Performance Review
Below is the performance of the stocks found on our watch list from last year compared to what analysts projected the stocks would do.
analyst estimate in red, actual performance in blue
The first five stocks found on the watch list lost an average of –4.38% compared to the entire list which averaged a decline of –2.44%. The performance of the list is contrasted with the –7.73% change with Toronto Stock Exchange.
Performance Review
On April 15, 2015, we generated the following list of stocks for consideration with their respective performance one year later:
| symbol | Name | 2015 | 2016 | % chg |
| RCI-B.TO | Rogers Communications Inc. | 42.1 | 50.05 | 18.88% |
| CU.TO | Canadian Utilities Ltd. | 39.9 | 35.85 | -10.15% |
| BEI-UN.TO | Boardwalk REIT | 59.72 | 52.5 | -12.09% |
| REF-UN.TO | Canadian REIT | 46.07 | 44.34 | -3.76% |
| SJR-B.TO | Shaw Communications, Inc. | 27.07 | 24.64 | -8.98% |
| ACO-X.TO | ATCO LTD., CL.I, NV | 46.33 | 38.68 | -16.51% |
| TU | TELUS Corporation | 34.78 | 31.81 | -8.54% |
| IGM.TO | IGM Financial Inc. | 46.17 | 37.49 | -18.80% |
| CTY.TO | Calian Technologies Ltd. | 18.5 | 19.01 | 2.76% |
| BNS.TO | The Bank of Nova Scotia | 65.43 | 61.85 | -5.47% |
| NA.TO | National Bank of Canada | 48.16 | 42.31 | -12.15% |
| CM.TO | CIBC (bank) | 95.84 | 96.27 | 0.45% |
| CGO.TO | COGECO Inc. | 54.13 | 54.15 | 0.04% |
| CUF-UN.TO | Cominar REIT | 19.33 | 17.1 | -11.54% |
| AX-UN.TO | Artis REIT | 14.85 | 12.79 | -13.87% |
| CJR-B.TO | Corus Entertainment Inc. | 17.07 | 11.73 | -31.28% |
| LB.TO | Laurentian Bank of Canada | 47.33 | 46.82 | -1.08% |
The performance of the entire list averaged –7.77% compared to the –12.93% decline in the Toronto Stock Exchange index. The first five stocks on the list averaged a loss of –3.22%.
The spread between what the analysts had predicted for earnings (and the implied change in the stock price for the year ahead) provides a better summary of performance. As we’ve indicated in the past, the stocks with the worst estimates typically should outperform the stocks with the best estimated price expectations. The chart below shows a ranking based on the total percentage spread between projected price change and the actual price change.
The narrower the spread the more accurate the analyst estimate. Three stocks were on target (CU.TO, BEI-UN.TO, REF-UN.TO) as they performed within a 5% range AND in the general direction that the analysts has anticipated (having declining expectations and declining price or rising expectations and a rising price). All other stocks were well out of the range of analyst expectations by falling or rising when the opposite was forecasted.
It should be noted that the order of the spread is almost the mirror opposite of the analyst expectations. This goes back to our point of identifying the stocks that have the worst expectations and best fundamentals for investment consideration as the analysts are typically too negative or too positive when a more balanced view is necessary.
