Monday, October 24, 2011

Dividend Increase, Third Quarter

From questions on Reasonable Stock Price, I would suggest that you never invest in the Stock Market (Bond Market too) any money you will need in the next 5 years. Also, you should plan on a 5 year period to take money out of a stock portfolio. Over a 5 year period, you can take money out when the market is relatively high. In a stock market, you only really know where the market is, relatively.

I know that it is not always possible to plan. Life happens. But if you can delay cashing out stocks you might be better off. Fall is generally the worse time to take money out of a stock portfolio. January is better and between March and May even better. The stock market has a seasonality to it. There is no logical reason for this, but it happens on a pretty consistent basis. Knowing this may help in making plans to take money from a stock portfolio.

Today, I am updating my spreadsheet on dividends. For all my stocks, I have shown in the “11” (for 2011) column, if a company has actually increased their dividend yet for their current financial year ending in December 2011. In the “div” column preceding, I show the percentage increase in the dividends for the company’s financial year ending in 2011. I have also added columns of “Div” and “12” for any of my stocks that have financial years not ending in December 2011 and they are therefore into their 2012 financial year.

For the third quarter of 2011, I had 7 companies increase their dividends. In my spreadsheet, these increases are highlighted in blue. The first 3 I will talk about today. I will cover the remaining 4 tomorrow. You can use your mouse to highlight a line in my htm documents. The first three I want to talk about today, have raised their dividends for a second time this year. These stocks are:

Computer Modelling Group Ltd (TSX-CMG)
Russel Metals (TSX-RUS)

The first stock to talk about is BCE. They raised their dividends by 7.7% in the first quarter of this year. For the third quarter of this year, they have again raised their dividend, this time by 5.1%.

I do have this stock recorded on Quicken and can calculate an IRR, but the problem is that they spun off Nortel in 2000 when the market price on this stock was very high. They also spun off Bell Aliant in 2006. Taking all these stocks in account, I have a total return of 10.24% per year since I have tracked this stock from 1987.

I had initially bought this stock in 1982, but I have only tracked it on quicken since that 1987. If I look at all these stocks for the past 10 years, I have lost 1.4% per year. If I track this stock for 9 years, without Nortel, I have made a return of 7.47% per year. If I look at this stock for the last 9 years without Bell Aliant, I get a total return of 7.59% per year. My spreadsheet for this stock shows similar total return. The dividend has provided just over 3% of this total return.

For my last full blog entries on this stock in April 2011, click here or here.

The next stock is Computer Modelling Group Ltd. This is a small dividend paying company. Because it is small and is basically a Tech company, it would be consider a riskier than average stock. This is not the first time that this stock has raised their dividend more than once in a year. The first dividend increase was in the first quarter of this year and the increase was for 5%. The second increase was the third quarter of this year and the increase was for 4.8%.

Because the dividend was raised 3 times last year, the real increase in dividend payments between last year and this year is 13%. This company is basically paying out all its excess earnings in dividends. They often pay special dividends too. This year was no different with a $.10 special dividend payment.

I bought this stock first in 2008 and have made a total return of some 39% per year on the stock. For my last full blog entries on this stock in June 2011, click here or here.

The last stock to talk about today is Russel Metals. This stock increased their dividends in first quarter also, with an increase of 10%. The second increase was for 9.1%. The overall increase in dividends for this year is 15%. Also, because the 2nd dividend increase occurred in the third quarter, the dividends for next year would be some 4.35% higher than the dividends for this year.

However, Russell Metal is not like the other two companies I have been talking about. They have decreased as well as increased their dividends over the past 10 years. This is because of the business they are in as this company does metal distribution and processing North America.

Since I have bought this stock, I have lost 6.35% per year in capital. I have been making some 4.8% per year on dividends. My loss per year is 1.55%. However, I expect to earn decent money on this stock over the long term.

I bought this stock in 2007 and in 2009, so I have not had it for long. For my last full blog entries on this stock in June 2011, click here or here.

Tomorrow, I will talk about the other stocks I own which had dividend increases in the third quarter. They are:
Davis & Henderson (TSX-DH) down, then up
Royal Bank (TSX-RY)
Saputo Inc. (TSX-SAP)
Alimentation Couche Tard (TSX-ATD.A)

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.

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