Wednesday, April 15, 2015

What's Wrong with Finance

There is an interesting article by Morgan Housel at his blog call What's Wrong with Finance.

The number one problem he has is the extreme bias towards action which he puts down to the exploitative fee arrangement. I agree that there is a bias towards action and this is a big problem. I think I have made money because I bought good companies at reasonable prices and then just left them alone in my portfolio.

Yes, there were times I had to take action. A company maybe bought out or company gets into difficulties. The odd time I did have to sell companies because I thought that they were currently going nowhere and I did not see any change in the future. This did not happen often. But, mostly I bought companies and held on to them and made money.

Morgan Housel has 3 more problems he sees, but I think these have been mentioned before.

On my other blog I am today writing about Sun Life Financial Inc. (TSX-SLF, NYSE-SLF) ... continue...

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, April 13, 2015

Shorting Canada

This is a very interesting and very short video by Jared Dillian. He is shorting Canada because our Real Estate is comparatively very expensive, oil prices are down and Canadians are the most indebted people anywhere.

On my other blog I am today writing about BCE Inc. (TSX-BCE, NYSE-BCE) ... continue...

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, April 8, 2015

Something to Buy April 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 at here. As in other spreadsheets, you can highlight a line or a number of lines for better viewing.

Of the consumer discretionary stocks, Newfoundland Capital Corp (TSX-NCC.A) and Leon's Furniture (TSX-LNF) are showing as cheap by the historical average dividend yield.

Consumer discretionary stocks showing as cheap by the historical median and 5 year median dividend yields is Goodfellow Inc. (TSX-GDL) and Newfoundland Capital Corp (TSX-NCC.A). Also Leon's Furniture (TSX-LNF) is showing as cheap by the historical median dividend yield.

Some Consumer Staple stocks are showing as relatively cheap. Jean Coutu Group Inc. (TSX-PJC.A) and Loblaw Companies (TSX-L) are showing as cheap only by the historical median dividend yield. Rogers' Sugar (TSX-RSI) is cheap using the 5 year median dividend yield.

Of the US Health Care stocks I follow Johnson and Johnson (NYSE-JNJ) and Medtronic Inc. (NYSE-MDT) are both relatively cheap by the historical average and historical median dividend yields.

Of the Real Estate Stocks, Granite Real Estate (TSX-GRT.UN) and Melcor Developments Inc. (TSX-MRD) are showing relatively cheap by the historical average and the historical median dividend yields. Artis REIT (TSX-AX.UN) is shown as cheap by the historical median dividend yield. Allied Properties (TSX-AP.UN), Granite Real Estate (TSX-GRT.UN) and Melcor Developments Inc. (TSX-MRD) are showing as relatively cheap by the 5 year median dividend yield.

The Canadian banks of Bank of Nova Scotia (TSX-BNS) National Bank of Canada (TSX-NA), Royal Bank (TSX-RY) and Toronto Dominion Bank (TSX-TD) are showing as relatively cheap by the historical median and the 5 year median dividend yields. Bank of Nova Scotia (TSX-BNS) and Toronto Dominion Bank (TSX-TD) are also showing as cheap by the historical average dividend yield.

Of the Financial Services stocks, AGF Management (TSX-AGF), CI Financial (TSX-CIX), DirectCash Payments Inc. (TSX-DCI), Gluskin Sheff & Associates Inc. (TSX-GS), Home Capital Group (TSX-HCG), IGM Financial (TSX-IGM) and Power Corp (TSX-POW) are showing as relatively cheap by the historical median dividend yield. Of these, only CI Financial (TSX-CIX), Home Capital Group (TSX-HCG), IGM Financial (TSX-IGM) and Power Corp (TSX-POW) are showing as cheap by the historical average dividend yield.

Of the above Financial Services stocks DirectCash Payments Inc. (TSX-DCI), Gluskin Sheff & Associates Inc. (TSX-GS), and Home Capital Group (TSX-HCG) are showing as relatively cheap by the 5 year median dividend yield.

Of the Insurance group Great-West Lifeco Inc. (TSX-GWO, Manulife Financial Corp (TSX-MFC), Power Financial Corp (TSX-PWF) and Sun Life Financial (TSX-SLF) are showing as relatively cheap by the historical median dividend yield. Power Financial Corp (TSX-PWF) is also showing as cheap by the historical average dividend yield.