Performance Review
Below is the performance of all the stocks from our March 2015 Canadian list:
| symbol | name | 2015 | 2016 | % chg |
| BEI-UN.TO | Boardwalk REIT | 58.27 | 53.2 | -8.70% |
| TU | TELUS Corporation | 33.47 | 30.84 | -7.86% |
| BNS.TO | The Bank of Nova Scotia | 63.46 | 62.27 | -1.88% |
| REF-UN.TO | Canadian REIT | 45.57 | 43.45 | -4.65% |
| LB.TO | Laurentian Bank of Canada | 48.3 | 47.76 | -1.12% |
| CJR-B.TO | Corus Entertainment Inc. | 18.41 | 10.75 | -41.61% |
| CM.TO | CIBC | 93.2 | 96.99 | 4.07% |
| BDT.TO | Bird Construction Inc. | 10 | 11.75 | 17.50% |
| SU | Suncor Energy Inc. | 28.2 | 26.16 | -7.23% |
| RY.TO | Royal Bank of Canada | 76.39 | 74.25 | -2.80% |
| HCG.TO | Home Capital Group Inc. | 42 | 36.11 | -14.02% |
| CTY.TO | Calian Technologies Ltd. | 18.55 | 19.8 | 6.74% |
| NA.TO | National Bank of Canada | 47.03 | 41.38 | -12.01% |
| AX-UN.TO | Artis REIT | 14.83 | 12.65 | -14.70% |
| RCI-B.TO | Rogers Communications Inc. | 44.06 | 50.73 | 15.14% |
| CUF-UN.TO | Cominar REIT | 19.3 | 16.66 | -13.68% |
| TD | The Toronto-Dominion Bank | 43.06 | 41.65 | -3.27% |
| CWB.TO | Canadian Western Bank | 27.63 | 24.28 | -12.12% |
| IMO.TO | Imperial Oil Ltd. | 48.35 | 44.4 | -8.17% |
| D-UN.TO | Dream Office REIT | 26.14 | 20.32 | -22.26% |
The average change was –6.63% as compared to the Toronto Stock Exchange change of –9.60% in the period from March 22, 2015 to March 11, 2016. The first five stocks on the list averaged a decline of –4.84% excluding the dividend. Including the dividend for the first five stocks would have resulted in a net decline of –0.78%.
A stock that we had strong interest in from our January 2015 Canadian list was Computer Modelling Group (CMG.TO). At the time we said the following:
“As Computer Modelling Group is heavily associated with the oil, gas and mining sector, currently experiencing a drubbing at the hands of lower oil prices, there is good reason to believe that the stock could go as low as $7.30. However, the most compelling element of Computer Modelling Group is the fact that the services they provide are, or could become, applicable to other industries. Therefore, we wouldn’t rule out this company’s prospects over the long-term.”
According to the available data, CMG.TO managed to trade as low as $7.67 on January 26, 2016, this was within 5% of our targeted worst case scenario of $7.30. Below is an updated Altimeter for CMG.TO.
March 2016 Watch List
Performance Review
On February 18, 2015, we generated the following list of stocks for consideration with their respective performance one year later:
| Symbol | Name | 2015 | 2016 | % chg |
| BEI-UN.TO | Boardwalk REIT | 60.69 | 42.00 | -30.80% |
| IGM.TO | IGM Financial Inc. | 44.68 | 33.61 | -24.78% |
| ACO-X.TO | ATCO LTD., CL.I, NV | 46.76 | 37.90 | -18.95% |
| CJR-B.TO | Corus Entertainment Inc. | 21.73 | 9.32 | -57.11% |
| CM.TO | CIBC | 95.39 | 89.01 | -6.69% |
| REF-UN.TO | Canadian REIT | 47.05 | 39.90 | -15.20% |
| RY.TO | Royal Bank of Canada | 77.70 | 69.41 | -10.67% |
| HCG.TO | Home Capital Group Inc. | 43.30 | 29.86 | -31.04% |
There was little surprise in the performance of the stocks on the watch list. As a group (equally weighted) the average change was –24.40% compared to the Toronto Stock Exchange decline of –17.49%.
The analysts were off target for their 1-year projections. Only Canadian REIT (REF-UN.TO) and Boardwalk REIT (BEI-UN.TO) came close (somewhat) to the analyst targets.
