Exchange Income (EIF.TO)

It has a 61% payout ratio so the dividend looks good. It is trading below its 5 year average The balance sheet is not bad, but they missed on Q4 due to weather and equipment issues which they have now mitigated, so you could go in and buy it.

(Top Pick Apr 7/16, Up 43%) It is a good quality pick. This has been a total under-the-radar story. They did a phenomenal job of managing their assets. They have raised the dividend multiple times.

*Short* This is sort of a mini conglomerate. They have a bunch of small regional airlines in Canada, as well as an aviation leasing business in the US, along with some small manufacturing businesses in Canada. This is what he would call “an access to Canada short” in that the underlying businesses do not generate enough cash to sustain the company as a whole. Subsequently they need to continue coming back to the market doing equity issue after equity issue. All the industries that they operate in are high capital intensive businesses. Just in CapX alone they have outspent their cash flow way, way back. Yet they pay a dividend yield of 5.34% and have a debt they have to service. If there was any market downturn and equity markets were actually shut off to this sort of constant equity issuance, the dividend would be in very, very serious trouble. (Analysts’ price target is $47.)

This buys different businesses and generates cash flow, and their job is to pay the dividends from those businesses. They focus on businesses where you cannot get exposure from the public market. They’ve done a pretty good job over the last several years, and the dividend yield is sustainable at this point. A good hold for the longer-term at this point.

(Market Call Minute.) A good, well-run company. It has had a heck of a run over the last year.

Had owned this for some time, but sold it too early. One of Canada’s really great growth stories. It is going through a bit of back-and-forth here as many stocks are. Feels the valuation has gone about as far as it was going to go. He would look at this again at some time.

Has been invested in this for some time now. Management is excellent. They have a business where they acquire a bunch of other operating businesses. They’ve really focused on airlines and manufacturing. In their history, they did the West Tower transaction and things were growing great, but then ran into a lot of problems. The company successfully sold that and redeployed the capital, which is a hallmark of a good management team. The stock isn’t cheap, but has a good dividend. They tend to be serial issuers, and as they add acquisitions, they issue more stock. If you don’t own, he would wait to pick up a new issue at a cheaper price. 5.1% dividend yield.

A growth by acquisition company, engaged in aviation manufacturing. They have some scheduled chartered airline services. The company has done extremely well. Ranks 63 in his database, roughly the top 10%. Earnings are expected to grow modestly by about 5%. A PE of 17X. ROE is reasonable at 14%. Unfortunately, free cash flow currently is -5%. This doesn’t seem cheap. Prefers others.

Manufactures airplane parts. He likes this. A surprisingly good business. They consistently produce 13%-50% ROC, year in and year out. Pays a nice dividend of just under 5%. Valuation is still reasonable. The balance sheet looks great. Not a lot of debt.

This has been a very, very strong stock for the past couple of months. Their last quarter, which is typically their weakest quarter, had absolute stunning blow away numbers. Raised their dividend by about 5%, and the payout ratio went down dramatically in the quarter. Their divisions are firing on all cylinders. Very heavily tied to aviation and aeronautics, and he would like to see them do another deal to dilute that exposure a bit. A very cheap stock with a very nice dividend yield of 5.6%.

This invests in aerospace businesses and manufacturing. The stock has had a good run over the last year of 50% or so. Any time you get a stock with that much appreciation, people sometimes get nervous and the stock will come down a little. A very well-run company.

(A Top Pick Nov 13/15. Up 40%.) Sold his holdings when he thought there were better opportunities elsewhere.

Aviation related services. Had shorted this in the past, but has been watching from the sidelines since. They have been getting some headwinds, largely from cheap jet fuel prices.

(Market Call Minute.) This has done all the right things and pays a good dividend. It has a lot more upside. They are finding deals harder to come by. Growth by acquisition, but they are showing discipline.

They put a lot of good capital to work. Return on Capital has climbed to 13% consistently. Valuation looks reasonable.