THE BEST CANADIAN DIVIDEND STOCKS FOR NOVEMBER 2016

2016, Canadian Dividend Kings / Steve

It’s time again for my monthly CANADIAN DIVIDEND KINGS list. It’s not always easy to dig through the mountains of information to try to find some hidden gems out there. Hopefully, to make it easier, I have compiled a list of the best Canadian dividend stocks using some basic metrics. My hope is that this list provides a starting point for you to do you own research.

About my list

There are over 1500 stocks on the TSX and only 14 made my November list. As you can see by the list below, it’s not easy being a Canadian Dividend King and these stocks all had to pass a series of test to make it on the list.

The Criteria

The company must have 5 or more years of uninterrupted dividend growth.
The company must have a Graham number greater than its current share price.
Its payout ratio must be under 70%
Its P/E ratio must be under 15
The company must have a price to book ratio under 2

NOVEMBER CANADIAN DIVIDEND KINGS

	Ticker	Streak	Yield	Price	Graham Value	P/E	EPS	Annual Dividend	Payout %Ratio	P/Book	Div/Gr 5-yr
1	CWB.TO	24	3.61	$25.45	$34.38	11.31	2.25	0.92	40.89	1.09	5.4
2	HCG.TO	17	3.62	$26.55	$46.05	6.74	3.94	0.96	24.37	1.11	13.3
3	TCL-A.TO	14	4.12	$17.94	$27.10	7.41	2.42	0.74	30.58	1.33	4.9
4	SJR-B.TO	13	4.46	$26.58	$27.76	9.60	2.77	1.19	42.78	2.15	33.2
5	ACD.TO	10	4.02	$8.96	$13.99	8.87	1.01	0.36	35.64	1.04	8.0
6	XTC.TO	10	2.43	$11.50	$12.56	10.36	1.11	0.28	25.23	1.82	33.7
7	LB.TO	8	4.84	$49.57	$61.51	14.33	3.46	2.40	69.36	1.02	4.6
8	MIC.TO	7	5.77	$29.13	$58.60	7.41	3.93	1.68	42.75	0.75	4.5
9	WJA.TO	6	2.55	$21.95	$29.38	9.30	2.36	0.56	23.73	1.35	6.0
10	EQB.TO	5	1.59	$52.84	$92.01	6.93	7.62	0.84	11.02	1.07	13.9
11	TFI.TO	5	2.50	$30.43	$48.69	4.62	6.58	0.76	11.55	1.90	21.7
12	GRT-UN.TO	5	5.77	$42.20	$60.11	10.27	4.11	2.44	59.27	1.08	12.7
13	CM.TO	5	4.82	$100.50	$112.20	9.76	10.30	4.84	46.99	1.85	10.6
14	BNS.TO	5	4.11	$72.08	$73.20	12.76	5.65	2.96	52.39	1.71	10.5

Canadian Western Bank. Banks
Home Capital Group. – Banks
Transcontinental.- Publishing
Shaw Communications. -Communications (new)
Accord Financial Corp. -Credit Service
Exco Technologies.-Auto Parts
Laurentian Bank. – Regional – Canada (new)
Genworth MI. -Insurance (new)
Westjet Airlines Ltd. -Airlines
Equitable Group. – Finance
Transforce Inc. Trucking
Granite Real Estate Investment Trust REIT. – Industrial
Canadian Imperial Bank of Commerce.-Banks
Bank of Nova Scotia.- Banks

New to the list

Laurentian Bank Of Canada.. Banks Regional

The Laurentian Bank of Canada is a Schedule 1 bank that operates primarily in the province of Quebec, with commercial and business banking offices located in Ontario, Alberta, British Columbia and Nova Scotia.

Genworth MI Canada Inc. Insurance

Genworth MI Canada Inc., through its subsidiaries, operates as a private residential mortgage insurer in Canada. It underwrites mortgage default insurance to residential mortgage lenders, brokers, homebuyers, and realtors.

Shaw Communications. Communications

Shaw Communications Inc., a diversified communications and media company, provides broadband cable television, Internet, digital phone and telecommunications services, direct-to-home (DTH) satellite services and satellite distribution services, and programming content in Canada and the United States.

Off the list

Toronto Dominion Bank.-Banks
National Bank Banks – Banks Regional

Final Thoughts

The best way to use my Canadian Dividend Kings list is as a starting point for your own research.

Don’t feel confined to my methods. Look up the values that mean the most to you. Like any screening method , the purpose of the Canadian Dividend Kings list is to help you dig through the stock market to find some hidden gems, which can then be further research by you.

Disclosure. I’m long CWB and SJR.B. I may or may not purchase shares in any of the stocks in the near future.

Resources from: Morningstar, Google Finance, Zacks,

Canadian dividend champion list provided and maintained by dividendgrowthinvestingandretirement

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Dividend Income – Oct 2016

2016, Dividends / Steve

Last month was a new personal best with a dividend income of $716.88 in September. Let’s check out my dividend income for October to see where I end up.

But First

HALLOWEEN!

Halloween

Halloween has come and gone and November is upon us. Everywhere I go, I hear complaints about this time of year. I live in Vancouver so it is wet, cold and cloudy almost all the time. But, perspective is everything!

I get to hang-out inside with the family and watch movies and play card games and get some real quality time together.

The rain gives me the perfect excuse to sloth around in my jogging pants. I love this time of year.

