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%
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%
Energy is tricky with a four year bear market. However, valuations are starting to get cheap enough. He does not own this. One of the largest producers. He just sees better opportunities in the space. (Analysts’ price target is $47.55)
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%
He does not own SU-T and remains underweight in energy. If the US dollar weakens, this could result in a higher oil price and good value for SU-T. There are just too many secular issues that are beyond the company's control. He owns VET-T because of its international assets.
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%
Energy infrastructure name. Durable cash flow profile. Overhangs are Line 3 and growth. Tremendous value. Defensive business, and you're paid a fantastic dividend to wait. Valuation's still compelling even if there is no growth. Yield is 6.67%. (Analysts’ price target is $54.88)
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%
For an RRSP? The bad news is that he expects only 3% EPS growth (vs. 6% for this space). Yes, it's cheap vs. its peers and pays a solid dividend. But CM remains tethered to Canadian real estate, a headwind. The banks will be market performers; he prefers TD or RY or BMO. CM is…
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%.
(A Top Pick Jul 04/18, Up 0.2%) Somewhat of a laggard compared to the other Canadian banks. He likes it because it has the smallest exposure to Canada. Their acquisitions into wealth managing companies should take time to develop. He would continue to hold it.
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.
Like the chart. It broke below its 20-day moving average. It had a hammer pattern last year that flushed out a lot of weak hands/investors. It's now testing $71-72. If it slips below that, it will fall to $67. Falling to $61 is not a good sign. You can buy it now and happily hold…
Colgate Palmolive (CL-N)
An American consumer products company. Analysts are pessimistic about this as they were negatively impacted by rising interest rates. Before, it was considered a bond proxy. However, in the long term it is considered a safe investment. The yield is 2.47%
Has been more of a defensive stock. A little rich at 15X earnings. Won’t grow much with a growing US economy.
Genuine Parts Company (GPC-N)
A service organization for automotive parts and other replacement materials. They are the biggest auto parts manufacturer in North America. In slower economic times, people tend to repair cars more. They have a good history of increasing dividends annually. A dividend yield of 2.96%.
North America's largest auto parts wholesale distributor. Profit margins are increasing. A 3% yield. Well managed. Generates lots of cash.
Hormel Foods Corp (HRL-N)
A well managed food company. They have been struggling with growing earnings and protein prices due to livestock epidemics. They raise dividends annually and it is currently at 2%.
Spam and peanut butter manufacturer. A great company and has done a great job of executing, but it is expensive. Trading at nearly 24X.
Coca-Cola Company (KO-N)
The famous beverage company that everyone knows. They are diversifying away from their main activity to include energy drinks and coffee. There is still a lot of room to grow. They pay a dividend of 3.44%.
Valuation is a little stretched. There is a strong correlation between this and the US$. They generate a lot of sales outside the US, so when the dollar weakens, this does relatively well. They are trying to become less capital intensive, so are getting rid of some of their bottling operations. When they sell those…
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%.
This one is coming on and improving their operations. They expanded their presence in Canada by buying Rona. They are in Canada, Mexico and the US. As millennials move out of parents’ basements, this stock should do well.
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%.
One of the great consumer product companies. However, we’ve seen the entire retail sector come under pressure, mainly generic brands coming out of the supermarkets nibbling away at the super brands. The company has implemented cost cutting, going from a growth company to more of a stable company. This is one you can put away…
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%.
He really likes the company. It is in the same business as LNR-T and MG-T, but growing faster. It is too small to be a takeover target. There is a lot to like about the stock. 1.65% yield.
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%.
Finning (FTT-T) or Toromont (TIH-T) for long-term growth and dividends? This area is a little tough right now. Industrial equipment has been pretty beaten up in the last few weeks. He would prefer Finning, which has the oil Sands in Alberta as well as South America where they have a ton of mining. Toromont more…
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%
In an industrial complex, it would be comparable to a General Electric (GE-T) or something similar. Feels the whole industrial complex in that space will move higher. Not as keen on this business simply because of the emerging-market exposure it has. In different segments of their businesses, there is fairly flat to slightly negative growth.…
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%
(Market Call Minute.) A decent holding for a long-term portfolio. They have just been under a lot of price competition and margins have saturated a little bit, because of a lot of FX exposure.
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.
This Top pick consists of a basket of U.S. large caps, Gardner Denver (GDI-N), Corning (GLW-N) and Ingersoll-Rand (IR-N) Parker Hannifin (PH-N) and Timken (TKR-N). Infrastructure spending has lagged severely. On the corporate side, there is lots of cash on hand, debt has declined
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%.
They just reported solid earnings, though the stock was down today a bit. Has a wide product range sold in 200 countries. Solid and diversified. They raise their dividend every year and it rise again.
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.
(A Top Pick May 10/17, Down 23%) He kept averaging down as it plunged last year, so it's been a strong performer as it has bounced up. That bottom should never have happened. problem was, they reported in Q3 when utilities report their weakest earnings in the warmest weather; you don't use as much lighting…