Canadian Dividend Watch List: February 15, 2013

This is a list of Canadian dividend stocks that currently, or in the past, had a history of consecutive dividend increases. For those wishing to find the most complete fundamental information on these companies, we recommend visiting one of Canada’s leading financial websites, the Financial Post (found here). However, Yahoo!Finance probably has the better long-term charts and historical dividend data.

Symbol Name Price P/E EPS Yield % from yr low
JE.TO JUST ENERGY GROUP INC 7.56 3.36 - 16.40% 4.13%
FTS.TO Fortis, Inc. 33.04 19.55 1.65 3.75% 4.23%
CUF-UN.TO Cominar REIT 22.91 9.16 2.11 6.28% 5.58%
FFH.TO FAIRFAX FINANCIAL HOLDINGS LTD. 376.98 - - 2.62% 5.76%
AX-UN.TO Artis REIT 15.84 5.09 2.8 6.81% 5.95%
CPG.TO Crescent Point Energy Corp 38.19 67 0.63 7.22% 6.53%
IMO.TO Imperial Oil Ltd 42.39 9.72 4.42 1.13% 6.59%
REI-UN.TO Riocan REIT 27.45 7.06 4.57 5.13% 6.73%
EMA.TO Emera, Inc. 34.95 19.75 1.76 4.00% 8.24%
CTC-A.TO Canadian Tire Corp 68.26 11.06 6.14 2.05% 9.39%

Watch List Summary

The company topping our Canadian Watch List this week is Just Energy Group (JE.TO).  According to their website, Just Energy is involved in, “…the sale of natural gas and/or electricity to residential and commercial customers under long-term fixed-price, price-protected or variable-priced contracts and green energy products. By fixing the price of natural gas or electricity under its fixed-price or price-protected program contracts for a period of up to five years, Just Energy’s customers offset their exposure to changes in the price of these essential commodities.”

According to Yahoo!Finance, JE.TO has trailing earnings of $2.25 and a monthly dividend of $0.10.  This means that the company has a dividend payout ratio of 53.33% ([0.10x12]/2.25=0.5333).  This is a reasonable payout ratio for what basically is a utility company.  However, what scares us the most about Just Energy is the fact that the dividend yield is so high.  It should always be assumed that the higher the dividend yield, the higher the risk.  Another challenge is JE.TO’s ability to come out ahead in volatile energy markets while saving their customers money.

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.

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Another company of interest to us is Canadian Tire Corp. (CTC-A.TO).  According to Yahoo!Finance, Canadian Tire, “…offers a range of products and services through retail brands and banners in Canada. The company retails shopped general merchandise through a network of 488 Canadian Tire stores, which provide auto parts and accessories, sports and leisure products, and home products operated by independent third-party operators.”

While we’re interested in this company overall, the fact that it is within 10% of the new low is a bit misleading.  The stock has been trading in a range of $66 to $72 from December 2011 to the present.  According to Dow Theory, the price activity that has been exhibited by Canadian Tire is either accumulation or distribution of large shareholders.  The breaking above or below the “line” is what will determine what has been taking place in the stock for the last year or so.  Our guess is that CTC-A.TO is in a distribution phase and should not be bought despite the current level in the stock. (more about Dow Theory Lines found here).

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