Tuesday, December 31, 2013

Dividend Stocks Link

My blog yesterday had a bad link to my spreadsheet. This has been fixed. See my spreadsheet at dividend growth stocks.

Monday, December 30, 2013

Dividend Stocks

I have updated a third of my spreadsheet on dividend growth information. See my spreadsheet at dividend growth stocks. I am using the historical high and historical average dividend yield to get my spreadsheet to points out stock that could possibly be cheap at this point.

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.

The best buys are probably the ones selling with the dividend yield above the historical average. There is probably nothing wrong with these stocks.

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. They are 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.

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. You might want to look at my original entry on Dividend Growth Stocks.

This will be the first of three entries as it takes too long to update the data on dividend growth stocks in one day, so I will be doing a third of the list each day.

On my other blog I am today writing about Stella-Jones Inc. (TSX-SJ, OTC-STLJF)...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. See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.

Friday, December 27, 2013

Portfolio December 2013

I have also loaded an index spreadsheet with some key ratios here for all the stocks that I cover. Use your mouse to highlight a line in this index.

On my other blog I am today writing about Mullen Group Ltd. (TSX-MTL, OTC-MLLGF)...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. See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.

Wednesday, December 25, 2013

Next Bear Market

My internet had been down from Saturday today. This was my post for Monday, December 23, 2013.

I read a number of news emails each week. Lately they have been talking about a bear market or a market corrections coming soon. The most prominent in this call has been The Daily Buy and Sell advisor of MPL Communications . Their article was based on information from Keith Richards.

Keith Richards has a blog at Smart Bounce and two of his recent articles on a coming correction are here and here.

I also get emails from Mauldin Economics. They also have been talking about coming problems. This group is American and are very concerned about the never ending QE of the Federal Reserve.

There are, of course, others saying that calling for a stock market crash (or bear market) is wrong. However, do not forget that we are still in a cyclical bull market within a secular bear market. How long the cyclical bull will last is anyone's guess. These things always last longer than anyone expects.

On my other blog I am today writing about Methanex Corp. (TSX-MX, NASDAQ-MEOH)...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. See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.

Wednesday, December 18, 2013

The Folly of P/E Multiples

I saw an article in the Financial Post called "The Folly of P/E Multiples". This article talks about not just looking at P/E Ratios to determine how reasonable a stock price is. The article talks about 5 stocks with high P/E Ratios that the author thinks investors should look further into than just P/E Ratios.

I must admit that P/E Ratios are one measurement that I use. However, I also like to look at, at least 3 other measurements to decide how reasonable a stock is priced. The stock price tests that I generally do are a P/E Ratio test, Price/Graham Price Ratio test, Price/Book Value per Share test and a dividend yield test.

With the Price/EPS Ratio test that I do, I like to compare the current P/E Ratio using this year's EPS estimates and the current price against the 5 year low, median and high median P/E Ratios. There are some rules of thumb with P/E Ratios, with below 10.00 being cheap and above 30.00 being expensive. However, you have to be aware that different sectors have different P/E Ratios that are considered low and high. Also, growth stocks tend to have quite high P/E Ratios.

My Price/Graham Price Test is a comparison of the current P/GP Ratio with the 10 year low, median and high median P/GP Ratios. Generally speaking, a P/GP Ratio of 1.00 or lower is pointing to a cheap stock. However, here again what ratio is considered cheap can vary by stocks in different sector.

For the Price/Book Value per Share Ratios stock test, I compare the current P/BV Ratio to the 10 year close median P/BV Ratio. Generally speaking, if the current P/BV Ratio is 80% of the 10 year close median P/BV Ratio, the stock is considered to be cheap. If the current P/BV Ratio is close to the 10 year close median P/BV Ratio, then the stock price is reasonable.

There is also some rule of thumb values such as if the current P/BV Ratio is 1.00 or lower, a stock is considered cheap and if the current P/BV Ratio is 1.50 then the stock price is considered reasonable. However, the P/BV Ratio can also vary by stock sector.

