Category Archives: Canadian Dividend Watch List

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.

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.

Looking back at the watch list from November 2013 we had the following performance:

The entire watch list gained as much as +12.24% which was above the Toronto Stock Exchange Composite index gain of +10.13% from November 22, 2013 to November 14, 2014.  Additionally, the top five stocks gained an average of +14.46% in the same time.  Surprisingly, the REITs gained far more than we had anticipated.  From the list above, only Dundee REIT (D-UN) turned in a negative return.

Performance Review

Below is the 1-year performance of the Canadian dividend stocks from our June 2013 watch list (found here):

As described in our June 2013 watch list, the REIT sector was expected to underperform (highlighted in red above).  We said the following:

“What is most alarming about the most recent decline in these REITs is the fact that, unlike the large decline of 2011, the current decline has broken through the 2012 lows which is a huge technical failure.  In 2011, as the Canadian REIT industry was experiencing a hiccup, the price of the stocks did not decline below the 2010 support level (approximately October/November 2010).  In addition, as 2011 prices did not fall below 2010 lows, the REITs climbed above the 2011 peak (approximately April/May 2011).  Unfortunately, the most recent rise from the October/November 2012 low could not exceed the July 2012 peak.  These are classic Dow Theory indications of a sector that has further to go on the downside.”

Below is the performance of the five stocks that topped our list last year as compared to the Toronto Stock Exchange:

Canadian Dividend Watch List: June 13, 2014

Below is the June 2014 watch list of stocks that we think are worth your consideration and due diligence.

Performance Review

Below is the 1-year performance of the Canadian dividend stocks from our April 18, 2013 watch list (found here).

The performance of the entire list of stocks averaged +9.91%.  Stocks that lost the most in the last year were in sectors (REITs) that we warned against investing in.  The elimination of the REIT sector losses would have increased the average gain to +16.20%.

The top five stocks, stocks that we consider of strong interest and worth investigating further, averaged +21.69% in the last year as compared to the Toronto Stock Exchange gain of +20.67% (see chart below).  The top five stocks are charted against the Toronto Stock Exchange Index.

Four of the five stocks exceeded the gains of the representative index. As recently as April 2nd, FTT.TO gained as much as two times (2x) the gain in the TSX Index. Not to be outdone, CPG.TO gained nearly +15% since early February 2014 to notch gains of +24.75% by the one year mark.  TA.TO wallowed in a narrow price range throughout the year at +/-10%.  The attractive dividend yield that was offered at 8.31% last year was cut down to size with the most recent dividend reduction by –38%.   We’ve noted that yield alone should not be the reason to invest.  Furthermore, a high yield stock should be considered high risk.  What is surprising is that TA.TO didn’t fall by very much when the dividend cut was announced.

The question of why bother with individual stocks that are only going to grow at +1% more than the index has come up from time to time.  However, obtaining the average dividend yield of 3.32% and being able to compound at that rate with companies that are well managed far exceeds the perceived reductions of risk associated with investing in a fully diversified index fund such as the iShares S&P/TSX Capped Composite Index ETF (XIC).

One stock that we singled out from last year’s list was Ritchie Brothers Auctioneers (RBA.TO).  At the time we said the following of RBA.TO:

“...be on the lookout for RBA.TO with a $18 handle ($18.99-$18.01) as a starting point for purchases of the stock.  The best case upside target is always 1/2 of the prior peak…”

As it happens, even without waiting for RBA.TO to achieve an $18 handle, the stock performed very well by gaining +35.47%, the 3rd highest return out of 23 stocks listed.  Suffice to say, when RBA.TO declined to $18.90 on October 9, 2013, the shares gained as much as +45% by April 1, 2014.  We believe it is worth reading our initial assessment of RBA.TO to confirm whether our thesis holds any merit (found here).  We continue to hold shares of RBA.TO in our partnership.

Canadian Dividend Watch List: April 18, 2014 (intra-day)

Below is the April 2014 watch list of nine stocks we think are worth your consideration.

Below is the 1-year performance of the Canadian dividend stocks from our March 2013 watch list (found here).

The performance of the stocks from last year was significantly below that of the Toronto Stock Exchange Composite index gain of +10.89%.  The entire list of stocks gained +0.96% and the top five stocks gained only +2.16%.  As previously noted, REITs were expected to underperform.

There were two stocks of interest to us last year, Just Energy and Cominar.  Of Just Energy, we said:

“Just Energy (JE.TO) has given up -7.40% since our February watch list.  This is almost half of the 16.40% dividend yield that was presented last month.  As we’ve said in our May 4, 2011 article titled “Price Decline Equals Dividend Canceled,”  a dividend can be taken away as quickly as it was issued simply based on the price of the stock declining.  As the stock of JE.TO continues to decline, we eagerly await whether or not the stock find price support at the $6.00 level.”

No sooner said than done in the case of Just Energy. Not only are dividend gains erased by the declines in the stock price, Just Energy cut the dividend by more than 30% starting in April 2013.  We have never been impressed with high dividend yields, the performance of Just Energy is a prime example.  Aside from the dividend concerns, Just Energy fell in line with our analysis.  Just Energy declined as low as $5.89 and subsequently increased as high as $9.09, a gain of +51% if purchased at the $6.00 level.

Regarding Cominar REIT we said:

“Cominar (CUF-UN.TO) is marginally changed since our January 2013 profile of the company.  Our analysis based on the stock remains the same as we said then, ‘the consistency of Cominar’s dividend history, given the economic environment, is a reflection of a responsible management team at the helm. Cominar should be considered at or below $18.25. Acceptance of downside risk to the $10.59 price should be built in for long-term investors.’”

Cominar has fallen in line  with our initial assessment, so for.  At the time, the stock was trading at $22.45 and we projected downside risk of -18.70% to $18.25.  On November 8, 2013, Cominar closed at $18.22 for the first time since November 2009.  Since November 2013, Cominar has traded in a tight range giving investors the opportunity to reassess the prospects for the company going forward (a requirement regardless of meeting prior expectations).

Canadian Dividend Watch List: March 14, 2014

Below are the twelve Canadian stocks to be on the lookout for.  Additionally, we have included the analyst estimates of expected returns for the remainder of 2014.