Gordon Page is the Editor and Publisher of “The Canada Report” by Gordon Pape Enterprises. His talk was titled “Where to put your money in 2012”.
Gordon starts by saying that we are in for a couple of tough years, but the sky is not falling. We do have problems, the US credit rating is down, Sovereign debt is high, there are record gold prices and stock markets are volatile. We also have very low interest rates with a recession looming. He thinks that we are heading into a recession that will last until 2013.
He feels that knowing the past will help to tell us the future. The US down grade was not a non-event. It was a shock to the Bond Market. The US has gridlock in politics and nothing will happen until the next election in 2012.
He thinks that the Euro zone is a house of cards. If the German people are not willing to support Greece, Italy etc. there is going to be problems. The gold market will continue to go up and volatility will continue. Interest rate will continue to be low and we have a 50/50 chance of having another recession.
He thinks that the TSX will probably break even in 2011, although it is currently down about 6%. He sees a high demand for high yield securities and these will also be the winners in 2011. (One main reason for demand for high yield securities is demographics.)
This year bonds have done better than stocks as they are up about 6.6%. REITs are also doing well as they are up around 8.2%. Telecoms are also up around 11.9%. The TSX aristocrats are up a bit this year. (The TSX aristocrats are large caps that have raised their dividends each year of the past 5 years.
What he sees a winners for 2012 will be gold, dividend stocks, trusts and limited partnerships and bonds. Gold is still moving up as people see it as a store of wealth. (This is a universally accepted view of gold.) He sees the world in disarray with some countries on the verge of default. This will go on for some time and will help gold to rise.
Stocks he suggests are Agnico-Eagle Mines (TSX-AEM), Barrick Gold Corp. (TSXC-ABX); Franco-Nevada Corp. (TSX-FNV); and Silver Wheaton (TSX-SLW). He likes Silver Wheaton, as have a number of other people at this convention. They buy silver royalty streams. They have just reintroduced a dividend. The stock is low, but it is rising. For ETFs and Mutual Funds, he recommends RBC Global Precious Metals (RBF178); BMG Bullion Fund-A (BMG100) and Claymore Gold Bullion ETF (TSX-CGL).
If you want to buy stocks, you should be into dividend paying stocks. You want stocks that offer down market protection even if you do no need the income. Stocks to buy would be Enbridge Inc. (TSX-ENB); BCE Inc. (TSX-BCE); Fortis Inc. (TSX-FTS); Telus Corp (TSX-T) and Emera Inc. (TSCX-EMA).
Other stocks to consider are Trust and Limited Partnerships such as Inter Pipeline Fund (TSX-IPL.UN) and Brookfield Renewable Power (TSX-BRC.UN). You should try to buy IPL below $15. It is currently around $16.09. Brookfield is a green source electricity company. It used to be Great Lake Hydro. It has a 5.6% yield and it is a buy currently at $23.10. He stressed that we should not discount trust and limited partnership companies as investments.
He thinks that it is not a good idea to buy US Limited Partnership companies as you would need to file US taxes. However, Brookfield Infrastructure LP (NYSE-BIP) is fine as it is based in Bermuda. This company has a good yield at 5.3% and they increase the dividends each year around 3 to 5%.
He thinks that the return from bonds in 2012 will be around 3%. He suggested iShares DEX Universe Bond (TSX-XBB); iShares DEX Short Term Bond (TSX-XSB) and Claymore 1-5 year Government Bond E.T.F. (TSX-CLF). He also suggested Beutel Goodman Bond Fund.
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.
Monday, September 12, 2011
Money Show, Dennis Gartman
Dennis Gartman is editor and publisher of the Gartman Letter. Dennis was also in the opening ceremonies. His talk was entitled Food, Fuel, and the Fed: Investing in a Post QE2 World.
People want better food as their income risings. We are producing more and more grains and this will continue. We are producing more fertilizer, like potash. However, food will just get tighter. Companies who are shippers of grains have not done well recently, but eventually their stocks will rise.
He also believes that fuel will get tighter. (He does not believe in peak oil.) Some of the oil will be replaced by nuclear power. What people want is high grade oil like that from Brent, Texas and Libya. (He says that Saudi oil is not good, that it is really junk and takes a lot of refining.) He is not bullish on natural gas. The US has a lot of natural gas.
He says the Fed is not going to tighten (i.e. raise interest rates). The same is true with Europe, Canada and Australia. All interest rates are going to go to 0%.
He defines himself as a trader. He buys what is going up and sells what is going down. He says an “investment” is just a trade that has gone wrong. He says gold is going to go up until it stops. He also said that gold is not a safe harbor. Safe harbor investments do not move 8% in a single day.
He thinks that eventually stocks will go up. However he points out that volatility is a sign of high prices. When you have low prices, the market tends to be quite.
He is also bullish on the US dollar. He feels that it will not lose its reserve status and that the US will remain a dominant power for a very long time. The strong currencies will be dollars that is US, Canadian, Australian and New Zealand dollars.
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.
People want better food as their income risings. We are producing more and more grains and this will continue. We are producing more fertilizer, like potash. However, food will just get tighter. Companies who are shippers of grains have not done well recently, but eventually their stocks will rise.