A stock of particular interest to us was Home Capital Group (HCG.TO). At the time we said the following of HCG.TO:
“Applying Speed Resistance Lines to HCG.TO, we see that the stock has already declined to the conservative downside target of $37.92. Because it appears that we are in the early stages of the economic decline in Canada, HCG.TO might be worth watching to see if the stock can decline to the $28.21 level. The extreme downside target is $18.51 which confirms the Altimeter low of $20.80. HCG.TO should be considered in three stages starting below the ascending $37.92, $28.21 and $18.51 levels.”
Not surprisingly, HCG.TO declined as low as 23.16 on January 15, 2016. This has set the stage for our latest risk assessment (as noted below).
Performance Review
Below is the performance of the stocks found on our January 13, 2015 watch list:
| symbol | name | 2015 | 2016 | % chg |
| IMO.TO | Imperial Oil Ltd. | 44.86 | 41.68 | -7.09% |
| PSI.TO | Pason Systems Inc. | 18.45 | 16.49 | -10.62% |
| FTT.TO | Finning International Inc. | 21.87 | 17.66 | -19.25% |
| ESI.TO | Ensign Energy Services Inc. | 9.44 | 6.47 | -31.46% |
| TD | The Toronto-Dominion Bank | 43.41 | 34.04 | -21.58% |
| BDT.TO | Bird Construction Inc. | 10.30 | 11.47 | 11.36% |
| AGF-B.TO | AGF Management Limited | 7.48 | 4.13 | -44.79% |
| CCO.TO | Cameco Corporation | 17.65 | 15.72 | -10.93% |
| PPL.TO | Pembina Pipeline Corporation | 37.23 | 28.02 | -24.74% |
| CNQ.TO | Canadian Natural Resources | 31.94 | 24.44 | -23.48% |
| GS.TO | Gluskin Sheff + Associates, Inc. | 24.64 | 18.19 | -26.18% |
| CWB.TO | Canadian Western Bank | 28.29 | 20.23 | -28.49% |
| BNS.TO | The Bank of Nova Scotia | 61.92 | 52.27 | -15.58% |
| Average Change | -19.45% | |||
| Toronto Stock Exchange | 14187.20 | 12073.46 | -14.90% |
Below is the performance of the watch list based on the analyst estimates given at the time. As can be seen, there was a significant divergence between what was expected and what actually happen. It appears that for a majority of the list, analysts were over-optimistic.
However, when viewed from the perspective of using the same p/e ratio as January 13, 2015 as seen in the following link, the analysts appeared to be a more realistic expectation for the stocks.
In our most recent article on “Dogs of the Dow: A Look Back at 2015 & Forward to 2016”, we highlighted the stocks that are part of the Dow Jones Industrial Average that “…an investor annually select[s] for investment the ten Dow Jones Industrial Average stocks whose dividend is the highest fraction of their price [dividend yield] (wikipedia).”
Within the context of this concept, picking the ten highest yielding stocks of the Dow Jones Industrial Average, there is an important qualitative element that is implied by using the Dow. Michael O’Higgins, author of the 1991 book Beating the Dow which outlined the idea later called “Dogs of the Dow”, said the following of the blue chip index:
“As the most popular indicator of market activity, the Dow is itself an influential barometer of the market and economic conditions. Individually, the 30 stocks that make up the Dow industrials are among the most widely held, widely analyzed, and widely publicized in the world. They are also among the biggest and the strongest. Combined, the 30 Dow components have assets of around 2.5 trillion dollars, nearly five million employees, and sales that exceed the gross national product of every country in the world except China, Germany, India, Japan and the United States.
“These prime companies may gain, lose, spin off, acquire, merge, rename themselves, reorganize, even drop out of the Dow, but they are an integral and vital part of our economic system, and in one form or another they are here to stay.
“The Dow companies and their products and services are household names to most people.”
The very fact that the companies from the Dow Industrials is limited to only 30 widely followed companies is what makes the concept “work”. This strategy for investing gets extremely thin on performance when applied to the S&P 500 or any other “broad” index. Part of the reason for this is the fact that some companies that are part of the S&P 500 Index aren’t at a “blue chip” status, yet. Therefore, the whole point of using the Dow Jones Industrial Average is to isolate the best companies to invest in regardless of the market conditions. Concerns regarding diversification are addressed here.
