Dividend stocks are companies that pay out a portion of their revenues to stakeholders. They make for a great income investment and if done right, can become an integral part of your revenue streams. For dividend investors, it is a good strategy to DRIP, where dividend payments are reinvested to purchase more shares in the company. This is a good strategy for the “set it and forget it” investment style.
Furthermore, in times of economic slowdown, dividend stocks are a boon in your portfolio. These companies will pay you to wait it out. Dividend stocks are seen as income generators combined with capital gains.
🛢 Basic Materials
Methanex Corp (MX-T)
A methanol producer and distributor. Energy commodity prices have come down and general global economic growth is stalling. The dividend is considered safe by analysts and the stock has become cheaper. They are a global leader with operations across the globe. They pay a dividend of 3.3%
It is a cyclical stock. It is a best of breed. Their advantage is low cost leadership. Some of their plants are idle right now. It is likely a double coming out of this. (Analysts’ price target is $28.54)
Canadian Natural Rsrcs (CNQ-T)
A Canadian oil and gas exploration and production company. They are generating a lot of free cash flow and is managed well. They do not have a debt problem. CNQ also has an impressive history of 17 years of dividend growth. The dividend is at 4.19%
Exxon Mobil (XOM)? Near-term, he's cautious about the energy sector. XOM has a broad base of assets and pays a high 8% dividend, but is underperforming the S&P. XOM has been struggling as a stock. He prefers a company outperforming peers, such as CNQ. CNQ pays a 6.8% dividend. It's had rising relative strength since…
Suncor Energy Inc (SU-T)
An integrated energy company based in Canada. Suncor is considered a good way to dip your toe in the energy sector since they are so big and should do alright. They pay a dividend yield of 4%
These companies are un-investable. The winds have changed in term of environment and it will be difficult to grow value. Ethically, there are many people who are abandoning energy by principle.
An energy transportation company that is looking to complete Line 3 by 2020. This is considered a good income play but not a share appreciation name. The dividend is safe at 6.5%
A company that he is not enthusiastic about. They have a lot of debt, poor performance in assets, and cashflow hasn't changed in the past few years. There is good dividend growth. It would probably do better than cash or bonds. He would look elsewhere for better balance sheets, cashflow and less debt.
Canadian Imperial Bank of Commerce (CM-T)
One of the Big Five banks in Canada. Some analysts consider this bank to be particularly under valued. They pay a dividend of 5.4%
Canadian bank for dividends? For a 10-15 year time horizon, the Canadian banks are a pocket of value. They are trading less than 10 times forward earnings, which already include loan loss provisions. They have high asset qualities. Buying here is a winning formula for the long term. The dividend will pay you to wait…
Bank of Nova Scotia (BNS-T)
The third largest bank in Canada. They are one of the most global Canadian banks with operations particularly in Latin America. They have been the lagger of the Canadian banks and offer good value right now. The dividend yield is 5%.
They have less diversification compared to TD Bank, but he is not too worried on credit losses. Their dividend is sustainable and the capital ratio is alright. He would be accumulating around these levels.
Magna Int’l. (A) (MG-T)
A global automotive supplier. They were hit hard due to reduced guidance, slow-down in Europe. They also made an acquisition that many think they paid too much for. They are investing in autonomous technology and may be planning to buy back shares.
The auto industry is currently in complete disarray. How reluctant are people going to be to step up to big purchases after the economic recovery. If you are going to invest in the auto parts industry, you want to be with the big players. It will be a long but jagged recovery.
Colgate Palmolive (CL-N)
An American consumer products company. Analysts are pessimistic about this as they were negatively impacted by rising interest rates. Before, it was considered a bond proxy. However, in the long term it is considered a safe investment. The yield is 2.47%
Global consumer products that dominates in oral personal care products. They have grown well in the past in emerging markets, but this space is quite competitive. The stock has always traded at high multiples, which has kept her out of this stock and continues to do so.
Genuine Parts Company (GPC-N)
A service organization for automotive parts and other replacement materials. They are the biggest auto parts manufacturer in North America. In slower economic times, people tend to repair cars more. They have a good history of increasing dividends annually. A dividend yield of 2.96%.
Stockchase Editor: Michael O'Reilly GPC has increased its dividend for 63 consecutive years -- a real Dividend star. The company focuses on aftermarket and replacement car parts -- a rising trend given that new car sales are stagnating. Technically, the stock is riding an up trend with higher lows being made regularly. We would use…
Hormel Foods Corp (HRL-N)
A well managed food company. They have been struggling with growing earnings and protein prices due to livestock epidemics. They raise dividends annually and it is currently at 2%.
