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The positive for this bank is that it is a retail global bank. They are in Europe, South America, Latin America and North America, but not a lot in Asia. The bad news is that there are political machinations going on in Spain that are not making people happy. Also, it is the largest car loan issuer in the US, and that is not going well. Raised the dividend 9% last year, but over the last 5 years it has fallen 13%.
5G is coming to a billion people in China, and they only have half a billion signed up so far. This is interesting because it is a domestic Chinese stock that pretty much has a built-in market without competition. This is more of a blue-chip yield play, as opposed to expectations of a lot of growth, but they may start to see better times ahead. This will put more smart phones in the hands of rural Chinese. Go slowly into this, because you never know what could happen in the Chinese stock market.
Last year, the 12-month price was up 5.8% compared to Rogers (RCI.B-T) at 26% and Cogeco (CGO-T) and 27%. The dividend yield is at 5%. The acquisitions they have been making doesn't change the landscape at all. This is fine for the widows and orphans, but don't be suckered in to buying a high yield stocks, because if you are not getting the dividend growth with it, you are not getting a whole lot of capital appreciation.
This has been struggling, simply because it is a large REIT with retailers. Prefers owning the REIT bonds because you get the safety of payment, and if the stock market falls 20%, the bonds would probably go higher. If you buy the REIT, you are taking on equity risk, which you never want as an equity investor. Also, this company's dividend hasn't moved in the last 6 years, so the growth rate over the last 6 years has been zero. Over the last 15 years, the growth rate has been 2% per year. This is not a great investment.
They are having competition with their biggest product. Mylan (MYL-Q) has come out with a generic alternative to their Copaxone. Their debt has been heavily laden. Just let 10,000-15,000 Israeli employees go. You have to be in a gambling phase, because this could go to zero with their heavy outstanding debt load. They don't have a lot of new products coming out. Instead of playing the stock, he is looking at their bonds.
The problem he has with utilities is that they are making acquisitions for growth, not organically. That is the 1st of a red flag. Interest rates are rising. This company's dividends have been going up roughly 7%. The company has been moving into the US so there are some currency issues. If you go with this, don’t make it a large holding.
There are 2 big conglomerates in south east Asia, and this is an easy way for Canadian investors to have access to the south-east market with a big conglomerate. The stock has done nothing for the last 5 years, because of the rise in the US$. They report their numbers in US$, but currencies in Indonesia, China, etc. have been falling, so they’ve been hurt. This has a clean balance sheet and they can make acquisitions. 10-year dividend growth rate has been 15%. Dividend yield of 2.5%. (Analysts' price target is $67.)
His resource of choice is water and wastewater. This company is into irrigation equipment. They've been able to advance, through technology, to have satellite shots of irrigation equipment so it can be controlled anywhere on the farm. 60% of sales are in the US and 40% is international, particularly in Brazil. Dividend yield of 1.4%. (Analysts price target is $83.)
This was a top pick because he wanted to keep the betas low, just in case there is a market correction any time in the next year. All the talk is about Keystone and their oil pipelines, but nobody is really paying attention that this has been accumulating a lot of gas pipelines and gas assets. Natural gas prices have been in the toilet for a long time, and that bodes well for them, because it is going to be the less pollutant, cheaper choice for the US moving forward. The dividend has been growing roughly in the 10% range which he expects will continue. Dividend yield of 4.2%. Trading around 20X PE. (Analysts' price target is $72.50.)
Feels the problem over the last decade or so, is that they used to sit on cash and then jump at opportunities, but haven't really been jumping at acquisitions recently. There hasn't been any growth in the mutual fund industry or even at Great West (GWO-T). In 2009, the dividend was at $1.40, and stayed at that until 2015 when they raised its to $1.49. The average growth rate of the dividend over the last 5 and 10 years has only been 5%. He would avoid this.