Power of Dividend Growth 2011 (and beyond)

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Taggart
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Re: Power of Dividend Growth 2011 (and beyond)

Post by Taggart »

Regarding the energy sector that Scomac referred to above, it really hasn't hit me all that hard. I took a small loss on Ensign Energy Services which I sold last November. I was supposed to buy it back by now, but have decided to wait and see how this all plays out. Three other stocks I do own and are in Standard & Poor's list for the energy sector are Canadian Energy Services & Technology, Enbridge, and Trans Canada Corp. All are well above what I originally paid for them, so no tax harvesting advantage to take for now. Will I be keeping a close eye on what these three companies do with their dividend over the coming year? You betcha, I will.
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Re: Power of Dividend Growth 2011 (and beyond)

Post by SQRT »

I have really only sold out 2 positions, MFC and SLF in 2011. I lost confidence in their management and couldn't understand their financials. MFC cutting div certainly didn't help. Only time I experienced a Div cut.
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Re: Power of Dividend Growth 2011 (and beyond)

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SQRT wrote:I have really only sold out 2 positions, MFC and SLF in 2011. I lost confidence in their management and couldn't understand their financials. MFC cutting div certainly didn't help. Only time I experienced a Div cut.
Thought you would have experienced more than just one divy cut over the years. I have experienced maybe half a dozen or perhaps more. MFC, YLO, COS, BAC(US) are ones I can recall quickly off the top of my head.
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Re: Power of Dividend Growth 2011 (and beyond)

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AltaRed wrote:
SQRT wrote:I have really only sold out 2 positions, MFC and SLF in 2011. I lost confidence in their management and couldn't understand their financials. MFC cutting div certainly didn't help. Only time I experienced a Div cut.
Thought you would have experienced more than just one divy cut over the years. I have experienced maybe half a dozen or perhaps more. MFC, YLO, COS, BAC(US) are ones I can recall quickly off the top of my head.
No, just the one.
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Re: Power of Dividend Growth 2011 (and beyond)

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I wonder about the dividend stocks. Since 2008 a lot of investors have been piling into these stocks. I find it very difficult when I do the metrics to find value . Most have high PE ratios and low ROEs. I road this train a lot and I am starting to believe that train is coming to a stop. Cyclical stocks like oil and gas stocks don't seem to be the best sector to find dividend stocks. When energy prices are high they can pay dividends when the energy prices return to their norms they must drastically cut or eliminate their dividends.
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Re: Power of Dividend Growth 2011 (and beyond)

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zinfit wrote:I wonder about the dividend stocks. Since 2008 a lot of investors have been piling into these stocks. I find it very difficult when I do the metrics to find value . Most have high PE ratios and low ROEs. I road this train a lot and I am starting to believe that train is coming to a stop. Cyclical stocks like oil and gas stocks don't seem to be the best sector to find dividend stocks. When energy prices are high they can pay dividends when the energy prices return to their norms they must drastically cut or eliminate their dividends.
Agree that commodity businesses not the best place to find solid div growers. Banks have ROE's in the 15-20% range and PE's well under average at about 11x with payout ratios of 40-50% I have done very well with Banks, Telcos, and Pipes. Div stocks have done well in a low interest rate envireonment but also their underlying business have generally performed well. Not sure why you think " the train is coming to a stop" Banks with a 4% solid div yield would seem to have little downside from here? I expect the first Q results to surprise a bit on the upside and clear some of the uncertainty away.
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Re: Power of Dividend Growth 2011 (and beyond)

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SQRT wrote:
zinfit wrote:I wonder about the dividend stocks. Since 2008 a lot of investors have been piling into these stocks. I find it very difficult when I do the metrics to find value . Most have high PE ratios and low ROEs. I road this train a lot and I am starting to believe that train is coming to a stop. Cyclical stocks like oil and gas stocks don't seem to be the best sector to find dividend stocks. When energy prices are high they can pay dividends when the energy prices return to their norms they must drastically cut or eliminate their dividends.
Agree that commodity businesses not the best place to find solid div growers. Banks have ROE's in the 15-20% range and PE's well under average at about 11x with payout ratios of 40-50% I have done very well with Banks, Telcos, and Pipes. Div stocks have done well in a low interest rate envireonment but also their underlying business have generally performed well. Not sure why you think " the train is coming to a stop" Banks with a 4% solid div yield would seem to have little downside from here? I expect the first Q results to surprise a bit on the upside and clear some of the uncertainty away.
They have a lot of Canadian operations and the exposure to a resource dominated economy and a overheated housing market. This will eventually work it's way through the financials. There will be blood.
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Re: Power of Dividend Growth 2011 (and beyond)

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I do not see blood but I do not see banks going anywhere for some time. Wealth management divisions are not going to lift those boats enough to keep profits rising. Still, I will keep TD on my Alert list for a possible buy later this year when quarterly results likely falter.

