. I get a sum of 8.52 and dividing this by 5 I get 1.70. If the 5 year average for 2010 is $3.15 then the IRR for the past 5 years is -11.59%. This is not quite as bad as the 5 year decline showing as -27.15%. See my spreadsheet on Dorel Industries Inc.

For Canam Group Inc. the IRR over the past 5 years for EPS is 244% per year. There is because 5 years ago the company earned less than $0.01 in EPS and in 2015 EPS was at $1.08. However, the 5 year running average for the past 5 year is -7.58% per year.

This is because the 5 year running average to 2010 is $0.65 and the current 5 year running average is $0.55. So for the 5 years to 2010 the company earned more than for the 5 years to 2015. This shows that 2015 was a very good year for the company, but that the last few years were not good years. See my spreadsheet on Canam Group Inc.

For Andrew Peller Ltd. when looking at 5 year running averages and current growth they point to a very different format. The 5 year growth is -5.38% per year because 5 years ago the company earned $1.49 and in 2015 the company earned $1.13.

However, if you look at 5 year running average, the growth is 8.01% per year. This is because for the 5 years to 2010 the EPS averaged $0.67 per year and for the 5 years ending in 2015, the EPS averaged $0.98 per year. For this stock EPS tends to be volatile, but they have done better over the past 5 years of 2011 to 2015 than for years 2006 to 2010. See my spreadsheet at Andrew Peller Ltd.

This sort of calculation can be useful when a company has just reported a bad year. It can also be useful say when EPS or CFPS varies are lot year from year. In some industries EPS and CFPS is more volatile than in other industries.

On my other blog I wrote yesterday about DirectCash Payments Inc. (TSX-DCI, OTC-DCTFF)... learn more. Tomorrow, I will write about Loblaw Companies Ltd. (TSX-L, OTC-LBLCF)... learn more on Friday, August 12, 2016 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.