He also believes that fuel will get tighter. (He does not believe in peak oil.) Some of the oil will be replaced by nuclear power. What people want is high grade oil like that from Brent, Texas and Libya. (He says that Saudi oil is not good, that it is really junk and takes a lot of refining.) He is not bullish on natural gas. The US has a lot of natural gas.
He says the Fed is not going to tighten (i.e. raise interest rates). The same is true with Europe, Canada and Australia. All interest rates are going to go to 0%.
He defines himself as a trader. He buys what is going up and sells what is going down. He says an “investment” is just a trade that has gone wrong. He says gold is going to go up until it stops. He also said that gold is not a safe harbor. Safe harbor investments do not move 8% in a single day.
He thinks that eventually stocks will go up. However he points out that volatility is a sign of high prices. When you have low prices, the market tends to be quite.
He is also bullish on the US dollar. He feels that it will not lose its reserve status and that the US will remain a dominant power for a very long time. The strong currencies will be dollars that is US, Canadian, Australian and New Zealand dollars.
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.
Money Show, Jim Jubak
Jim Jubak is a stock picker and analysts that is often with the Money Show. He is the Editor and Founder of JubakPicks.com. He is also Senior Market Editor for MoneyShow.com. He was a speaker in the Opening Ceremonies. His talk was called 2013 – The Year when the Bills Come Due from Beijing to Washington to Frankfurt.
Jim is very worried about 2013. Currently we have Greek government debt at 53%, the US government debt has been downgraded, Japan debt also has been downgraded, but no one noticed, and we have inflation rearing its head in China and Brazil.
Solutions to problems, especially in US and Europe have not really been solutions, but just delays. There will be another Greek rescue. The US debt ceiling was “fixed’ with cuts back loaded to 2013. Brazil is dreaming that lower inflation will come with a global slowdown.
He feels that Greece will default and with this will come the erosion of the ECB (European Central Bank) and unpredictable bank defaults. He feels that France will be hit hard.
In the US he thinks that reducing the deficit will just become harder. The economy will slow down into a recession. Real Estate is still underwater in the US. Lots of the unemployed have been unemployed for 18 months and may have their skills become obsolete. He thinks that the US risks a 2nd downgrade by another rating organization.
For Brazil, they just have had a big increase in their budget. They are risking runaway inflation and the deficit is just getting higher.
China is postponing their bad loans problems. These bad loans are to local government owned and state-owned companies.
He sees stock market rallies in 2011 and 2012, but they will not be sustainable. He thinks we should be in dividend paying stock and just stick it out through the coming turmoil.
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.
Jim is very worried about 2013. Currently we have Greek government debt at 53%, the US government debt has been downgraded, Japan debt also has been downgraded, but no one noticed, and we have inflation rearing its head in China and Brazil.
Solutions to problems, especially in US and Europe have not really been solutions, but just delays. There will be another Greek rescue. The US debt ceiling was “fixed’ with cuts back loaded to 2013. Brazil is dreaming that lower inflation will come with a global slowdown.
He feels that Greece will default and with this will come the erosion of the ECB (European Central Bank) and unpredictable bank defaults. He feels that France will be hit hard.
In the US he thinks that reducing the deficit will just become harder. The economy will slow down into a recession. Real Estate is still underwater in the US. Lots of the unemployed have been unemployed for 18 months and may have their skills become obsolete. He thinks that the US risks a 2nd downgrade by another rating organization.
For Brazil, they just have had a big increase in their budget. They are risking runaway inflation and the deficit is just getting higher.
China is postponing their bad loans problems. These bad loans are to local government owned and state-owned companies.
He sees stock market rallies in 2011 and 2012, but they will not be sustainable. He thinks we should be in dividend paying stock and just stick it out through the coming turmoil.
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.
Saturday, September 10, 2011
Money Show, Robert Gorman 2
Robert Gorman, Chief Portfolio Strategist of TD Waterhouse, Canada gave his remarks also in the Opening Ceremonies of the Money Show. However, his was quite a bit longer than anyone else as it was scheduled for one half hour. His talk was, he said of 6 themes. The first three were in part 1 and the last 3 are in part 2 below.
His fourth theme has to do with Bonds. We have had a 30 year bull market in bonds and it is now over. Bond yields in the future will go up and total returns will go down. Probably the best bonds will be corporate bonds.
His 5th theme was to avoid southern European stocks and concentrate on northern European stock. The first one he mentioned would be Nestle S. A. This is the largest food and nutrition company in the world and is Swiss. Next would be Diageo, which is a British Distiller. Another company to hold is British Petroleum (BP). The last is Standard Charter Bank, which is a British bank that is heavily into Asia.
His last theme is about emerging markets. China has done the best this year and most other Asian countries are under water at this point. The Return on Equity is increasing in emerging markets. However, they have a shortage of skilled labor and this will push up wages and compress profit margins going forward. Emerging market growth will go forward in the single digits.
There were a couple of other stocks he recommended and they all have strong dividend growth. They are Suncor Energy (TSX-SU), Canadian Oil Sands (TSX-COS) and Potash Corp. of Saskatchewan (TSX-POT).
