Investing

Investing Idea - Dividend Growth

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  • Oct 16th, 2017 10:37 pm
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Gungnir wrote:
Feb 27th, 2017 8:38 pm
Hey Rod, I know it's run up a bit of late, but what do you think of NYSE:JNJ at these levels for a long term hold?
JNJ is a great long term hold, but that doesn't mean that it should be purchased at any conditions. It's too expensive now. Valuation will come down eventually, and even if it trades higher when it's fairly valued, I'll be more comfortable buying it then, when it provides a better margin of safety. The example below illustrates how purchasing at a high valuation can drag return. Sure, in the long term it will be profitable, but buying high carries unnecessary risks and it drags return overtime. There are better opportunities in the Health Care sector.

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Chance7652 wrote:
Feb 27th, 2017 11:07 pm
Hi Rod, I've been reading a lot of this thread and appreciate your analysis.

I'm wondering how does Inter Pipeline (IPL) look to you right now from a value point of view?
IPL looks reasonable to me, with Funds From Operations (and dividends) estimated to grow:

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Chance7652 wrote: Most of my portfolio is Canadian Dividend Stocks. I'd like to shift more of my RRSP into US stocks. What do you think of Omega Healthcare Investors Inc (NYSE:OHI)?
I'm not familiar with OHI, and Health Care REITs are tough (I had a bad experience with HCP). OHI estimates are looking so-so:

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The only US REIT I have on my list is O, which is a retail REIT, but they're expensive now:

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charliebrown wrote:
Mar 1st, 2017 9:29 pm
So which of you had $500 mil lying around and didn't know what to do with it (then decided to go big on FTS)

http://m.marketwired.com/press-release/ ... 199904.htm
FTS does that almost every year to fund growth. See the Float metric below (outstanding shares).

Image

On this particular case, this will be used for the remaining $535MM bridge loan from the ITC acquisition. The share issue is being offered to one institutional investor in the U.S., which will hold about 3% of Fortis' total share count on close. Fortis will issue about 12.2MM shares at $41/share under a private placement for total gross proceeds of C$500MM. As of the latest quarterly report, the company indicated US$404MM (C$535MM) remained on the bridge loan to fund the ITC purchase, thus curing the funding gap and removing an overhang from the shares. According to one of the companies covering Fortis, "they are not expected to require any further equity to fund its five-year C$13 billion capital plan ending 2021, and the analyst does not see the need for any additional equity unless the company is successful in securing one of its major projects. The estimated EPS dilution is about 2% on a full-year basis".


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FlyOverMyDoodle wrote:
Mar 2nd, 2017 10:09 am
Thanks, will start with these!

What other sectors would utilize something different from adjusted earnings?

REITS, pipelines
Financials(Banks)?

Anything else?
REITs should use Adjusted Funds From Operations. Pipelines should use Operating Cash flow. Oil companies are cyclical, so I rely on Operating Cash Flow to validate how sustainable dividends are. The first post has the details on how to evaluate banks.

Rod
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Siralex wrote:
Mar 3rd, 2017 1:54 pm
Can anyone do an analysis on the railways, CNR or CP. Looking to see if they fairly valued.
Although CNR is estimated to have high earnings growth, it's too expensive now, so total return estimates are not attractive:

Image

CP looks much better in my opinion:

Image


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FlyOverMyDoodle wrote:
Mar 4th, 2017 4:00 pm
Hey Rod,

Is IPL's inconsistent free cash flow graph on fastgraphs concerning even though it's estimated to increase in the next couple years?
You shouldn't look at Free Cash Flow. Instead, you should look at Operating Cash Flow. Estimates are solid and there's the potential for further growth if IPL decides to go ahead with the build of two petrochemical plants that would convert propane into plastic (it would be operational by 2021). IPL said in its third-quarter earnings report it is pursuing long-term contracts with global plastics and marketing companies and a decision should take place this summer. IPL assumed the option to build a $1.8-billion petrochemical facility after it bought the Canadian assets of Oklahoma-based Williams Cos. for $1.3 billion in September. With further growth fueled by projects like this, plus higher estimated operating cash flow and dividends, IPL is a solid buy for me.


Rod
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cn_habs wrote:
Mar 5th, 2017 4:55 pm
Rod, do you have any input on how the projected EPS decrease in 2019 shown on Fastgraphs is going to affect total return?

Thanks.
For which company?


Rod
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Rod did an analysis last month, but I guess you are asking if anything has changed?

I picked some up at 11.80 after selling fts.to, and it was sitting at that price for a few days before earnings. Thought I needed a second opinion on AQN for my analysis. dividend is around 5 percent. lol. I'm just starting the dividend portfolio. Got some TECK, BCE, and now AQN.

Post 1501.


cn_habs wrote:
Mar 6th, 2017 11:26 am
My bad. AQN.TO.
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stt55pot wrote:
Mar 6th, 2017 11:39 am
Rod did an analysis last month, but I guess you are asking if anything has changed?

I picked some up at 11.80 after selling fts.to, and it was sitting at that price for a few days before earnings. Thought I needed a second opinion on AQN for my analysis. dividend is around 5 percent. lol. I'm just starting the dividend portfolio. Got some TECK, BCE, and now AQN.

Post 1501.
Yes Rod's previous chart didn't show the projected EPS decrease in 2019 as FASTGraphs hid it by default until a week ago.
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Rod: thanks for sharing your March purchase. For MDA.TO, it seems earnings are pretty flat since 2014, dividend are flat, and they even had a cut not long ago. RBC annual earning estimate for 2017/2018 comes lower compared to Fast Graph, and basically shows flat. I guess the main attraction is low PE comparing with historical level ?
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HCG all the way back to the 25s. Tempted to add to my position.
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rodbarc wrote:
Mar 5th, 2017 10:13 pm
JNJ is a great long term hold, but that doesn't mean that it should be purchased at any conditions. It's too expensive now. Valuation will come down eventually, and even if it trades higher when it's fairly valued, I'll be more comfortable buying it then, when it provides a better margin of safety. The example below illustrates how purchasing at a high valuation can drag return. Sure, in the long term it will be profitable, but buying high carries unnecessary risks and it drags return overtime. There are better opportunities in the Health Care sector.

Image


Rod
Thanks Rod, my portfolio is already very overweight on JNJ, so maybe I'll wait on a pullback
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Gungnir wrote:
Mar 10th, 2017 10:08 am
Thanks Rod, my portfolio is already very overweight on JNJ, so maybe I'll wait on a pullback
Have been waiting on a pull back for a while on this one.
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cn_habs wrote:
Mar 6th, 2017 11:26 am
My bad. AQN.TO.
I wouldn't worry about it. There's no market consensus for FY19, only 2 analysts covering it for long term, and frankly that's too hard to estimate, too many unknowns until there. AQN had good results recently, and the current fiscal year and the next one are looking promising. According to one of the analysts, "Algonquin has undergone a period of significant growth over the last few years, mainly fueled by acquisitions in its renewable power and utilities divisions. Going forward, we see strong growth continuing, albeit at a more sustainable pace. The additions of Odell Wind and Park Water enhance an already impressive slate of projects coming into service, all of which are cost-of-service (utilities) or
long-term contracted (renewable generation) assets. The acquisition of Empire District adds additional scale, diversity and a platform for further growth. Algonquin has also safe harboured PTC eligibility on up to $1.5 billion of pending renewable projects in the U.S."


Rod
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