Wednesday, January 29, 2014

Peter Rose, Artist

Peter Rose is having an art exhibition at the Ben Navaee Gallery. This exhibition will be from February 8 to February 16, 2014. This gallery is located at 1107 Queen Street East, Toronto, Ontario M4M 1K7. The gallery is between Pape Avenue and Jones Avenue.

Hours that the gallery is open are from 1 pm to 5 pm daily or by Appointment.

Opening Reception: To be held on February 8, 2014 from 2 pm to 4 pm.

Monday, January 27, 2014

Book Value

In theory, the book value per share is what shareholders would get if a company was broken up. To look at the Price/Book Value per Share Ratio can be an easy way to pick if a company is under or overvalued. Basically the book value is Assets less Liabilities. To get the book value per share you divide the book value by the number of shares outstanding.

If shares are selling below book, that is the P/B Ratio is under 1.00, it could mean the shares are cheap or that the market thinks that the book value might be too high. Generally value investors tend to want the P/B Ratio to be 1.50 or less. If the P/B Ratio is high it could mean that the shares are overpriced. It could also mean that the market thinks the company may be worth more than the book value.

One of the metrics I use in deciding if a stock price is reasonable or not is to compare the 10 year median P/B Ratio of the company to the current P/B Ratio. I consider a stock cheap, if the current P/B Ratio is 80% or less than the 10 year P/B Ratio. If the current P/B is 120% or more of the 10 year P/B Ratio, I consider the stock expensive.

I like this test P/B Ratio stock test because this test does not use estimates. Although in theory a good P/B Ratio is 1.50 or less, it is also a very good idea to look at the relative P/B Ratio over time. Also, you should not look at any metric in isolation. I try to look at four different measures to determine if a stock price is reasonable or not.

Please note that although the book value is considered to be the break-up value of a company. However, the reality is that when a company goes into bankruptcy, what value the company has can decrease very rapidly. Generally, if a company is in bankruptcy, few people actually get any money at all. That being said Book Value can sometimes be used to give you an idea what a company is worth.

For further reading on this subject you can look at Investopedia. They have an article called "Using The Price-To-Book Ratio To Evaluate Companies". They also have another article called "Book Value per Common Share".

On my other blog I am today writing about National Bank of Canada (TSX-NA, OTC-NTIOF)...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, January 22, 2014

I am just doing my annual review of Canadian Bank Stocks. One reason to invest in these stocks is that generally the dividends are good and the dividend growth is good. I know over the past 5 years the dividend growth has not been good on banks, but there is no reason to assume that they will not resume their historical dividend and dividend growth combination.

A reason to investment in dividend growth stock is that you can grow a nice portfolio with increasing dividend income. It takes a while, but if after 10 years you are earnings says 10% on your original stock investment, I think you are doing very well. In any investment climate, a return of 10% is great.

The banks I hold are Bank of Montreal (TSX-BMO), Royal Bank of Canada (TSX-RY) and Toronto-Dominion Bank (TSX-TD). I also cover the Bank of Nova Scotia (TSX-BNX) another bank I like, but you cannot buy everything that is good. I do not cover CIBC (TSX-CM) as I have no desire to every buy this stock. I cover one smaller bank of National Bank of Canada (TSX-NA) and will cover that shortly.

I have held Bank of Montreal (TSX-BMO) for 31 years and I am earning 42.6% yield on my original purchase price. I have held Royal Bank of Canada (TSX-RY) for 19 years and I am earning 36.9% on my original purchase price. I have held Toronto-Dominion Bank (TSX-TD) for 14 years and I am earning 14.6% on my original purchase price.

Of course the past does not guaranteed what the future might hold, however, I do think that our Canadian banks will continue to produce good dividends and good dividend growth.

In a past report I had looked at I looked at what the current increases were and their current yields and then looked at what I was getting on my stock investments. Of course, neither one may actually show what may happen in the future. See my spreadsheethere and read my original Dividend Yields on Original Investments blog entry. This is why you buy dividend growth stocks if you want to grow dividend income.

I reviewed some of the stocks I hold of Alimentation Couche-Tard Inc. (TSX-ATD.B); BCE Inc. (TSX-BCE); Bank of Montreal (TSX-BMO); Royal Bank (TSX-RY); Saputo Inc. (TSX-SAP); SNC-Lavelin (TSX-SNC); RioCan Real Estate (TSX-REI.UN).

On my other blog I am today writing about Enghouse Systems Ltd (TSX-ESL, OTC-EGHSF)... 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, January 20, 2014

2000, 2008 and Recovery

I recently was wondering how well I did through that last two bear markets to the present. I had realized I was doing fine, but it is fun to check into it. I do not keep records for shorter periods that monthly, so I am using the closes month ends for the dates for the 2000 bear market's top and low and the 2008 bear market's top and low.

