Investing

Investing Idea - Dividend Growth

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  • Dec 11th, 2017 12:22 am
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Chance7652 wrote:
Mar 11th, 2017 10:14 am
Hi Rod, Thanks for the feedback on IPL and OHI!

Yesterday, I sold most of my shares in RY and doubled my position in TD on the 5% dip (I didn't time it perfectly but bought while it was lower). This is after I've already bought and sold, but how do RY and TD look from a value point of view?
Compared to historical P/E, both RY and TD are overvalued. However, I would never sell any of them, since my objective is dividend growth - and they have been very shareholder friendly. If a stock on my list becomes overvalued, I simply stop buying it. But I wouldn't sell an income growth machine just because it got expensive. Who knows if by the time it gets fairly valued again it won't be trading higher than when I sold? Not to mention the dividends that I wouldn't be capturing to invest in other fairly valued business during that time. However, there's no one-size-fits-all, and there's nothing wrong locking profits and deploying capital to other businesses that are more attractive from a valuation standpoint. Different approaches, neither better or worse.

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Rod
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513263337 wrote:
Mar 14th, 2017 3:43 pm
Guys, any thoughts on TSE:QSR? Seems to be fairly valued, but nobody talked about it for a long long time in this thread.
Fairly valued and estimated to grow earnings by 21.5% annualized for the next 3 years as per market consensus. Dividends are also estimated to continue to grow. QSR is also my holding on my "Defensive (TSX)" trading model, which screens for companies with recession-proof characteristics and have high Return on Capital and high earnings yield.

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dvd5 wrote:
Mar 17th, 2017 10:34 am
AirBoss Announces 4th Quarter and Full Year 2016 Results and Dividend

Increased quarterly dividend by 7.7% to C$0.07 per common share. Stock took a dive today!

Time to load up more?
treva84 wrote:
Mar 17th, 2017 11:33 am
Well, the fundamentals continue to worsen - ongoing decline in sales and earnings. On the plus side, cash flow is growing greatly which will fund dividend increases and buybacks.

I'm disappointed as a shareholder and I want to sell, but I'm going to continue to hold. Personally I won't be buying more until sales / earnings start to grow again. If cash flow growth stops and turns negative quarter over quarter then I'll sell.

BOS stock price is highly influenced by rubber commidity price, which makes it very hard to evaluate valuation and estimate earnings. Although earnings and sales have been declining, I Was happy to see that such company facing these challenges are growing cash flow and dividends, meeting my primary goal to partner with them, while reducing net debt. Airboss had a big client that was generating 40% of rubber compound volume to them, so they clarified that they have not lost market shares with their existing customer base, it's just a lack of volume from their businesses,hence their approach to diversify to other areas - makes sense. They want to enter in non-automative antivibration market, a $6 Billion annual market that would include everything from locomotives rail to marine to aerospace to earthquake vibration or earthquake prevention to anti vibration products to combined distracters et cetera. So, all products that currently use antivibration, it's a different market than what they are in today, and they believe they can leverage the same technology, the exactly the same engineering, and very similar techniques to solve the problems that they have today. In that market, individual customers tend to be smaller, but the margins tend to be significantly higher. And the part price tends to be a lot higher. Diversifying their business makes sense and when the automative market eventually recovers, that would give them a boost. Airboss increased their active customer base by approximately 18%, while maintaining a robust pipeline of new customers in their development funnel for 2017. Defense is the area where they`re seeing the biggest increase of volume, and they are optimistic on how that will continue.

I`ve added more on Friday and they look fairly valued today. They continue to meet my goals of dividend increase - and I wouldn`t sell them until fundamentals deteriorate or they have 5-year of lower earnings. No company is capable of growing earnings perfectly, specially commodity driven ones like Airboss. I`m happy to get paid while waiting.


Rod
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Newbie
Mar 18, 2017
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Hi Rod,

Can we get your analysis on MTY. It looks be growing well and estimated to grow 22% this year. Trading at a PE of 21.8 as well. Would you say that is fairly valued and could be bought at this range?
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rodbarc wrote:
Mar 18th, 2017 10:35 pm
Hi Rod,
curious about your opinion on the current price and valuation of EMP.A? Specifically, for someone who hasn't invested in this stock yet, but sees it as an opportunity?
It's one of your few losses in your portfolio, so it would speak highly if you still consider it a buy.
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jerryhung wrote:
Mar 22nd, 2017 1:49 pm
CJR.B is tanking, -2% and -3% today, 2017 low
added some

ER on April 6th
Im trying to wait until it hits 10 again (if it does)
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jerryhung wrote:
Mar 22nd, 2017 1:49 pm
CJR.B is tanking, -2% and -3% today, 2017 low
added some