It's always been a good company due to their ability to allocate capital appropriately. They were struggling before due to pork prices for SPAM. They're also in the spreads business like Skippy's. 5 year dividend growth is 16%. If they continue to keep margins up, it is a good company.
Coca-Cola Company (KO-N)
The famous beverage company that everyone knows. They are diversifying away from their main activity to include energy drinks and coffee. There is still a lot of room to grow. They pay a dividend of 3.44%.
CO-N vs. PEP-Q. They are both consumer stables and he likes them because they are falling off maybe 20% from their high. He is more a Coke guy and it is close to EBV+7 at $39 and closed at $42.81. Close to $38-9 he would be a buyer, maybe even at this price. You can…
Lowes Companies Inc. (LOW-N)
A home improvement store. The company has profited from the DIY movement. They recently brought in new management as the company has underperformed. They pay a dividend of 1.99%.
She would consider buying both. LOW-N brought in a new management team with a lot of self-help initiatives to closed the gap, but HD-N has also been very strong and both are a home-run in the area. The recession just keeps getting pushed out
Procter & Gamble (PG-N)
A multinational consumer goods company that was trading at a discount until a bump up recently. It is in a slow growth space and growth is expected to be around 10%. They pay a dividend of 2.7%.
This sector has held up reasonably well during this downturn along with utilities. She would continue to hold it and likes the dividend it pays.
Exco Technologies (XTC-T)
A Canadian multinational developer and manufacturer for automobiles and equipment. They have a good history of buying back shares and increasing dividends. A well run company with good capital allocations. They pay a dividend of 4.48%.
This had disappointing results. Had come to the Street about a year ago talking about their new high tech Japanese equipment. Their big business is making moulds for automobile engines. It’s a purchase that auto companies would only make once or twice in a cycle. They hadn’t delivered in the latest quarter and the stock…
Toromont Industries (TIH-T)
They surprised investors with a dividend increase of 21% in the last quarter. One of the biggest Caterpillar distributors in the world with focus in Ontario. They do well in tandem with construction and mining. They pay a dividend yield of 1.8%.
He holds this one since 2015 and no intention to sell. They hold the rights to Caterpillar dealerships, now into Quebec and the Atlantic provinces. Most of their revenues come from mining, construction and farming. Fiscal stimulus could aid infrastructure, so construction could also do well. Mining should be okay for precious metals. The management…
Emerson Electric (EMR-N)
An industry company that has pulled back due to concerns over the trade war and their exposure to oil. It is well managed. The dividend payout is 3.1%
The uptrend from 2016 to 2018 broke late last year, then has seen a head and shoulders bottom. It's a safe bet from here--should return to old highs, but doesn't know if it will rise even higher.
3M Co. (MMM-N)
An industrial company across many sectors including consumer, industrials and materials. They bought back stocks last year but added debt. They have significant international operations who’s profitability is hurt by a strengthening US dollar. Their dividend yield is 3.4%
Not so high on this one. Trouble getting traction. Exposed to the global economy. Revenues for 2021 will be lower than in 2018. Profitability metrics are challenged. PFAS lawsuit is building steam, which could be as big as asbestos or lead in paint issues.
Parker Hannifin Corp (PH-N)
A specialist in motion and control technology. A good long term play as they have a good history of generating ROI for a long time. They are a key part of the industrial economy in a relative oligopolistic environment. They pay a 2.1% dividend.
A great company that he has owned before. A candidate to buy-hold- and forget about it. The problem is that, in the short term, it is highly correlated to the Purchasing Manufacturing Index (PMI). You need to call the bottom of the economic cycle to time the proper entry. A recent acquisition has increased their…
Johnson & Johnson (JNJ-N)
A multinational medical, pharmaceutical and consumer goods company. They are currently facing a lawsuit over talcum powder. They have good demographic support and analysts expect dividends to continue to grow. They pay a dividend of 2.72%.
Owns JNJ instead of Pfizer, because she likes its diversity, and its product pipeline is strong. PFE has a strong balance sheet, but JNJ's is stronger. JNJ's medical device side is recovering nicely, plus they were able to give guidance at a time when many companies can't.
Altagas Ltd (ALA-T)
An energy infrastructure company. A good place to keep your money for dividends and a quality utility name. They have settled down after their takeover although there may be other outcomes that are yet to be seen. They pay a 5% dividend.
There is a possibility the price will recover within five years. It is higher risk/reward to PPL-T, however. It needs more improvement in earnings quality for him to jump in.