I know that the TSX does not include dividends and a large part of my portfolio is dividends. However, the thing is that I am living off my dividends, so I am basically taken out all my dividend income to live on. When I first stopped working in 1999, I was taking out more than my dividends and now I am taking out a bit less. Overall, I have taken out just slightly more than I have earned in dividends.

What my calculations show is that I did not crash as much as the TSX in either bear market. For the 2000 bear I was down 30.92% and the TSX was down \$45.06%. For the 2008 bear I was down 30.81% and the TSX was down 39.89%.

I recovered better out of the 2008 bear than the 2000 bear. At the top in 2008 the TSX was up from the 2002 low by 30.82% and I was only up by 17.90%. If you look at the TSX high in 2008 compared to today, the TSX is still down by 7.43% to the end of December 2013, while I am up 37.79%.

Date TSX My Portfolio
Value YOY Y to Beg. YOY Y to Beg.
31-Aug-00 11,248
30-Sep-02 6,180 -45.06% -45.06% -30.92% -30.92%
30-May-08 14,715 138.11% 30.82% 70.68% 17.90%
27-Feb-09 8,845 -39.89% -21.36% -30.81% -18.42%
31-Dec-13 13,622 54.01% 21.11% 99.14% 62.46%

30-May-08 14,715
27-Feb-09 8,845 -39.89% -39.89% -30.81% -30.81%
31-Dec-13 13,622 54.01% -7.43% 99.14% 37.79%

On my other blog I am today writing about of Bank of Nova Scotia (TSX-BNS, NYSE-BNS)... 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, January 15, 2014

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

Some companies pay monthly, especially the old income trust companies, but there are fewer and fewer of these. A few pay semi-annually. Some companies are consistent in what months their dividends are paid, some are not.

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. 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 Royal Bank of Canada (TSX-RY, NYSE-RY)...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, January 13, 2014

TFSA for 2014

What I bought for my TFSA for 2014 was Saputo Inc. (TSX-SAP) and Hammond Power Solutions Inc. (TSX-HPS.A). Saputo was my main buy and I used Hammond Power Solutions Inc. as my filler. I use filler stocks to soak up excess money. They are usually small caps and cost less than \$10 per share.

Both these stocks showed up as cheap on my dividend stocks list. Hammond was showing up cheap based on historical high dividend yields, historical average dividend yields and 5 year median dividend yield tests. Saputo was showing up as cheap just on the historical average dividend yields and 5 year median dividend yield tests. See my spreadsheet here. and my blog entries of Dividend Stocks, Dividend Stocks 2 and Dividend Stocks 3.

I have held Saputo since 2006 but it was in my RRSP accounts. Since I am now taking money out of these accounts, I am selling stocks with the lowest dividend yields. Saputo had one of the lowest dividend yields in my account. However, I still like this stock and therefore I am buying it for my TFSA account. In this account, I like stocks with low dividend yields but rather high dividend growth.

Hammond was my main TFSA choice last year. It has been having problems lately and that is why it is cheap. However, recently the stock has been picking up some momentum.

My most recent reviews of Saputo was in June 2013 and they are here or here. My spreadsheet is here sap.htm. My most recent reviews of Hammond was in June 2013 and is here. My spreadsheet is here hps.htm.

On my other blog I am today writing about Bank of Montreal (TSX-BMO, NYSE-BMO)...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, January 10, 2014

Dogs

There are lots of dogs in my neighbourhood. The vast majority of dog owners are responsible owners. However, there is a lady with a part collie dog. I do not like this dog. I am not usually afraid of doges, but this one I am.

I generally get along well with both dogs and cats. If I visit anyone with a dog or cat, the animal feel that I am around to pat them or run their stomach and they are not wrong.

Sometimes this dog ignores me when I pass it by and sometimes it has a deep growl. The growl is a warning of "move away or I bit" type. I give this dog a very wide berth. I do not think that owners realize how disconcerting it is for a dog to growl at you when you are just passing by.

On my other blog I am today writing about Bank of Montreal (TSX-BMO, NYSE-BMO)...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, January 8, 2014

Using my Stock Reviews

In working with my reports, you do not need a recently dated one of mine to make a judgment call on a stock. This is because I look at a stock over the last 5 and 10 years, I do not just look at what they are doing now. The only reason you would need to do a second review is if there is an unexpected material change in the company. To find this out just Google the company and do a search for "news". If you are a long term investor, stocks do not change that much over a year. The thing you need to look for is unexpected material changes.

You need to make two decisions when looking to buy a stock. The first one is "Does my report describe a stock you would like to own?" If so, then second question is, "Is the stock selling at a relatively reasonable price?"