Understanding the above commentary about why the Dow Industrials are used, we are now going to apply the same concept to three different categories of stocks within the Toronto Stock Exchange Composite Index.
Posted in Canadian Dividend Watch List, dog of the dow, Dogs of the TSX
Tagged members
Performance Review
Below is the performance of the stocks that were on our Canadian Dividend Watch List from November 2014 with the analysts estimated 1-year price change:
The analyst estimates were accurate with TA.TO, CPG.TO, CUF-UN.TO , NWC.TO, RCI-B.TO and BDT.TO. However, the remainder of the list fell short of analyst expectations. Our typical stance is that investors should first consider the stocks that are anticipated by analysts to perform the worst over the coming year. That would not have served investors well as a majority of the stocks were exceptional underperformers in the last year.
An equal weighted purchase of all the stocks on the watch list lost –15.21% compared to the Toronto Stock Exchange decline of –10.52% over the same time frame.
Toronto Stock Exchange
The accompanying chart of the Toronto Stock Exchange from 1979 to the present includes the work of Edson Gould’s Speed Resistance Lines (SRL).
What stands out is the coincidence of previous peaks, indicated by uppercase letters of the alphabet, being followed by declines to the current conservative downside target (8,450.30), at the respective lowercase letters. The work of Gould isn’t a cure-all for what might happen in the stock market, however, it does provide a reasonable guideline to work from.
The coincidence of seven prior declines to the 8,450.30 level makes us wonder if the Toronto Stock Exchange has any chance to decline to the conservative downside target of 8,450.30, at (h). It may asking much to suggest that the Toronto Stock Exchange could fall another -39.44% but if it does for some unknown reason then it would be good to have your resources (cash) at the ready.
The performance of the Canadian Watch List from September 2014 is listed below:
From left to right, the first five stocks on the list averaged a gain of +5.88% in the last year while the entire list averaged a loss of –8.90% compared to the Toronto Stock Exchange decline of –7.95%.
Of the companies listed, Just Energy (JE.TO), Transcontinental (TCL-A.TO) and North West Co. (NWC.TO) were the top three performers with an average gain of +36%. At the bottom of the performance scale were Crescent Point Energy (CPG.TO), TransAlta (TA.TO) and AGF Management (AGF-B.TO) with an average loss of –51%.
Canadian Dividend Watch List September 2015
Below is the performance of the stocks that were on our Canadian Dividend Watch List from August 2014:
| symbol | Name | 2014 | 2015 | % Chg |
| TA.TO | TransAlta Corp. | 12.72 | 6.42 | -49.53% |
| ESI.TO | Ensign Energy Services Inc. | 16.25 | 9.06 | -44.25% |
| CGX.TO | Cineplex Inc. | 40.35 | 46.29 | 14.72% |
| RCI-B.TO | Rogers Communications Inc. | 43.24 | 46.9 | 8.46% |
| D-UN.TO | Dream Office REIT | 28.95 | 21.48 | -25.80% |
| TLM.TO | Talisman Energy Inc. | 11.32 | 9.48 | -16.25% |
| CMG.TO | Computer Modelling Group Ltd. | 12.46 | 11.68 | -6.26% |
| CJR-B.TO | Corus Entertainment Inc. | 24.85 | 13 | -47.69% |
| NWC.TO | North West Company Inc. | 24.29 | 27.12 | 11.65% |
| IGM.TO | IGM Financial Inc. | 50.64 | 36.24 | -28.44% |
| CWT-UN.TO | Calloway REIT | 26.25 | 29.41 | 12.04% |
The entire list lost –15.58% which is compared to the Toronto Stock Exchange decline of –12.16% in the period from August 15, 2014 to August 21, 2015. The top five stocks on our list averaged a loss of –19.08% which is substantially more than the index. Below we’ve outlined the performance of the watch list stocks compared to the analyst estimates.
