Below is the performance of our Canadian Dividend Watch List dated May 25, 2016:
It appears that the analyst call on Cameco (CCO.TO) was quite accurate. All other stocks on the list fell short of analyst expectations. When compared to the Toronto Stock Exchange gain of +11.84%, the watch list from last year severely underperformed with an equal weighted decline of –5.82%.
One stock that we had particular interest in was Gluskin Sheff (GS.TO). At the time, we said the following of the stock:
“…we believe that GS.TO is in a general range of undervaluation and should be considered at the current price. Additional attention should be paid to the worst case target of the stock falling to the $7.25 price. Our fair value target price from the current level is $20.87 or approximately +27% above the current price.”
On two occasions in the last year Gluskin Sheff approached, but never achieved, our fair value target price. Once on September 6, 2016 at an intraday high of $19.45 and again at $19.93 on February 14, 2017.
Merely approaching our fair value target is sufficient to warrant the sale of some/all of the stock in a qualified retirement account. However, the stock would have failed to trigger a sale of the stock in a non-qualified account. With GS.TO sitting slightly below last year’s price we are publishing an updated Altimeter for a perspective on where the stock might be on a dividend/price basis.
Below is the performance of our Canadian Watch List from April 2016:
On the whole, the watch list underperformed with a –0.10% decline, this is contrasted with the Toronto Stock Exchange +17.70% change in the same period of time.
While the analysts got a majority of the calls wrong, estimates for Shaw Communications (SJR-B.TO) and Canadian Real Estate Investment Trust (REI-UN.TO) exceeded estimates on the upside. Our call on Imperial Oil (IMO.TO)was short of the mark in the final analysis. However, looking at the intra-year performance below, we can see that Imperial Oil rivaled the performance of the Toronto Stock Exchange (^GSPTSE).
Canadian Dividend Watch List
A review of our watch list from March 2016 resulted in the following:
The entire list declined –1.71% versus analyst estimated gain of +23.10%
The top five companies on the list lost an average of –9.62%
The stock estimated by analysts to perform the worst (ThompsonReuters: TRI.TO) gained +14.63%
The stock estimated by analysts to perform the best (Dream Office REIT: D-UN.TO) lost –5.80%
These totals compare to the +15.36 change in the Toronto Stock Exchange in the same period of time.
The following is the performance review for the watch list from our February 16, 2016 Canadian Dividend Watch List.
Looking at the categories above, the average actual 1-year return was led by the “high expectation, low return” with a gain of +26.35% followed by the Toronto Stock Exchange with a gain of +25.13%. Coming in last was the “average risk, average returns” group with a gain of +17.36%.
However, the distinguishing aspect of this review is the fact that analyst estimated gains show a high level of underperformance for the “high expectation, low return” group as compared to the “average risk, average return” and “high risk, high return” categories. Both categories (average risk and high risk) exceeded analyst estimates, making for better risk adjusted investment returns.
A review of our watch list from January 17, 2016 resulted in the following:
The entire list gained an average of +30.52%
The top five stocks gained an average of +44.85%
The top ten stocks gained an average of +38.18%
These totals compare to the +30.19% change in the TSX in the same period of time.