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.
His fourth theme has to do with Bonds. We have had a 30 year bull market in bonds and it is now over. Bond yields in the future will go up and total returns will go down. Probably the best bonds will be corporate bonds.
His 5th theme was to avoid southern European stocks and concentrate on northern European stock. The first one he mentioned would be Nestle S. A. This is the largest food and nutrition company in the world and is Swiss. Next would be Diageo, which is a British Distiller. Another company to hold is British Petroleum (BP). The last is Standard Charter Bank, which is a British bank that is heavily into Asia.
His last theme is about emerging markets. China has done the best this year and most other Asian countries are under water at this point. The Return on Equity is increasing in emerging markets. However, they have a shortage of skilled labor and this will push up wages and compress profit margins going forward. Emerging market growth will go forward in the single digits.
There were a couple of other stocks he recommended and they all have strong dividend growth. They are Suncor Energy (TSX-SU), Canadian Oil Sands (TSX-COS) and Potash Corp. of Saskatchewan (TSX-POT).
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.
Money Show, Robert Gorman
Robert Gorman, Chief Portfolio Strategist of TD Waterhouse, Canada gave his remarks also in the Opening Ceremonies of the Money Show. However, his was quite a bit longer than anyone else as it was scheduled for one half hour. His talk was, he said of 6 themes. The first three are below and I will continue this later.
First he talk on how the US market affects us, we cannot avoid that. 2008 was the steepest market decline since the Great Depression. There was no double dip recession for US last year, but what happened was slow growth. His says that the signals coming from the US are quite mixed. The biggest issue is that of confidence by consumers and companies. He feels that the odds of a double dip recession have gone up and that this is a concern.
What he thinks what will happen is that slow growth will continue. This can be good if the growth is good enough to increase company profits, but not good enough to cause inflation. What happened since 2008 is that the S&P 500 when from a P/E of 29 to one of 12.5 today. This showed up as no growth in the S&P 500 in 10 years. He feels that the S&P 500 will go up to 15 P/E and it is a reasonable one because we are at the bottom of an inflation cycle.
He also points the difference between the 10 year Treasury bills with a yield of 2% and the Earnings Yield of the S&P 500, which is at 7%. This makes the S&P 500 cheap and the Treasury Bonds expensive. And the last thing he mentions was that US companies have $2T in cash and they can get cheap loans. So they can buy acquisitions rather cheaply.
The second theme Bob talks about is that there has been a recent transition to from small caps to large caps. Going forward, large caps will do better than small caps. The other thing is that large caps have very good dividend yields and they are, in fact, better than interest rates.
His third theme was that consumers are getting more conservative. In the US the biggest debtors were the middle and upper classes, and not as many people thought, the lower classes. These classes do have the earning power to reduce their debt. The US default rates are sharply down. Savings rate has gone from 2% to 6%. The lower debt and higher savings trend will continue and this has a lot to do with demographics. US economy will have a solid foundation but lower growth.
People and companies will be fiscally conservative. In this environment stocks like Johnson & Johnson (NYSE; JNJ) and Pepsico Inc. (NYSE: PEP) will be good investments. They will present lower risks and good upside. Two other good investments would be IBM (NYSE: IBM) and Oracle Corp. (NASDAQ: ORCL).
We will have an unusual period in investment going forward. Interest rates are below dividend yields. Rising dividends will push up stock prices. One good Canadian investment will be Power Corp (TSX: POW). This company has been dead money in the recent past but this is going to change. Other investments would Shaw Communications (TSX: SRJ.B), Royal Bank (TSX: RY) and Bank of Nova Scotia (TSX: BNS).
I will continue on this talk later.
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.
First he talk on how the US market affects us, we cannot avoid that. 2008 was the steepest market decline since the Great Depression. There was no double dip recession for US last year, but what happened was slow growth. His says that the signals coming from the US are quite mixed. The biggest issue is that of confidence by consumers and companies. He feels that the odds of a double dip recession have gone up and that this is a concern.
What he thinks what will happen is that slow growth will continue. This can be good if the growth is good enough to increase company profits, but not good enough to cause inflation. What happened since 2008 is that the S&P 500 when from a P/E of 29 to one of 12.5 today. This showed up as no growth in the S&P 500 in 10 years. He feels that the S&P 500 will go up to 15 P/E and it is a reasonable one because we are at the bottom of an inflation cycle.
He also points the difference between the 10 year Treasury bills with a yield of 2% and the Earnings Yield of the S&P 500, which is at 7%. This makes the S&P 500 cheap and the Treasury Bonds expensive. And the last thing he mentions was that US companies have $2T in cash and they can get cheap loans. So they can buy acquisitions rather cheaply.
The second theme Bob talks about is that there has been a recent transition to from small caps to large caps. Going forward, large caps will do better than small caps. The other thing is that large caps have very good dividend yields and they are, in fact, better than interest rates.
His third theme was that consumers are getting more conservative. In the US the biggest debtors were the middle and upper classes, and not as many people thought, the lower classes. These classes do have the earning power to reduce their debt. The US default rates are sharply down. Savings rate has gone from 2% to 6%. The lower debt and higher savings trend will continue and this has a lot to do with demographics. US economy will have a solid foundation but lower growth.