The first questions can be answered by reading the first part of my report on a stock, or if the stock report has two blog entries then read the first blog entry. The second questions can be answered in the 2nd part of my report on a stock, or if the stock report has 2 blog entries, then the 2nd blog entry. The second part of my report or the second blog entry should give you a good idea on what is a relatively reasonable stock price.

Since the values I give for these tests cover 5 or 10 years, the test values will not change much and test values from my last report can be used to check the current stock price to see if it is good or not.

My first test is the Price/Earnings Ratio test. I generally give 5 year low, median, and high median P/E Ratios. That is I am giving you the 5 year low median P/E Ratio, the 5 year median P/E Ratio and the 5 year high median P/E Ratio.

If they are, say 10, 12.5 and 15, you want a stock with a P/E closer to 10 than 15. Say around 12.5 or lower, although between 12.5 and 15 is not an unreasonable price. If the P/E Ratio is higher than 15, then it probably means the stock price is relatively too high. The Globe and Mail Investor site is a good place to get this information. "What you want to use is the "Forward P/E" found in the Summary section.

The next test I use to see whether or not a stock price is reasonable is the Graham Price Test. I give the current Graham Price in my write up. I generally say what the low, median and high 10 year median Price/Graham Price Ratio is. If the P/GP Ratios are 0.93, 1.07 and 1.23, then the better price is when the current P/GP Ratio is between 0.93 and 1.07 (or the ratio is lower than 0.93). A P/GP Ratio over 1.23 probably indicates the stock price is probably too high. When P/GP Ratio is below 1.00, then the stock price is lower than the Graham Price. (This, by itself shows that the stock price is good.)

I do not know any site that gives a P/GP Ratio. You can get it by dividing the current stock price by the Graham Price I give. If I give a Graham price of \$48.04 and the Stock price is \$69.29, then \$69.29 divided by \$48.04 gives a P/GP of 1.44. If the 10 year median high P/GP Ratio I give is 1.23, then a current P/GP ratio of 1.44 says that the stock price is relatively too high.

I give the 10 year median Price/Book Value Ratio. You would want a stock with a P/B Ratio close to or below the 10 year median P/B Ratio. The Reuter's site is the only one I know with this information. For Canadian Stocks follow the symbol with ".TO". For example, for Fortis Inc., use FTS.TO. See this under the Financials tab. (MRQ means Most Recent Quarter and TTM means Trailing Twelve Months.)

The last test I talk about is the dividend yield test. There are analysts that feel the only stock price test to use is the Dividend Yield one. Basically you buy a stock when the Dividend Yield is relatively high. I generally compare the current yield to the 5 year median yield and I want the stocks yields to be at or above this one. Some people like to see the yield at or above the 10 year median yield. My spreadsheet shows both. The dividend yield can be found at the Globe and Mail Investor site under the Summary tab.

If you get mixed results from these tests, look to see if I said one of these test had any problems. If so, eliminate that test. Otherwise look to the Dividend Yield and P/B Ratio tests. If they disagree, use the Dividend Yield test. The thing is both the P/E Ratio and the P/GP Ratios use estimates and the P/B Ratio and the Dividend Yield tests do not.

My report covers the last 5 and 10 years because I am a long term investor - not a short term trader. I use short paragraphs so it is easier to scan a report for specific information.

On my other blog I am today writing about Goodfellow Inc. (TSX-GDL, OTC-GFELF)...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, January 6, 2014

Dividend Stocks 3

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.

This is the third part of my updating my spreadsheet to see what stocks are being sold with a dividend yield above the historical average or historical high. See my spreadsheet at dividend growth stocks.

I have also added a new column to see if a stock is being sold with a dividend yield above the 5 year median dividend yield. See the column P/5 Y (I am using the 5 year median dividend yield to see if price is cheap or expensive). So, I am including the part of the spreadsheet I published on Monday, December 30, 2013.

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.

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

On my other blog I am today writing about Calian Technologies Ltd. (TSX-CTY, OTC-CLNFF) ...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.

Thursday, January 2, 2014

Dividend Stocks 2

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.

This is the second part of my updating my spreadsheet to see what stocks are being sold with a dividend yield above the historical average or historical high. I will be publishing for the remainder of my stocks next week.

I have also added a new column to see if a stock is being sold with a dividend yield above the 5 year median dividend yield. See the column P/5 Y (I am using the 5 year median dividend yield to see if price is cheap or expensive). So, I am including the part of the spreadsheet I published on Monday, December 30, 2013.

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.

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

On my other blog I am today writing about Metro Inc. (TSX-MRU, OTC-MTRAF)...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.