This is one of the best examples (so far) of the analysts being accurate about the estimated price change that we’ve seen so far. Talisman, TransAlta, Dream Office REIT, Rogers Communications, North West Co. and Cineplex all came within reasonable distance of the projected targets or move in the stock price. The remaining stocks that did not meet expectations failed miserably and in a directions that was highly unfavorable to investors.
Canadian Dividend Watch List for August 2015
Below is the list of stocks that we think are worth your consideration and due diligence.
Posted in Analyst Estimate, Canadian Dividend Watch List, CGX.TO, CMG.TO, IGM.TO, RCI-B.TO, TA.TO, TLM.TO
Performance Review
Below is the performance of the Canadian Dividend Watch List from July 2013:
| symbol | name | 2013 | 2015 | % chg |
| D-UN.TO | Dundee REIT | 31.77 | 24.7 | -22.25% |
| REI-UN.TO | Riocan Real Estate Investment Trust | 25.11 | 27.06 | 7.77% |
| CUF-UN.TO | Cominar REIT | 20.83 | 17.97 | -13.73% |
| CAR-UN.TO | Canadian Apartment Properties REIT | 22.31 | 28.45 | 27.52% |
| CWT-UN.TO | Calloway REIT | 26.09 | 30.17 | 15.64% |
| AX-UN.TO | Artis Real Estate Investment Trust | 15.1 | 13.68 | -9.40% |
| IFC.TO | Intact Financial Corporation | 57.53 | 90.17 | 56.74% |
| FCR.TO | First Capital Realty Inc. | 17.79 | 18.29 | 2.81% |
| FTS.TO | Fortis Inc. | 32.34 | 36.99 | 14.38% |
| BEI-UN.TO | Boardwalk Real Estate Investment Trust | 60.3 | 59.78 | -0.86% |
| EMA.TO | Emera Inc. | 33.75 | 42.55 | 26.07% |
| LB.TO | Laurentian Bank of Canada | 45.05 | 48 | 6.55% |
| TRP.TO | TransCanada Corp. | 46.77 | 49.34 | 5.49% |
| FTT.TO | Finning International Inc. | 22.68 | 21.9 | -3.44% |
| NA.TO | National Bank Canadian Equity SP | 36.14 | 45.51 | 25.93% |
| CM.TO | Canadian Imperial Bank of Commerce | 77.15 | 91.18 | 18.19% |
The average return for the entire watch list was +9.84% compared to the Toronto Stock Exchange Composite index change of +13.33% in the period from July 19, 2013 to July 22, 2015. At the time, we said the following of the watch list:
“We recommend careful examination of the listed companies in the REIT arena as they have less upside potential than is ideal.”
Since July 2013, the REIT related companies on the watch list generated a return of +0.94% while companies not in the REIT sector gained an average of +18.94%.
July 2015 Canadian Dividend Watch List
Below is the Canadian stocks of interest:
Below is the 1-year performance of the Canadian dividend stocks from our June 2014 watch list (found here):
| Symbol | Name | 2014 | 2015 | % chg |
| JE.TO | Just Energy Group Inc. | 6.04 | 6.69 | 10.76% |
| D-UN.TO | Dream Office REIT | 28.9 | 24.97 | -13.60% |
| TA.TO | TransAlta Corp. | 12.93 | 9.82 | -24.05% |
| EMP-A.TO | Empire Company Limited | 67.44 | 89.4 | 32.56% |
| CUF-UN.TO | Cominar REIT | 18.65 | 17.9 | -4.02% |
| NWC.TO | North West Company Inc. | 23.51 | 25.06 | 6.59% |
| GWO.TO | Great-West Lifeco Inc. | 29.37 | 36.37 | 23.83% |
| FTS.TO | Fortis Inc. | 31.75 | 36 | 13.39% |
| TLM.TO | Talisman Energy Inc. | 11.52 | 9.67 | -16.06% |
| POW.TO | Power Corporation of Canada | 29.3 | 31.63 | 7.95% |
| ESI.TO | Ensign Energy Services Inc. | 16.78 | 11.59 | -30.93% |
| PWF.TO | Power Financial Corporation | 32.88 | 35.93 | 9.28% |
The performance of the analyst estimates fit with our view that analyst earnings expectations are aligned with past performance and not future reality.