People and companies will be fiscally conservative. In this environment stocks like Johnson & Johnson (NYSE; JNJ) and Pepsico Inc. (NYSE: PEP) will be good investments. They will present lower risks and good upside. Two other good investments would be IBM (NYSE: IBM) and Oracle Corp. (NASDAQ: ORCL).
We will have an unusual period in investment going forward. Interest rates are below dividend yields. Rising dividends will push up stock prices. One good Canadian investment will be Power Corp (TSX: POW). This company has been dead money in the recent past but this is going to change. Other investments would Shaw Communications (TSX: SRJ.B), Royal Bank (TSX: RY) and Bank of Nova Scotia (TSX: BNS).
I will continue on this talk later.
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.
Thursday, September 8, 2011
Money Show, Opening Remarks
Kim Githler:
If you are smart, in 1807 you live in London, England, in 1907 you live in New York USA, and in 2008 you live in Asia. This is a quote from Jim Rogers. She says that at this show you can get a lot of stock tips, but before you buy, please do your own due diligence.
She also said what a number of other people said, and that is inflation is returning but the velocity of money has not returned. (Velocity of money is how fast money circulates.)
Charles Githler:
Charles points out that all the economists that are in Obama’s administration are Keynesian. None of the economists that Reagan had were Keynesian.
Charles points out that it is important to always cut your losses. If you lose 8%, to get even you need to earn 9%, but lose 15%, you need to gain 18%, lose 25% and you need to gain 33%, lose 35% and you need to gain 54%, but if you lose 45%, you need to gain 82%.
The stock market has cycles that last around 17 years, where they go up for 17 years and there are volatile but do not progress for 17 years. We are in a current flat cycle and it has only been going on for 11 years.
Bart DiLiddo:
Every day, 10,000 Americans become 35. In Canada 1,000 people become 65. People used to want capital gains, but now people want retirement Income. They particularly are looking for dividend income, especially, monthly dividend income. He thinks that people should also look for income from trading stock options.
He feels that Investors want to preserve their portfolios when markets go down. How he thinks they should do is using counter ITFs to make money in the downturns. He thinks we should use the Armageddon Collar whereby you sell calls and use the money buy puts. This would have the effect of limiting your increases in portfolio value, but will limit losses. (Personally, I have never traded options, so I would not know about such moves.)
Is last remark was that the TSX has peaked in April, but corporate earnings are still rising.
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.
If you are smart, in 1807 you live in London, England, in 1907 you live in New York USA, and in 2008 you live in Asia. This is a quote from Jim Rogers. She says that at this show you can get a lot of stock tips, but before you buy, please do your own due diligence.
She also said what a number of other people said, and that is inflation is returning but the velocity of money has not returned. (Velocity of money is how fast money circulates.)
Charles Githler:
Charles points out that all the economists that are in Obama’s administration are Keynesian. None of the economists that Reagan had were Keynesian.
Charles points out that it is important to always cut your losses. If you lose 8%, to get even you need to earn 9%, but lose 15%, you need to gain 18%, lose 25% and you need to gain 33%, lose 35% and you need to gain 54%, but if you lose 45%, you need to gain 82%.
The stock market has cycles that last around 17 years, where they go up for 17 years and there are volatile but do not progress for 17 years. We are in a current flat cycle and it has only been going on for 11 years.
Bart DiLiddo:
Every day, 10,000 Americans become 35. In Canada 1,000 people become 65. People used to want capital gains, but now people want retirement Income. They particularly are looking for dividend income, especially, monthly dividend income. He thinks that people should also look for income from trading stock options.
He feels that Investors want to preserve their portfolios when markets go down. How he thinks they should do is using counter ITFs to make money in the downturns. He thinks we should use the Armageddon Collar whereby you sell calls and use the money buy puts. This would have the effect of limiting your increases in portfolio value, but will limit losses. (Personally, I have never traded options, so I would not know about such moves.)
Is last remark was that the TSX has peaked in April, but corporate earnings are still rising.
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.
Wednesday, September 7, 2011
Stocks that Raise their Dividends
What I want to talk about today is stocks that raise their dividends yearly or on a regular basis. I follow some dividend lists that show stock that have raised their dividends yearly for a number of years. Both the qualifications for these lists and the stocks on these lists are always changing.
However, just because these lists are changing, it does not mean that they are not useful. They are an excellent place to start to look for dividend paying stock that increase their dividends on a regular basis. The dividend lists that I follow of Dividend Achievers (see resources) and Dividend Aristocrats (see indices).
As with using other filters to find good stocks, you have to be very careful about stocks on such lists. Most stocks are fine, but there are always ones that are not. There are also fine stocks excluded from these lists. I think that Indxis had recognized some problems with their lists because now they not only have a Canadian Dividend Achievers list for Canada, but a Select Canadian Dividend Index list.
However, they do not do this for US, UK or International stocks. The lists for other areas only have achievers lists. The new Canadian Dividend Index has more stocks as they are including banks and other financial institutions. They include all large companies that have increased or maintained their dividends for the last 5 years.