But that is true for pipelines too. Much of the current pricing is premised on new projects but who is going to fill those projects when O&G production is likely going nowhere? Look for a number of deferments/cancellations this year to bring P/E multiples back into line.
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Re: Power of Dividend Growth 2011 (and beyond)

Post by Shakespeare »

I'm expecting a buying opportunity in banks with the Euro collapse. :wink:
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Re: Power of Dividend Growth 2011 (and beyond)

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Differences of opinion is what makes a market. We shall see. I am certainly not selling at these prices but I hardly ever sell at any price. Hard to make money betting against the banks.
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Re: Power of Dividend Growth 2011 (and beyond)

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AltaRed wrote:I do not see blood but I do not see banks going anywhere for some time. Wealth management divisions are not going to lift those boats enough to keep profits rising. Still, I will keep TD on my Alert list for a possible buy later this year when quarterly results likely falter
This has been predicted by many for some time. Eventually this prediction will come true. But I doubt they will "falter" this year. Maybe 5-7% growth in EPS for the group. But who knows. TD should raise their div by 4-5 cents per Q on a base of 47 cents. Not too shabby in this envireonment.

Edit. Have noticed recently that earnings forecasts are a little lower than 5% for the group but some analysts think TD will benefit from a relatively stronger US banking envireonment. Divs should be raised by TD/RY/BNS this quarter.
Last edited by SQRT on 06 Feb 2015 09:53, edited 1 time in total.
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Re: Power of Dividend Growth 2011 (and beyond)

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Shakespeare wrote:I'm expecting a buying opportunity in banks with the Euro collapse. :wink:
Or when their mortgage securitization practices become public knowledge, risks are examined and everyone learns this process isn't squeaky clean (or legal)?
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Re: Power of Dividend Growth 2011 (and beyond)

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SQRT wrote:
AltaRed wrote:This has been predicted by many for some time. Eventually this prediction will come true. But I doubt they will "falter" this year. Maybe 5-7% growth in EPS for the group. But who knows. TD should raise their div by 4-5 cents per Q on a base of 47 cents. Not too shabby in this envireonment.
When earnings momentum slows or stalls, that almost automatically results in multiple compression. That is what we are seeing now with stock price declines. I expect that will continue yet to some degree until some uncertainties are resolved. It is not a bad thing. It's just the way a healthy market should behave.
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Re: Power of Dividend Growth 2011 (and beyond)

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AltaRed wrote:
SQRT wrote:
AltaRed wrote:This has been predicted by many for some time. Eventually this prediction will come true. But I doubt they will "falter" this year. Maybe 5-7% growth in EPS for the group. But who knows. TD should raise their div by 4-5 cents per Q on a base of 47 cents. Not too shabby in this envireonment.
When earnings momentum slows or stalls, that almost automatically results in multiple compression. That is what we are seeing now with stock price declines. I expect that will continue yet to some degree until some uncertainties are resolved. It is not a bad thing. It's just the way a healthy market should behave.
Yes, agree but the market has already discounted I think. I don't see much downside from here. I suspect we may have already seen the lows but who knows.
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Re: Power of Dividend Growth 2011 (and beyond)

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brad911 wrote:
Shakespeare wrote:I'm expecting a buying opportunity in banks with the Euro collapse. :wink:
Or when their mortgage securitization practices become public knowledge, risks are examined and everyone learns this process isn't squeaky clean (or legal)?
Do you think the Cdn banks are breaking the law when they underwrite or securitize mortgages? If so I better sell right away.
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Re: Power of Dividend Growth 2011 (and beyond)

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zinfit wrote: They have a lot of Canadian operations and the exposure to a resource dominated economy and a overheated housing market. This will eventually work it's way through the financials. There will be blood.
Around 10x 2015 earnings, 4% dividend yield, oligopoly growth potential (they keep finding ways to add on the fees). Hard to find any large company with those metrics.
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Re: Power of Dividend Growth 2011 (and beyond)