In the watch list from last year, we commented on Just Energy:
“…it should be said that Just Energy (JE.TO) has been left for dead by analysts and therefore has the most potential for surprises on the upside.”
Coincidentally, Just Energy managed to gain +10.76% when the expectation was that the stock would fall significantly.
Below is the Canadian Dividend Watch List and the estimated change over the next 12 months.
Performance Review
Below is the 1-year performance of the Canadian dividend stocks from our April 18, 2014 watch list.
| symbol | name | 2014 | 2015 | % chg |
| EMP-A.TO | Empire Company Limited | 65.30 | 91.84 | 40.64% |
| D-UN.TO | Dream Office Real Estate Investment Trust | 29.60 | 27.75 | -6.25% |
| TA.TO | TransAlta Corp. | 13.13 | 11.95 | -8.99% |
| CAR-UN.TO | Canadian Apartment Properties REIT | 21.37 | 29.16 | 36.45% |
| CUF-UN.TO | Cominar REIT | 19.01 | 19.33 | 1.68% |
| CJR-B.TO | Corus Entertainment Inc. | 24.31 | 17.07 | -29.78% |
| FTS.TO | Fortis Inc. | 32.01 | 39.15 | 22.31% |
| NWC.TO | North West Company Inc. | 24.25 | 25.52 | 5.24% |
| FCR.TO | First Capital Realty Inc. | 17.92 | 19.74 | 10.16% |
The performance of the entire list averaged +7.94% compared to the +6.55% gain in the Toronto Stock Exchange index. The top five stocks on the list averaged a gain of +12.71% and are charted below. Empire Co. & Canadian Apartment carried the list while Corus Entertainment suffered the largest decline in the last year.
Canadian Dividend Watch List
Below is the April 2015 watch list of stocks based on the closing price of April 15, 2015.
Below is the performance of the stocks found on our March 2014 watch list:
| symbol | 2015 | 2014 | % chg | |
| TLM.TO | Talisman Energy Inc. | 9.55 | 10.86 | -12.06% |
| FTS.TO | Fortis Inc. | 38.93 | 31.28 | 24.46% |
| TA.TO | TransAlta Corp. | 11.77 | 12.68 | -7.18% |
| FCR.TO | First Capital Realty Inc. | 19.89 | 17.71 | 12.31% |
| CWT-UN.TO | Calloway REIT | 29.88 | 25.8 | 15.81% |
| CAR-UN.TO | Canadian Apartment Properties REIT | 28.4 | 20.8 | 36.54% |
| EMP-A.TO | Empire Company Limited | 90.77 | 65.84 | 37.86% |
| CJR-B.TO | Corus Entertainment Inc. | 18.41 | 24.24 | -24.05% |
| BNS.TO | The Bank of Nova Scotia | 63.46 | 64.35 | -1.38% |
| D-UN.TO | Dream Office Real Estate Investment Trust | 26.14 | 28.5 | -8.28% |
| CUF-UN.TO | Cominar REIT | 19.3 | 18.21 | 5.99% |
| LB.TO | Laurentian Bank of Canada | 48.3 | 45.73 | 5.62% |
The chart below shows how the analyst estimates in blue varied compared to the actual performance in red after a year.
As is frequently the case, the analyst estimates did not quite match the actual performance with the exception of CWT-UN.TO, CAR-UN.TO and EMP-A.TO.
Posted in Canadian Dividend Watch List