The other interesting thing about the Indxis lists is that for US stocks, they must have increased their dividends year for 10 years. Other areas, including UK, Canada and International stocks must only have increased their dividends for 5 years.
One stock that I feel is problem stock that is on these dividend achievers lists is AGF Management. I do not think that this company has recovered from the 2000/1 bear market. The result of their continuation of increasing dividends is higher Dividend Payout Ratios. (See my site for information on Dividend Payout Ratios). Their 5 year median DPR on earnings coming into 2001 is 16.82% and for cash flow was 7.15%.
The 5 year median DPR coming into 2010 on earnings was 67.38% and on cash flow was 27.71%. The DPR for the financial year ending November 2010 on earnings was 79.23% and on cash flow was 51.14. The DPR for the financial year ending November 2011 on earnings was 91.74% and on cash flow was 47.04%. I will shortly being reviewing this stock as it is one I follow. I held this stock from 2001 and sold some in 2006 and the rest in 2008 and made a total return of 2.09% per year.
I really bought this stock at the wrong time. The median 5 year dividend yield was 4.83%. I sold because I thought that this stock was going nowhere and I did not see that it was going to recover fully anytime soon.
Just because a stock is not on such a list also does not make it a bad dividend payer and also if a stock is removed, it does not make it a bad dividend payer. I held onto all my bank and other financial stocks after they were removed from the dividend achievers lists because I believed that in the long run, they will serve me well. They are now recovering and starting to increase their dividends.
Personally, I rather have a stock stop dividend raises or even cut the dividend if it is the best for the long term viability of a stock. For example, I bought TransCanada Corp after they decreased their dividends in 2000. I had had my eye on this stock for some time, but thought it was overpriced. It did get into difficulty but it had a plan. It took a few years to recover to the old dividend rate, but it did.
I have written about dividend stock before. See my site for my blog entry about buying Dividend Growth Stocks. Also see my site for my blog entry on buying Dividend Paying Stocks.
I am going to pause on Thursday because I am going to the Money Show. I will be reporting what I hear there, the same as I did last year.
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.
However, just because these lists are changing, it does not mean that they are not useful. They are an excellent place to start to look for dividend paying stock that increase their dividends on a regular basis. The dividend lists that I follow of Dividend Achievers (see resources) and Dividend Aristocrats (see indices).
As with using other filters to find good stocks, you have to be very careful about stocks on such lists. Most stocks are fine, but there are always ones that are not. There are also fine stocks excluded from these lists. I think that Indxis had recognized some problems with their lists because now they not only have a Canadian Dividend Achievers list for Canada, but a Select Canadian Dividend Index list.
However, they do not do this for US, UK or International stocks. The lists for other areas only have achievers lists. The new Canadian Dividend Index has more stocks as they are including banks and other financial institutions. They include all large companies that have increased or maintained their dividends for the last 5 years.
The other interesting thing about the Indxis lists is that for US stocks, they must have increased their dividends year for 10 years. Other areas, including UK, Canada and International stocks must only have increased their dividends for 5 years.
One stock that I feel is problem stock that is on these dividend achievers lists is AGF Management. I do not think that this company has recovered from the 2000/1 bear market. The result of their continuation of increasing dividends is higher Dividend Payout Ratios. (See my site for information on Dividend Payout Ratios). Their 5 year median DPR on earnings coming into 2001 is 16.82% and for cash flow was 7.15%.
The 5 year median DPR coming into 2010 on earnings was 67.38% and on cash flow was 27.71%. The DPR for the financial year ending November 2010 on earnings was 79.23% and on cash flow was 51.14. The DPR for the financial year ending November 2011 on earnings was 91.74% and on cash flow was 47.04%. I will shortly being reviewing this stock as it is one I follow. I held this stock from 2001 and sold some in 2006 and the rest in 2008 and made a total return of 2.09% per year.
I really bought this stock at the wrong time. The median 5 year dividend yield was 4.83%. I sold because I thought that this stock was going nowhere and I did not see that it was going to recover fully anytime soon.
Just because a stock is not on such a list also does not make it a bad dividend payer and also if a stock is removed, it does not make it a bad dividend payer. I held onto all my bank and other financial stocks after they were removed from the dividend achievers lists because I believed that in the long run, they will serve me well. They are now recovering and starting to increase their dividends.
Personally, I rather have a stock stop dividend raises or even cut the dividend if it is the best for the long term viability of a stock. For example, I bought TransCanada Corp after they decreased their dividends in 2000. I had had my eye on this stock for some time, but thought it was overpriced. It did get into difficulty but it had a plan. It took a few years to recover to the old dividend rate, but it did.
I have written about dividend stock before. See my site for my blog entry about buying Dividend Growth Stocks. Also see my site for my blog entry on buying Dividend Paying Stocks.
I am going to pause on Thursday because I am going to the Money Show. I will be reporting what I hear there, the same as I did last year.
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.
Tuesday, September 6, 2011
Ag Growth International 2
I do not own this stock (TSX-AFN). Ag Growth was founded in 1996, and went public in May 2004. I cannot find financials beyond 2004. In June 2009, company was converted into a corporation. This company used to be a Unit Trust (TSX-AFN.UN).