Of the industrials, the stocks showing as cheap historically are Hammond Power Solutions Inc. (TSX-HPS), Pason Systems Inc. (TSX-PSI) and SNC-Lavalin (TSX-SNC). Canadian National Railway (TSX-CNR), Canyon Services Group (TSX-FRC), Finning International Inc. (TSX-FTT), McCoy Global Inc. (TSX-MCB), Mullen Group (TSX-MTL), PFB Corp (TSX-PFB), Russel Metals (TSX-RUS), Toromont Industries Ltd. (TSX-TIH) and Transcontinental Inc. (TSX-TCL) are showing as cheap by the historical median dividend yields.

Of the above stocks, only Finning International Inc. (TSX-FTT), Mullen Group (TSX-MTL), PFB Corp (TSX-PFB), Russel Metals (TSX-RUS), and Transcontinental Inc. (TSX-TCL) are showing as cheap by the historical average dividend yields. Also, Pulse Seismic Inc. (TSX-PSD) is showing as cheap by historical average, but not historical median dividend yield.

Of the industrials, also Exchange Income Corp (TSX-EIF) is the only one just showing as cheap by 5 year median dividend yield.

There are not many companies in the Tech sector, but Calian Technologies Ltd (TSX-CTY) and Evertz Technologies (TSX-ET) are showing as relatively cheap by the historical median dividend yield, by the historical average dividend yield and by the 5 year median dividend yield.

A number of energy stocks also seem cheap. Canadian Natural Resources (TSX-CNQ), Cenovus Energy Inc. (TSX-CVE), Ensign Energy Services (TSX-ESI) and Suncor Energy (TSX-SU) are still showing as relatively cheap historically.

Husky Energy (TSX-HSE) is showing as cheap by the historical median and the historical average dividend yields. Crescent Point Energy Corp (TXS-CPG) is showing as cheap by the historical median and the historical average dividend yields. Encana Corp (TSX-ECA) is only showing as cheap by the historical median dividend yield.

I have two materials stocks and both are showing up cheap. Teck Resources Ltd (TSX-TCK.B) is showing as relatively cheap historically. Barrick Gold Corp. (TSX-ABX) is showing as relatively cheap by the historical average and the historical median dividend yields.

Of the infrastructure type utility companies only Enbridge Inc. (TSX-ENB) is showing relatively cheap by the 5 year median. The utility companies TransAlta Corp (TSX-TA) is showing as relatively cheap by the historical average and the historical median dividend yields. ATCO Ltd (TSX-ACO.X) is showing relatively cheap by the historical median and 5 year median dividend yields. Canadian Utilities (TSX-CU) is showing as cheap by the 5 year median dividend yield.

Of the Telecom Stocks WiLan Inc. (TSX-WIN) is showing as relatively cheap historically. Shaw Communications Inc. (TSX-SJR.B) and Manitoba Telecom (TSX-MBT) are showing as relatively cheap by the historical average and the historical median dividend yields.

On my other blog I am today writing about AltaGas Ltd (TSX-ALA, OTC-ATGFF) ... continue...

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, April 7, 2015

Dividend Stocks April 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 April 2015.

On this list,
  • I have 9 stocks with a dividend yield higher than the historical high dividend yield,
  • I have 35 stocks with a dividend yield higher than the historical average dividend yield
  • I have 53 stocks with a dividend yield higher than the historical median dividend yield and
  • 42 stocks with a dividend yield higher than the 5 year average dividend yield.
When I did my list last month,
  • I have 9 stocks with a dividend yield higher than the historical high dividend yield,
  • I have 35 stocks with a dividend yield higher than the historical average dividend yield
  • I have 54 stocks with a dividend yield higher than the historical median dividend yield and
  • 44 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.
Of the stock that I follow 9 stocks have raised their dividends since last month. Dividends raises are denoted in green. Of special interest is Power Financial, which is the second life insurer to raise dividends after a long while. They are:

Canadian Natural Resources (TSX-CNQ)
EnerCare Inc. (TSX-ECI)
Enghouse Systems Limited (TSX-ESL)
Keyera Corp (TSX-KEY)
Parkland Fuel Corp (TSX-PKI)

Power Financial Corp (TSX-PWF)
SNC-Lavalin (TSX-SNC)
Stella-Jones (TSX-SJ)
Transcontinental Inc. (TSX-TCL.A)

Of the stock that I follow 3 stocks have decreased their dividends since last month. Dividends decreased are denoted in red. They are:

Canexus Corporation (TSX-CUS)
Penn West Petroleum (TSX-PWT)
Wajax Corp (TSX-WJX)

Also Magna International Inc. (TSX-MG) did a stock split of 2 to 1.

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 average 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.

However, 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 Stocks . 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 TransCanada Corp. (TSX-TRP, NYSE-TRP) ... continue...