The last test I generally do is comparing the current dividend yield to the 5 year median dividend yield. Basically you want the current yield to higher than 5 year median dividend yield. (Here the higher the dividends yield the better the stock price.) If the current dividend yield is 20% higher than the 5 year median dividend yield, the stock price is considered to be cheap. A stock price is considered reasonable, if the dividend yield is close to the 5 year median dividend yield and a stock price is considered high if the current dividend yield is 20% lower than the 5 year median dividend yield.

I have recently been looking at historical high, low and average dividend yields as a comparison to the current dividend yield. I wrote about this in two recent posts of Dividend Growth Dividend Growth Updated .

On my other blog I am today writing about Keg Royalties Income Fund (TSX-KEG.UN, OTC-KRIUF)...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. See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.

Monday, December 16, 2013

The Trouble with RRSPs

When you are building up money in an RRSP, you do not realize the problems it will be withdrawing money after you stop working. My budget outside of tax is increasing around 2% a year. However, add in tax and it is increasing at a rate of 8% a year.

When you withdraw money from an investment fund after you stop working, you are supposed to count on withdrawing 4% of the fund a year and earn 8% a year. I am lucky that I am only withdrawing currently at 3% of my total portfolio. However, this will not last, not with taxes increasing so rapidly. They are the biggest item on my budget.

My projections shows that RRIF withdrawal amounts will hit a peak at age 71 and because at that age you have to withdraw so much that my RRIFs will stop increasing in value and start to decrease. At age 71 you have to withdraw some 7.38% of the fund. The percentage climbs from there. RRIFs are to end at age 90. With people living longer and longer, you would think that this age should be raised.

The problem for older people and the government may be that there will be very old people with little money. I know that both my parents and in-laws spent a lot of money in their last few years of life. I am talking about money in the $100,000's range.

On my other blog I am today writing about Magna International Inc. (TSX-MG, NYSE-MGA)...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. See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.

Wednesday, December 11, 2013

Reitmans

I had always liked Reitmans (TSX-RET.A) stock because they had a growing dividend and low debt. I do not mind companies that are family own. However, I had never bought this stock, until just recently. I had not bought this stock because you cannot own all the good companies on the TSX, and I owned a number of retail stocks.

I bought some recently because the company had fallen on hard times and was very cheap. I knew that this was a risk. With a family owned stock company, the family is usually quite motivated to do a good job. When I bought the stock, I realized that the dividend was at risk.

When I read that the company could no longer cover the dividends with earnings, I hoped that they would cut the dividend. I know most dividend investors do not feel that way, but I do. It is the prudent thing to do. The company did do the prudent thing and they cut the annual dividend from $0.80 to $0.20.

The thing is if companies maintain a dividend that they cannot afford, that is to go into debt to keep up the dividend, it makes recovery harder. This is not the prudent way forward for a company in financial difficulties. In the longer term, the company will be better off to have cut dividends when they cannot cover them properly with earnings.

On the other hand, my son has own stock in this company for some time. He was angry when the dividend was cut. He thinks companies should do everything in their power to maintain their dividends while they mend the company's finances. We have been arguing about whether this was a prudent move on Reitmans part or not. I realize that other investors do not feel like I do as companies that cut dividends have big falls in their stock price.

On my other blog I am today writing about FirstService Corp (TSX-FSV, NASDAQ-FSRV)...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. See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.

Monday, December 9, 2013

Market Bulls and Bears

No market goes straight up, or straight down for that matter, and all markets have times in which they pull back. In fact, the fast and sharper the rise, the sharper and steeper are the declines. However, if a market rises gradually, it usually will have a time for consolidation before the next rise rather than a decline. These are two extremes examples. Usually, the rises and falls are somewhere between these two modes.

On my other blog I am today writing about First Capital Realty (TSX-FCR, OTC- FCRGF)...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. See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.

Wednesday, December 4, 2013

6-Pak Approach

I get the daily emails from MPL Communications called Daily Buy and Sell Advisor. A recent email talked about a 6 Pak Approach to investing in Canadian stocks for 2012. The have two 6-Paks, one the Equity 6-Pak focused more on growth and the Dividend 6-Pak on growing income return.