When I look at insider trading report, I find some $5.9M of insider selling, mainly by officers and most of the selling seems to be an estate of Robert Stenson. He passed away in October 2010. He was the CEO of this company. Almost 70% of the company is owned by institutions. Over the past 3 months they have marginally reduced their share of this company (by less than 1% of their holdings).
The 5 year median low Price/Earnings Ratio is 9.95 and the 5 year median high P/E Ratio is 19.44. The current P/E ratio on a stock price of $39.34 is about average at 15.37. I get a Graham Price of $31.08. This is some 27% below the stock price of $39.34. For most of this stock’s lifetime, the stock’s price has been below the Graham Price and the median high difference is Graham Price being just 7% below the stock price.
I get a 7 year median Price/Book Value Ratio of 1.77. The current P/B Ratio is 2.35 and this is some 32% above the P/B Ratio median. To show a good price, you would want to the current P/B Ratio to be below the median ratio. Although, this stock used to be a unit trust company and these sorts of companies are not good at growing their book values.
I get a current dividend yield of 6.1%, which in of itself is a good yield, but it is below the 5 year median yield of 7%. From looking at my spreadsheet, the only test that shows a current reasonable stock price is the Price/Earnings Ratio.
The best that can be said is that the current price is better than it was for most of last year when the stock price was generally higher. It should be expected that the dividend yields on former income trust companies will come down over the next few years. This stock has better Dividend Payout Ratios than a lot of former income trust companies.
So, what do the analysts’ say? I find Strong Buy, Buy and Hold recommendations with the consensus being a Buy recommendations. The Buy recommendation comes with a consensus 12 months stock price of $47.50. One analyst mentioned that only 25% of grain is professionally stored globally so the market for this company is enormous. Analysts like the Dividend Payout Ratios and feel that the dividend is safe.
If I was in the market to buy stocks, I would certainly take a good look at this one.
I am going to pause on Thursday because I am going to the Money Show. I will be reporting what I hear there, the same as I did last year.
Ag Growth is a leading North American manufacturer of portable grain handling equipment, consisting of augers, belt conveyors, grain drying, fencing, post hole augers, and other ancillary grain handling accessories. This company has 1,400 dealers and distributors in Canada and the United States. Its web site is here AG Growth. See my spreadsheet at afn.htm.
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.
When I look at insider trading report, I find some $5.9M of insider selling, mainly by officers and most of the selling seems to be an estate of Robert Stenson. He passed away in October 2010. He was the CEO of this company. Almost 70% of the company is owned by institutions. Over the past 3 months they have marginally reduced their share of this company (by less than 1% of their holdings).
The 5 year median low Price/Earnings Ratio is 9.95 and the 5 year median high P/E Ratio is 19.44. The current P/E ratio on a stock price of $39.34 is about average at 15.37. I get a Graham Price of $31.08. This is some 27% below the stock price of $39.34. For most of this stock’s lifetime, the stock’s price has been below the Graham Price and the median high difference is Graham Price being just 7% below the stock price.
I get a 7 year median Price/Book Value Ratio of 1.77. The current P/B Ratio is 2.35 and this is some 32% above the P/B Ratio median. To show a good price, you would want to the current P/B Ratio to be below the median ratio. Although, this stock used to be a unit trust company and these sorts of companies are not good at growing their book values.
I get a current dividend yield of 6.1%, which in of itself is a good yield, but it is below the 5 year median yield of 7%. From looking at my spreadsheet, the only test that shows a current reasonable stock price is the Price/Earnings Ratio.
The best that can be said is that the current price is better than it was for most of last year when the stock price was generally higher. It should be expected that the dividend yields on former income trust companies will come down over the next few years. This stock has better Dividend Payout Ratios than a lot of former income trust companies.
So, what do the analysts’ say? I find Strong Buy, Buy and Hold recommendations with the consensus being a Buy recommendations. The Buy recommendation comes with a consensus 12 months stock price of $47.50. One analyst mentioned that only 25% of grain is professionally stored globally so the market for this company is enormous. Analysts like the Dividend Payout Ratios and feel that the dividend is safe.
If I was in the market to buy stocks, I would certainly take a good look at this one.
I am going to pause on Thursday because I am going to the Money Show. I will be reporting what I hear there, the same as I did last year.
Ag Growth is a leading North American manufacturer of portable grain handling equipment, consisting of augers, belt conveyors, grain drying, fencing, post hole augers, and other ancillary grain handling accessories. This company has 1,400 dealers and distributors in Canada and the United States. Its web site is here AG Growth. See my spreadsheet at afn.htm.
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.
Friday, September 2, 2011
Ag Growth International
I do not own this stock (TSX-AFN). Ag Growth was founded in 1996, but went public in May 2004. I cannot find financials beyond 2004. In June 2009, company was converted into a corporation. This company used to be a Unit Trust (TSX-AFN.UN).