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, April 1, 2015

Doing the Same Thing

There is a saying that a sign of insanity is doing the same thing over and over again and expecting different results. However, there is an exception when it comes to computers. You can do the same thing over and over again and then suddenly you get a different result.

I got a PVR from Rogers. I have been having trouble getting Shomi and on Rogers' site it says to reboot the PVR. I did this a number of times yesterday, but it never got past -01-. Of course without the PVR there is no TV either. On Rogers' site they basically say that the PVR is like a computer.

Having long worked with computers I decided to give this another try. This morning I rebooted the PVR and now it is working just fine. I have TV, I have Rogers' On Demand and I have Shomi. My experience with computers has been doing the same thing over and over again sometimes gets you what you want.

On my other blog I am today writing about TransAlta Corp. (TSX-TA, NSYE-TAC) ... continue...

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, March 30, 2015

Dividend Payment Dates

Most annual reports show what dividends have been declared in a year, not what dividends they have actually paid. What a company declares in a year and what they pay in a year may or may not be the same. As a shareholder you want to know what you actually get paid and when. It can get confusing.

For dividends, you have a declaration date, ex-dividend date, dividend record date and dividend payment date. The declaration date is the date a company declares it will pay a dividend. The ex-dividend date is 2 business days before the dividend record date. (Most charts that give dividend information use the ex-dividend date.) The dividend record date is date that if you are the shareholder of record you will get the dividend. The dividend payment date is the actual day the dividend is paid.

In the following notice, February 20, 2014 is the declaration date. The ex-dividend date is March 27, 2014. The dividend record date is March 31, 2014 and the date the dividend is paid is April 30, 2014.

"CALGARY, ALBERTA--(Marketwired - Feb. 20, 2014) - TransCanada Corporation (TSX:TRP) (NYSE:TRP) (TransCanada or the Company) today announced that the Board of Directors (Board) of TransCanada declared a quarterly dividend of $0.48 per common share for the quarter ending March 31, 2014, on the Company's outstanding common shares. This is a four per cent increase over the $0.46 dividend per share paid in each of the previous four quarters. The common share dividend is payable on April 30, 2014, to shareholders of record at the close of business on March 31, 2014."

When you are buying or selling a stock, it is the ex-dividend date that you should look at. This is the date used in determining who actually gets the dividend. When you are collecting dividends, it is the payment date that is important. In my spreadsheets, I use the dividends that get paid in the applicable calendar year.

Some companies give you good information on past and current dividends. One such company is TransCanada and their dividend information is shown here.

On my other blog I am today writing about Enbridge Inc. (TSX-ENB, NYSE-ENB) ... continue...

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, March 25, 2015

Dividend Payment Cycles

There are three cycle for the companies that pay quarterly. They are:

Cycle 1: January, April, July, October
Cycle 2: February, May, August, November
Cycle 3: March, June, September, December

This means that if a company is paying dividends in cycle 1, dividends will be paid in January, April, July and October. Some companies pay monthly, especially the old income trust companies, but there are fewer and fewer of these. However, a few companies have started monthly payments. For example Mullen Group Ltd. (TSX-MTL) switched from a quarterly dividend to a monthly dividend in 2013.

Click here to get the table of payment cycles for the stock I cover. You can use your mouse to high light a line (i.e. the stock, symbol and corresponding Dividend Payment Cycle (DP)). The table lists the stocks by name in the first section and by Cycle in the second section.

When you are getting your income from dividends, a lot of people want to have their income spread out evenly over the months. This is hard to do as most dividends are paid in cycle 1. Also even within cycles some are paid near the first of the cycle, some in the middle and other at the end.

I do record a stocks dividend cycle, but some stocks do not keep to a particular cycle, so this can cause some confusion. The thing is, some companies pick a cycle and stay with it. Others do not. A company may pay some dividends in cycle 1 and some in cycle 2. Some may pay in Cycles 2 or 3. Some may pay in cycle 3 or 1. If a company pays dividends sometimes in Cycle 3 and sometimes in cycle 1, you can get a situation where one year has 3 dividends and the next year has 5 dividends. However, you do get all your dividends in the end.

I personally do not bother with this. Each December I draw up a budget and I figure out how much I will draw each month from dividends for the following year. I put money in an ING account in December each year from my Registered Accounts. Near the end of each month I put that pre-determined monthly amount in my chequing account. The ING account is used when my dividends in my Trading account is not enough for my monthly withdrawal.

On my other blog I am today writing about Richelieu Hardware Ltd (TSX-RCH, OTC-RHUHF) ... continue...

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.