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SQRT wrote:Do you think the Cdn banks are breaking the law when they underwrite or securitize mortgages? If so I better sell right away.
Breaking or bending I can't say for sure because I'm not inside the room. I have been watching their balance sheet behaviour the past few years and I'm almost certain they are bending rules.
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Re: Power of Dividend Growth 2011 (and beyond)

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brad911 wrote:
SQRT wrote:Do you think the Cdn banks are breaking the law when they underwrite or securitize mortgages? If so I better sell right away.
Breaking or bending I can't say for sure because I'm not inside the room. I have been watching their balance sheet behaviour the past few years and I'm almost certain they are bending rules.
Well I was in the room. Your conclusion after "reviewing their balance sheets" is ludicrous.
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Re: Power of Dividend Growth 2011 (and beyond)

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I don't think so, but it all depends on your approach, analysis and what part you were participating in. You don't have to invest like me or analyze stocks as I do.
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Re: Power of Dividend Growth 2011 (and beyond)

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AltaRed wrote:I would pass on HSE for other reasons. I believe it is primarily a vehicle for Li Ki Shing to fund the rest of his $32B ventures and HSE's offshore China ventures are only as secure as Li's relationship with the current regime. Risky in my opinion.

Still, that is hardly a valid reason to punt HSE from consideration in the Dogs index.
I stole the above from the Dogs thread. I would add that the reason I sold Husky a few years ago, was after management announced with words to the effect that they were not prepared to keep increasing the company dividend each year, but as AltaRed mentioned to pursue offshore ventures in east Asia. A high yield alone without the benefit of decent yearly dividend increases will never tempt me to invest in any company. I leave them for others to pursue.

I can think of only two stocks in my own portfolio that don't fit the above mould, and that's Leons Furniture and Corby Spirits & Wine, and the only reason for these two exceptions is that they have a habit of giving out a special dividend every few years.
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Re: Power of Dividend Growth 2011 (and beyond)

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brad911 wrote:I don't think so, but it all depends on your approach, analysis and what part you were participating in. You don't have to invest like me or analyze stocks as I do.
I was in a very senior finance role that starts with a "C". Your conclusions are ridiculous and even if true, which they are not, could not possibly be "discovered" by a review of a balance sheet.
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Re: Power of Dividend Growth 2011 (and beyond)

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SQRT wrote:I was in a very senior finance role that starts with a "C". Your conclusions are ridiculous and even if true, which they are not, could not possibly be "discovered" by a review of a balance sheet.
I acknowledge your opinion, but there are a few individuals here who can attest to the fact that it was actually very easy to find and this was back in 2013. How much systemic risk that will result in may not be significant; no one knows this yet. I own three of the banks, but my asset allocation is appropriate for the perceived risk I've determined.

Ask your colleagues about the recent lawsuit regarding the mortgage referral income structure.
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Re: Power of Dividend Growth 2011 (and beyond)

Post by Taggart »

Globeinvestor

John Heinzl

Should I buy dividend stocks now, or wait for a market correction?

I have been sitting on cash and GICs for the past year, waiting for an entry point into the market. Should I start buying dividend stocks now, or am I better to sit on the sideline and wait for true buying opportunities via a market correction?
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Re: Power of Dividend Growth 2011 (and beyond)

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brad911 wrote:
SQRT wrote:I was in a very senior finance role that starts with a "C". Your conclusions are ridiculous and even if true, which they are not, could not possibly be "discovered" by a review of a balance sheet.
I acknowledge your opinion, but there are a few individuals here who can attest to the fact that it was actually very easy to find and this was back in 2013. How much systemic risk that will result in may not be significant; no one knows this yet. I own three of the banks, but my asset allocation is appropriate for the perceived risk I've determined.

Ask your colleagues about the recent lawsuit regarding the mortgage referral income structure.
Very curious to know who else said this back in 2013 and what you look at in particular on the balance sheet that leads you to believe this. Can you explain?
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Re: Power of Dividend Growth 2011 (and beyond)

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jsbarnby wrote:
Very curious to know who else said this back in 2013 and what you look at in particular on the balance sheet that leads you to believe this. Can you explain?
It started with a review of the financials of the big five. I have a spreadsheet I maintain for historical purposes (so I can compare trends in repeating cycles to anticipate how the market may react). A number of anomalies presented themselves in regards to the explosive rise in mortgage business growth but how that wasn't translating to expected changes on the balance sheets. It was as simple as adding one and two, but networking with a number of peers here to see where the numbers made sense.
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