October Dividend Income

For the month of October I received dividends from 13 different companies (and 1 company twice):

TICKER	COMPANY	Oct 2016
TSE:CLF	Laddered Government Bond	$61.55
WDC	Western Digital Corp	$60.00
TSE:PLZ.UN	Plaza Retail REIT	$54.70
TSE:DRG.UN	Dream Global Real Estate	$54.67
TSE:AX.UN	Artis Real Estate	$47.97
TSE:NVU:UN	Northview Apartment Real Estate	$45.36
TSE:NVU.UN	Northview Apartment Real Estate	$29.33
BEN	Franklin Resources Inc	$27.00
TSE:REI.UN	Riocan Real Estate	$23.97
TSE:D.UN	Dream Office Real Estate	$22.75
TSE:BEI.UN	Boardwalk Real Estate	$19.13
TSE:PZA	Pizza Pizza	$15.90
TSE:XLB	Canadian Long Term Bond	$9.79
TSE:ECA	Encana Corp	$7.26
TOTAL		$479.38

I received $479.38 in dividends for the month of October. I’m very happy with this total as October is my lowest quarter of the three.

Dividend Income October 2016

As you can see from the list above, over half of my dividend income is from REITs and I am very aware that I am overexposed to that sector at the moment.

There are 2 reasons for this.

The first reason is, I am finding it very hard to buy any company I consider overvalued. When reading through Warren Buffett’s letters, the one thing that he consistently states is that you look for reasons not to buy a stock. When you can’t find any reason not to buy it, then you pull the trigger.

I have been close to buying several different companies but there has been something that is just not right. The last company I bought was Western Digital and that was back in August.

I’m not going to buy a company just “because.” It has to make sense.

The second reason I’m overweight in REITs is because they pay huge yields that are safe and I buy new shares on the DRIP. When I buy new shares using a DRIP I usually get around a 3% discount on market price and the new shares compound. Even if the REIT doesn’t raise the payout, my payout grows every month. I like that.

Nuts and Bolts

My year over year increase was 103.13% or $243.38 more then 2015
My quarter over quarter increase was 26.15%

Month	2015	2016	$INC 2016	%INC 2016	Q OVER Q %INC
January	$152.00	$367.00	$215.00	141.45%	55.51%
February	$229.00	$427.00	$198.00	86.46%	2.15%
March	$385.00	$602.00	$217.00	56.36%	-3.53%
April	$201.00	$313.00	$112.00	55.72%	-14.71%
May	$375.00	$456.00	$81.00	21.60%	6.79%
June	$475.00	$676.00	$201.00	42.32%	12.29%
July	$200.00	$380.00	$180.00	90.00%	21.41%
August	$375.00	$501.00	$126.00	33.60%	9.87%
September	$499.00	$716.88	$217.88	43.66%	6.05%
October	$236.00	$479.38	$243.38	103.13%	26.15%

Every quarter there are 3 months or dividend payouts, this is the smallest one.

My total dividend haul this year is now $4918.26, already $749.26 more than my last years TOTAL!!

I have already crushed my last years total and I still have 2 full months left in the year!

I’m hoping to reach my goal of $6000, it will be close 🙂

Dividend Income – Oct 2016 Read More »

What is the Graham Number and Why it Still Matters

2016, Financial Jargon / Steve

The Graham Number is a calculation used to see if a stock is trading at its fair value. It’s named after the father of value investing Benjamin Graham.

Graham Number

Graham, known as the “Dean of Wall Street”, began teaching value investing at Columbia Business School in 1928. Together with David Dodd, they wrote their famous book Security Analysis in 1934, following the largest stock market crash in history.

Graham is arguably more known as the mentor to Warren Buffett.

Warren Buffett

After the Great Depression, many people were trying to make sense of why the market imploded. Benjamin Graham is rightly attributed to making sense of the market. He looked at the underlying value of a company instead of the stockpickers go-to method, which at the time was “earning trends.”

The Graham Number

To find the fair value of a company, Benjamin Graham came up with a formula that could be applied to any security. He wrote this formula in chapter 14 of The Intelligent Investor.

Or 22.5 times Earnings per share times Book Value per share =X

Now find the square root of X=Y

Y will be the Graham number

The Graham number will be the intrinsic value, or in other words, what a company is actually worth. If the Graham number is above the current market price of a company, it could be trading at an undervalued price!

An Example of the Graham Number

I’ll use Walmart for an example.

The current share price is $69.60.

To find out the Graham Number we need to find out it’s most recent earning per share and it’s book value per share. Then find the square root of that number.

It’s trailing 12 months (most recent) EPS = $4.64

It’s current BPS =$24.74

22.5 x 4.64 x 24.74 = 2582.85

√2582.85 = 50.82

Using this formula we come to the Graham Number or the intrinsic value of Walmart – $50.82

So it would appear that the market is overvaluing Walmart right now at the going price of $69.60 vs the Graham value at $50.82

Is it still Relevant?

Warren Buffett learned from Ben Graham

Many people still buy Wal-Mart at today’s price even though it is overvalued according to the Graham Number. The reason for this could be many, but the main reason is because people still believe the company has further room to grow.

You will often here of Growth vs Value. You might never see Google or Apple hit a good Graham Number and they might still have a long way to grow, but there always is an end to how far a company can grow.

If you look at Warren Buffett’s portfolio, the world’s greatest investor, nearly 25% of the companies he owns pass the Graham Number test. Many of the rest are close. Clearly he still thinks that the formula has value.

Warren Buffett has 4 favorite books. Ben Graham wrote 2 of them. Security Analysis and The Intelligent Investor.

In writing the foreword to Security Analysis, when describing his tutelage at Columbia University under Benjamin Graham he wrote:

“what I learned then became the bedrock upon which all of my investment and business decisions have been built”.

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Author name: Steve