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%
Chemical stocks are cyclical and now behaving well. He likes it. The commodities group is performing well, benefitting from a stronger economy. MX should trade higher throughout 2018. But with cyclicals, buy them with they look cheap, and sell when they look pricey.
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%
The best Canadian oil company and they have integrated purchases well. He's long owned this. The problem is that Canadian oil stocks have lagged the oil price, but CNQ will still benefit from this rising price.
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%
$60.37 is his target price. You can enter it now. It will benefit from rising oil prices. It's a low-risk trade.
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%
ENB has cleaned up its act, getting rid of some assets, cancelled their DRIP and their valuation is still compelling. Various things have lined up now to propel ENB forward. You can hold this for 25 years and do well. ENB is the best in this sector.
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%
This has been disappointing for the past couple of years, but the dividend yield of 5% is good. He would not worry about holding this. His stop-loss would be $100.
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%.
Often the worst bank one year does the best the next. BNS is 50% Canada and 50% foreign operations. (Analysts’ price target is $79.17)
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.
He keeps watching it. Great balance sheet. They've been growing their dividend this cycle, but auto sales have rolled over. Magna is still making good money, but trading at 7-8x earnings because the market believes that the auto companies are rolling over; production and sales have rolled over. He's cautious about it. He may buy…
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%.
One of the world’s great brand names. They are gradually losing market share as people are consuming less. They’ve moved into other beverages. With global retail under pressure, they will be pressured a bit. For the next couple of years, he would prefer to be somewhere else. 3.3% dividend yield.
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%.
Home building and new home sales in the US have just skyrocketed. Last month, new home sales increased by 15%. Also, existing home sales are increasing. Executing very well and are able to beat their estimates. She sees this as a non-performer over the next year. Prefers Home Depot (HD-N) slightly more as they execute…
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%.
(A Top Pick July 31/17. Down 3%.) Tends to do well in the summer because it is a consumer staple stock. Investors are looking for dividends and more stable earnings. This year we’ve seen some excitement in the stock market in the summer, so investors haven’t been attracted. At the same time expectations on interest…
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%
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%.
Worries about if markets do sell off. It’s had a great run up. It would have to get above levels it’s at. He’d buy because it’s still trending higher, but with the caveat to be careful with the DOW and S&P if they start to sell off.
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 good name in terms of if you want to be prone to take some risk for potential returns. Similar to energy names it has lagged recently. You can be very patient with it if you want. Don’t expect it to break out easily. Buy the weakness and don’t chase strength. He does not go…