Monday, January 10, 2011

State of My Dividends 2010 2

I have updated my spreadsheet on my stocks for stock I own and dividend increases for 2010, see dividends. I own 45 stocks; and of these 23 increased their dividends, 16 kept the dividends at the same level, 3 lower their dividends and 3 have no dividends. I am continuing my blog about my dividends of 2010 today.

The first company to talk about is the utility company Transalta Corp (TSX-TA) which has not got a great record of increasing dividends. Currently, the earnings do not cover their dividends (but cash flow does). If you look at earnings estimates, it is not expect that the earnings will be greater than the dividends until 2012. However, the dividend rate on this stock is in the 4 to 5% range. I have been invested in this company since 1987 and I have made an average return of around 8% per year with over 5% per year from dividends. It is a solid, but unexciting investment.

My other utility company with no increase in distributions is Fort Chicago Energy Partners (TSX-FCE.UN). This company just changed from a Partnership to a corporation. The name has changed to Versesen Inc (TSX-VSN). They plan on keeping the dividend level for 2011, but may or may not decrease it in 2012. It should be noted that lots of income trusts and partnerships going to corporations has decreased distributions.

Canadian Tire (TSX-CTC.A) is a stock that has not been in much favor with analysts at any time, but I have done well with it earning a total return of 12% per year since buying it in 2000. It has never been consistent in raising its dividends. However, it just announced a 31% increase in dividends for 2011. The last year it raised their dividend was 2008.

I also have RioCan (TSX-REI.UN) a real estate trust that did not increase dividends this year. They are also inconsistent in rising dividends and over the long term tend to raise them in line with background inflation (3%). I bought this in 1998, 2000 and recently in 2006. I have made a return of around 16% per year. About half my return is in dividends.

The next to mention is Husky Energy (TSX-HSE). This is an energy company and although you can make good dividends from an energy company, dividends do tend to fluctuate. I am getting less dividends in 2010 because of a dividend decrease in 2009. I have not got much invested, nor have I made any money yet on this stock, but I expect to.

The next 3 companies are Industrials. Two of them kept their dividends flat in 2010 after reducing their dividends in 2009. The first one to discuss is Russell Metals (TSX-RUS) which reduced their dividends in 2009 by 45% and kept the dividends flat in 2010. A lot of analysts still like this stock and feel that the current dividend level is well supported by cash flow.

The next one is IESI-BFC Ltd (TSX-BIN), which is into waste disposal. This company was once a Unit Trust and they decreased their dividends in 2009. Many analysts think it is well run and that they will start to increase their dividends again in the future.

The last to talk about is Bombardier Inc. (TSX-BBD.B) I have only done very well on this stock because I bought it before the stock market bubble that send all sorts of stocks very high in 2000. I bought this stock in 1987. I did not think that it would get hurt so badly in the last recession. Although, I must admit that the Bombardier family have been working their butts off to ensure the survival and thriving of this company.

There is one last thing I would like to mention. If I were starting off my investments today, I would invest in the Tax Free Savings Account rather than an RRSP account. I did not have a choice when I started to invest. However, what ending up happening was that I invested in RRSP accounts and got tax deductions at a lower tax level than when I am now taking money from my RRSP. This is not what was supposed to happen.

Tomorrow, I will again talk about individual stocks, starting with Enbridge Income Fund Holdings.

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 website for stocks followed and investment notes. Follow me on twitter.

1 comment:

  1. I like to tell myself, friends and anyone else who will listen that an RRSP should only be used when one has a big enough income to get a good return (above 40% tax bracket).

    Otherwise as you say you may end up in a worse spot. The TFSA is far better for low and medium wage earners.