You can sign up for this email at their site. I find that they generally give good solid advice. They sell information only to investors so they do not have to worry about doing business with the companies that they cover. So they are a good independent source of information on Canadian Stocks.

The Canadian Equity 6-Pak comprises of Bank of Nova Scotia (TSX-BNS), Brookfield Asset Management (TSX-BAM.A), Canadian Pacific Railway (TSX-CP), Enbridge Inc. (TSX-ENB)., EnCana Corp/Cenovus Energy (half allotments) (TSX-ECA and TSX-CVE) and Thomson Reuters (TSX-TRI). To the end of October, the Canadian Equity 6-Pak returned 20.2 per cent.

The Canadian Dividend 6-Pak comprises of Artis REIT (TSX-AX.UN), Bank of Montreal (TSX-BMO), BCE Inc., (TSX-BCE) Inter Pipeline L P. (TSX-IPL.UN), Power Corporation of Canada (TSX-POW) and TransAlta Corp (TSX-TA). To the end of October, the Dividend 6-Pak was a lower but nonetheless at a credible 12.7 per cent that includes a growing dividend yield of 5.2 per cent. By comparison, the year-to-date return on the benchmark S&P/TSX Composite Index was in the order of 10 per cent.

I follow all these stocks, see my site.

For CP Rail, oil-by-rail is a lucrative new bonus as President Obama keeps dithering over the Keystone XL pipeline and railroads fill the void by transporting Canadian oil sands bitumen across the border to waiting Gulf. Daily Buy and Sell Advisor likes the description of Cenovus as a "best-in-class" Canadian oil sands operator.

Brookfield Asset Management is a world leader in power, property, infrastructure and private equity. TransAlta Corp is making a massive transition from a coal to natural gas-fired electricity generation. If Mr. Buffett and Berkshire Hathaway favour TransAlta, we should like it too.

On my other blog I am today writing about Canada Bread Co. (TSX-CBY, OTC-CBDLF)...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. See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.

Monday, December 2, 2013

Canadian Dozen for 2014

I get the daily emails from MPL Communications called Daily Buy and Sell Advisor. A recent email gave their choices for a Canadian dozen stocks for 2014. These stocks are shown below with a short reason why they are being picked.

You can sign up for this email at their site. I find that they generally give good solid advice. They sell information only to investors so they do not have to worry about doing business with the companies that they cover. So they are a good independent source of information on Canadian Stocks.

Company Symbol Price (Oct.31) Dividend
Bank of Nova Scotia (BNS) $63.39 $2.48
Canada's most international bank
Brookfield Asset Mgmt. (BAM.A) $41.28 $0.60 +
Property, dominance, renewable, power, infrastructure, financial
Canadian Pacific Railway (CP) $149.04 $0.40
New leadership, prodigious operating catch-up leverage, oil-by-rail bonus
EnCana Corp. (ECA) $18.68 $0.80 +
A refocusing North American natural gas giant
Cenovus Energy (CVE) $30.98 $0.97
Among best in oil sands, SAGD, refinery partnership with Conoco-Phillips
Husky Energy (HSE) $29.69 $1.20
Asian controlled, integrated producer and downstream, new mgmt., project diversity
Manulife Financial (MFC) $18.47 $1.44
Canada's largest insurer, impressive international (Asia) push
Suncor Energy (SU) $37.89 $0.80
Canada's largest Oil & Gas producer, a cash & dividend machine
Teck Resources (TCK) $27.90 $0.80
Diversified integrated mining, export coal, other
Toronto-Dominion Bank (TD) $95.69 $1.72
A premier world bank by every metric
Trans Alta Corp. (TA) $14.03 $1.16
Conversion to natural gas, joint venture with Mid-American Energy
Trans Canada Corp. (TRP) $46.99 $1.84
Transitioning leader, energy transportation and generation, including hydro, nuclear


On my other blog I am today writing about Finning International Inc. (TSX-FTT, OTC-FINGF)...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. See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.