This is one of very few companies to convert from an income trust and not reduced their distributions. In fact, this company was able to raise their dividends by almost 18% by the end of 2010. This is a great showing. Their Dividend Payout Ratios for 2010 was 75% for earnings and 46% for cash flow. Both these ratios are better than the corresponding 5 year median ratios of 91% and 64%.
According to analysts’ consensus estimates for 2011 and 2012, these ratios will go back up in 2011, but will again fall in 2012. (See my site for information on Dividend Payout Ratios). The current dividend yield is very good at 6%. The 5 year growth in dividends is 8% per year.
Since there are only financial statements going back to 2004, I only have 5 year growth statistics on this stock. All these are very good, except for growth in book value. Growth in book value over the past 5 years is just 3.4%. However, I should mention that most income trust stocks do not grow their book values. So, looking at this stock this way, the growth is not bad.
The only statistics I have going back beyond 2004 is for revenue. For revenue, the growth over the past 5 and 10 years are great at 26% and 17% per year, respectively. Good revenue growth usually leads to good earnings and cash flow growth. That is why revenue growth in important.
The 5 year growth for earnings is 8.8% per year. The 5 year growth in cash flow is 9.25% per year. Also, when we look at Return on Equity, we get one of 22.5% for the end of 2010 with a 5 year median ROE of 18.6%. The ROE for the last 12 months ending in June 2011 is a bit lower at 17.7%.
The debt ratios for this stock are very good. Part of the reasons the current ones are good seems to be because of the change in accounting rules to IFRS. However, the debt ratios on this stock have always been good. The current Liquidity Ratio is 3.00. The current Asset/Liability Ratio is 2.14. What you want for these ratios is one of 1.50 or better, so these ratios are very good.
The current Leverage Ratio is 1.88 and the current Debt/Equity Ratio is 0.88. These are also very good. The company has little debt. People who invested in this stock 5 years ago have made out well. The IRR over the past 5 years is 33% per year, with around 8% of the return in dividends. However, I do not think that this stock will do as well going forward, but it should do well.
This company has done very well since going public in 2004. It looks like a great dividend payer, with good dividend growth. On Tuesday, I will look at what analysts say about this company and what my spreadsheet says about the current stock price.
Ag Growth is a leading North American manufacturer of portable grain handling equipment, consisting of augers, belt conveyors, grain drying, fencing, post hole augers, and other ancillary grain handling accessories. This company has 1,400 dealers and distributors in Canada and the United States. Its web site is here AG Growth. See my spreadsheet at afn.htm.
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.
This is one of very few companies to convert from an income trust and not reduced their distributions. In fact, this company was able to raise their dividends by almost 18% by the end of 2010. This is a great showing. Their Dividend Payout Ratios for 2010 was 75% for earnings and 46% for cash flow. Both these ratios are better than the corresponding 5 year median ratios of 91% and 64%.
According to analysts’ consensus estimates for 2011 and 2012, these ratios will go back up in 2011, but will again fall in 2012. (See my site for information on Dividend Payout Ratios). The current dividend yield is very good at 6%. The 5 year growth in dividends is 8% per year.
Since there are only financial statements going back to 2004, I only have 5 year growth statistics on this stock. All these are very good, except for growth in book value. Growth in book value over the past 5 years is just 3.4%. However, I should mention that most income trust stocks do not grow their book values. So, looking at this stock this way, the growth is not bad.
The only statistics I have going back beyond 2004 is for revenue. For revenue, the growth over the past 5 and 10 years are great at 26% and 17% per year, respectively. Good revenue growth usually leads to good earnings and cash flow growth. That is why revenue growth in important.
The 5 year growth for earnings is 8.8% per year. The 5 year growth in cash flow is 9.25% per year. Also, when we look at Return on Equity, we get one of 22.5% for the end of 2010 with a 5 year median ROE of 18.6%. The ROE for the last 12 months ending in June 2011 is a bit lower at 17.7%.
The debt ratios for this stock are very good. Part of the reasons the current ones are good seems to be because of the change in accounting rules to IFRS. However, the debt ratios on this stock have always been good. The current Liquidity Ratio is 3.00. The current Asset/Liability Ratio is 2.14. What you want for these ratios is one of 1.50 or better, so these ratios are very good.
The current Leverage Ratio is 1.88 and the current Debt/Equity Ratio is 0.88. These are also very good. The company has little debt. People who invested in this stock 5 years ago have made out well. The IRR over the past 5 years is 33% per year, with around 8% of the return in dividends. However, I do not think that this stock will do as well going forward, but it should do well.
This company has done very well since going public in 2004. It looks like a great dividend payer, with good dividend growth. On Tuesday, I will look at what analysts say about this company and what my spreadsheet says about the current stock price.
Ag Growth is a leading North American manufacturer of portable grain handling equipment, consisting of augers, belt conveyors, grain drying, fencing, post hole augers, and other ancillary grain handling accessories. This company has 1,400 dealers and distributors in Canada and the United States. Its web site is here AG Growth. See my spreadsheet at afn.htm.
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.
Thursday, September 1, 2011
Living Off of Dividends
When you are living off your portfolio how you invest in stocks changes. Also, because I am taking money from my portfolios, I make sure that I have enough dividends and cash to cover money withdrawals over the next 5 years. I look at each account separately. I have a Trading Account and two RRSP accounts. I never want to be in the position of having to sell any stock at an inopportune time.
