Canadian Dividend Watch List: September 26, 2014

Performance Review

Below is the 1-year performance of the Canadian dividend stocks from our September 2013 watch list.

symbol Name 2013 2014 % change
TRP.TO TransCanada Corp. 45.72 58.14 27.17%
BEI-UN.TO Boardwalk Real Estate Investment Trust 56.76 68.21 20.17%
IFC.TO Intact Financial Corporation 61.19 72.27 18.11%
REF-UN.TO Canadian REIT 41.18 47.85 16.20%
CAR-UN.TO Canadian Apartment Properties REIT 20.44 23.41 14.53%
BDT.TO Bird Construction 12.37 13.98 13.02%
EMA.TO Emera Inc. 29.95 33.76 12.72%
LB.TO Laurentian Bank of Canada 44.98 49.56 10.18%
AX-UN.TO Artis Real Estate Investment Trust 14.03 15.33 9.27%
FTS.TO Fortis Inc. 31.46 34.12 8.46%
REI-UN.TO Riocan Real Estate Investment Trust 24.16 25.63 6.08%
CWT-UN.TO Calloway REIT 24.67 25.75 4.38%
FCR.TO First Capital Realty Inc. 17.00 17.55 3.24%
CUF-UN.TO Cominar REIT 19.09 18.93 -0.84%
NWC.TO The North West Company 23.48 22.26 -5.20%
D-UN.TO Dundee REIT 30.16 27.85 -7.66%
TLM.TO Talisman Energy Inc. 11.38 9.93 -12.74%
TA.TO TransAlta Corp. 13.69 11.79 -13.88%
JE.TO Just Energy Group 6.50 5.28 -18.77%
      Average 5.50%

The performance of the September 2013 Watch List severely underperformed the Toronto Stock Exchange which gained +16.99%. A fascination of ours is the performance of a stock that we have covered here at NLO for a short period of time, Just Energy (JE.TO).  On February 18, 2013, we said the following of Just Energy:

“On the technical front, Just Energy is fast approaching the 2009 low of $6.60 after breaking below the November 2012 low of $8.00.  There appears to be tremendous technical support at the $6.00 level going all the way back to 2003.  If you’re interested in this stock, consideration of purchases of Just Energy should be entered into in three phases, once at $6.60, $6.00 and $4.00.  Naturally,  breaking below $6.00 on the downside suggests that the floor’s the limit.”

Since February 18, 2013, JE.TO fell slightly below our $6.00 target and then took off to the $7.90 level.  We recommended that investors consider selling the principal in JE.TO on July 31, 2013.  In that July 2013 posting we also said:

“We are resigned to the possibility that $8.00 could be a technical resistance level.  Additionally, the $6 support level has moved down to the March low of $5.89.  No use getting fancy about exceptional gains as the dividend has already been cut -32% since our February posting (found here).”

As soon as JE.TO fell to the $6.00 level on August 17, 2013, we suggested that JE.TO was worth considering with the following commentary:

“Because JE.TO is trending lower, we recommend reassessing the stock when and if it declines to the $6.15 level.  The dividend for JE.TO should not be a consideration for this stock as there are continued risks to the dividend going forward.”

As Just Energy has managed to achieve almost all of our upside and downside targets, we can only refer back to our comments from February 2013 regarding the support level at $4.00.  Anyone still interested in this stock should be willing to accept the considerable downside risk.  Additionally, the $6.00 level is the new resistance for the stock.  If JE.TO were to fall well below the $4.00 level then that would become the new upside resistance.  It would take exceptional news to propel the stock above the $6.00 level.

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The top five stocks from our watch list last year had the following performance:

symbol Name 2013 2014 % change
CAR-UN.TO Canadian Apartment Properties REIT 20.44 23.41 14.53%
REI-UN.TO Riocan Real Estate Investment Trust 24.16 25.63 6.08%
CWT-UN.TO Calloway REIT 24.67 25.75 4.38%
FCR.TO First Capital Realty Inc. 17.00 17.55 3.24%
CUF-UN.TO Cominar REIT 19.09 18.93 -0.84%

For all of our concern about REITs, they managed to do better than we expected.

Canadian Dividend Watch List

Below is the Canadian Dividend Watch List for September 26, 2014:

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U.S. Dividend Watch List: September 26, 2014

Top Five Watch List Performance Review

In our ongoing review of the NLO Dividend Watch List, we have taken the top five stocks on our list from September 27, 2013 and have checked the performance one year later. The top five companies on that list can be seen in the table below.

Symbol Name 2013 Price 2014 Price % change
XOM Exxon Mobil Corp. 86.90 95.43 9.8%
ED Consolidated Edison 55.15 56.35 2.2%
SCG SCANA Corporation 46.03 49.24 7.0%
IBM IBM 186.92 190.06 1.7%
T AT&T Inc 33.98 35.28 3.8%
      Average 4.9%
         
DJI Dow Jones Industrial 15,258.24 17,113.15 12.2%
SPX S&P 500 1,691.75 1,982.85 17.2%

Our top five didn’t perform as well as the market. However, we did highlight a company that we took position in on our watch list at the time. That company was Sysco (SYY), a major food distributor. We said the following one year ago:

“We’ve a taken position in Sysco (SYY). This major food distributor is no stranger to our team. We believe the stock offers great value at the current level but we cautious that downside risk remains. As such, we’ve allocate a two part purchase for the stock if the price should drop. The current purchase is timed right before the ex-dividend date thus we will be compensated with the dividend in the coming month.”

The stock has risen by +17% excluding dividend. Incorporating dividend payment in and the total return is +20.50%.

U.S. Dividend Watch List: September 26,2014

The market closed the week down -1.40% as volatility has risen. The VIX Indicator (a measure of volatility) was up +22.6%. Consolidation around the 2,000 level for the S&P 500 and 17,000 for the Dow Industrials appears to be the direction the market is headed, on a short-term basis. However, stronger signals of market weakness can be seen with the Russell 2000 index which is still struggling and our expanding watch list of stocks. At the end of the week, the total number of companies that met our criteria to be on the list expanded to 111 companies and 51 of them are trading within 5% of their 52-week low. Continue reading

Gold Stock Indicator: September 26, 2014

Gold (GLD) was relatively unchanged this past week while gold stocks (XAU) got crushed.

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Gold Stocks: Risks and Remedies

The topic of gold inspires a charged reaction from individuals seeking fiscal and monetary responsibility of their respective governments.  This article is an attempt to establish the risks of gold stock ownership in an investor’s portfolio.  We will cover the topic of risk by showing the critical periods of correlation and inverse relationship between the stock market, precious metals and gold stocks.  We will outline the potential rewards to gold stock investing when gold stock risks are put in the proper perspective.

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