Also, what I am basically doing is selling in the RRSP accounts and buying in my Trading Account. I have budgeted to take out 4% of my portfolio each year. When this drops below 4%, I still take out budgeted amount from my RRSP accounts, but that means that I can increase investments in my Trading Account. Currently, I am taking out 3.1% of portfolio.
I am following the 8%, 4% income withdrawal from portfolio theory. That is I am trying to earn 8% on my portfolio each year and take out 4%. One implication of this is that the value of my portfolio will grow at 4% each year. Another implication is that I can withdrawal 4% more from my portfolio each year. However, I have only been increasing my budget by 3% each year to give me some leeway for future unexpected expenses.
As I have said when you are living off your portfolio how you invest in stocks changes. I have been asked what I would buy at this time of volatility in the market. There are a couple of problems. First I cannot legally advise on what stocks to buy because I do not have the certifications. Another thing is what I may want to buy may not be suitable for others. I am not building a portfolio.
I am generally fully invested. I am also taking money out of my portfolio rather than making new investments. Also, where my money is coming from in investments is from my RRSP accounts. Each year, usually in December, I transfer money from my RRSP accounts into my trading account. Of course, most of this money is needed for spending in the following year.
Currently, when I buy, I look to see if it is a good idea to buy more of some stock I already own. I do have a fair number of stocks and I would rather increase one I have than get a new one. What I pick may not be best in its category, but I do not want to have too many stocks.
Too many stocks can hamper portfolio management. So, this can be a trade off in deciding what to do. Do I get a new stock at a really good price or an old one that may be relatively more expensive? Usually if an old one is at a reasonable price, I will go with that. Of course, if none of my current stocks are reasonable price I would go for a new one. This does not happen much. I usually have some stock selling at a good price.
When you are starting out to build a portfolio it is probably best to build up shares in only 2 or 3 stocks, until you have a reasonable size investment in each before branching out. Although you would want each stock in a different category and, for example, categories like Financial, Utility and Consumer Staple would be good.
I also may look at some stock to fill in my portfolio in some area where my relative investment has gone down. For example, the percentage of my investments in Financials has decreased from 30% to 27% over the past year, so I may look there. Also, my investment percentage in Info Tech and Telecommunications has also gone down.
I would currently probably not be buying any utility stocks as my percentage in utility stocks has gone from 18% to 19%. Although, I must admit that my most recent purchase was of Emera because I have wanted some more of this stock, but it was overpriced. One of the recent dips in prices got the stock price in the reasonable category, so I went for it.
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.
Also, what I am basically doing is selling in the RRSP accounts and buying in my Trading Account. I have budgeted to take out 4% of my portfolio each year. When this drops below 4%, I still take out budgeted amount from my RRSP accounts, but that means that I can increase investments in my Trading Account. Currently, I am taking out 3.1% of portfolio.
I am following the 8%, 4% income withdrawal from portfolio theory. That is I am trying to earn 8% on my portfolio each year and take out 4%. One implication of this is that the value of my portfolio will grow at 4% each year. Another implication is that I can withdrawal 4% more from my portfolio each year. However, I have only been increasing my budget by 3% each year to give me some leeway for future unexpected expenses.
As I have said when you are living off your portfolio how you invest in stocks changes. I have been asked what I would buy at this time of volatility in the market. There are a couple of problems. First I cannot legally advise on what stocks to buy because I do not have the certifications. Another thing is what I may want to buy may not be suitable for others. I am not building a portfolio.
I am generally fully invested. I am also taking money out of my portfolio rather than making new investments. Also, where my money is coming from in investments is from my RRSP accounts. Each year, usually in December, I transfer money from my RRSP accounts into my trading account. Of course, most of this money is needed for spending in the following year.
Currently, when I buy, I look to see if it is a good idea to buy more of some stock I already own. I do have a fair number of stocks and I would rather increase one I have than get a new one. What I pick may not be best in its category, but I do not want to have too many stocks.
Too many stocks can hamper portfolio management. So, this can be a trade off in deciding what to do. Do I get a new stock at a really good price or an old one that may be relatively more expensive? Usually if an old one is at a reasonable price, I will go with that. Of course, if none of my current stocks are reasonable price I would go for a new one. This does not happen much. I usually have some stock selling at a good price.
When you are starting out to build a portfolio it is probably best to build up shares in only 2 or 3 stocks, until you have a reasonable size investment in each before branching out. Although you would want each stock in a different category and, for example, categories like Financial, Utility and Consumer Staple would be good.
I also may look at some stock to fill in my portfolio in some area where my relative investment has gone down. For example, the percentage of my investments in Financials has decreased from 30% to 27% over the past year, so I may look there. Also, my investment percentage in Info Tech and Telecommunications has also gone down.
I would currently probably not be buying any utility stocks as my percentage in utility stocks has gone from 18% to 19%. Although, I must admit that my most recent purchase was of Emera because I have wanted some more of this stock, but it was overpriced. One of the recent dips in prices got the stock price in the reasonable category, so I went for it.
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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