ER on April 6th
nikels21 wrote:
Mar 22nd, 2017 1:51 pm
Im trying to wait until it hits 10 again (if it does)
and just like that, we're back to $12.9x
why did I only add so little at $12.5 and not more at $12.3 :P
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iceage wrote:
Mar 16th, 2017 7:10 pm
Hello, Rod, can you pls comment on my cash account holdings? I'm thinking about holding them for a long time. Thanks!
enf 7.4%
h 14.1%
ipl 3.8%
sjr.b 30%
t 11.7%
td 23.6%
It depends on your goals, and that's very unique to each one. I think there's too much weight on SJR.B, I'd rather diversify such weight to other holdings (10% from SJR.B to T). I`m also not familiar on how H would perform now that it`s publicly traded, so I wouldn`t buy it until management proves their competency first, but that`s just me. I rather have EMA, CU or FTS instead of H, specially being over 14% of the portfolio. But that`s just my opinion, it doesn`t mean that your setup needs to be changed. H might prove in the end to be a great business to partner with, and it certainly has great prospect.


Rod
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Sep 22, 2005
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Thanks Rod for your comment! The composition is due to the switch of stocks from registered and etfs to registered accounts. Since the last post, I have added more td, so it's about 30% now. I still have TRP and X in the registered accounts to move out, which will drive down percentage of sjr.b.

My goal is to hold them for long term and eventually provide some dividend income for retirement.
rodbarc wrote:
Mar 26th, 2017 12:13 pm
It depends on your goals, and that's very unique to each one. I think there's too much weight on SJR.B, I'd rather diversify such weight to other holdings (10% from SJR.B to T). I`m also not familiar on how H would perform now that it`s publicly traded, so I wouldn`t buy it until management proves their competency first, but that`s just me. I rather have EMA, CU or FTS instead of H, specially being over 14% of the portfolio. But that`s just my opinion, it doesn`t mean that your setup needs to be changed. H might prove in the end to be a great business to partner with, and it certainly has great prospect.


Rod
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Rod, what do you think of CM? They have raised their dividend in 9 out of the last 10 quarters and at least once a year in the past 6.
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zobi123 wrote:
Mar 27th, 2017 7:47 pm
Rod, what do you think of CM? They have raised their dividend in 9 out of the last 10 quarters and at least once a year in the past 6.
They are not on my list because they have the lowest earnings growth rate from all Big 6 banks, followed by BMO. However, since Victor Dodig took the driving seat 3 years ago, the bank has been more aggressive in many initiatives, including acquiring other banks and rewarding shareholder at a very aggressive pace. He's been doing a great job in cutting costs and grow revenue and earnings.

However, my approach has always been to see proof that the business can deliver and then I'll consider partnering with them. They just started. If they improve their earnings growth rate in the next 7 years or so, then I'll consider them. My goal is not to catch a bottom and ride the wave up, but to partner with solid businesses that can deliver income growth consistently. They have been doing great lately, but their tracking record is poor. They had their share of issues in the past, and being a shareholder of 3 large banks and 3 small banks will require CM to show that it deserves an earned spot in my portfolio. It takes time to change a culture, and they're on the right track. There will be enough events in the next 7 years to see how they reacted and adapted.

Rod
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Jan 4, 2017
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Hi Rod,

Thank you for your great contributions. I've read through this thread twice now, and I've noticed in many other threads that you always have concise and meaningful input, and very well articulated. And I think I read that English is not your native language too? Kudos. In large part thanks to you, I've learned a great deal and am well on my way. I've picked up some of the literature that I've seen you recommend repeatedly. For now I've been indexing, but I hope to start a modest $10k port in 2018 with similar goals that you've been describing for dividend growth. Your posts have completely opened my eyes as to the value of doing one's own due diligence (to such an extent), and now just what that entails is no longer a mystery, but an attainable goal. Thank you!!

You've spoken repeatedly of FAST Graph and Portfolio123. While those look awesome, I don't think I'll be able to justify their expense (yet) personally. I've looked around at the TD screener that's built into TD's brokerage, and while it's certainly better than nothing, it's clear that it doesn't compare to what you're doing with FAST Graph and Portfolio123. My question to you is, how did you come to discover these tools? Would you say that one could still confidently apply your methodology with only free tools, without losing out on too much extra time?
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zcypher wrote:
Mar 29th, 2017 12:13 am
Hi Rod,

Thank you for your great contributions. I've read through this thread twice now, and I've noticed in many other threads that you always have concise and meaningful input, and very well articulated. And I think I read that English is not your native language too? Kudos. In large part thanks to you, I've learned a great deal and am well on my way. I've picked up some of the literature that I've seen you recommend repeatedly. For now I've been indexing, but I hope to start a modest $10k port in 2018 with similar goals that you've been describing for dividend growth. Your posts have completely opened my eyes as to the value of doing one's own due diligence (to such an extent), and now just what that entails is no longer a mystery, but an attainable goal. Thank you!!

You've spoken repeatedly of FAST Graph and Portfolio123. While those look awesome, I don't think I'll be able to justify their expense (yet) personally. I've looked around at the TD screener that's built into TD's brokerage, and while it's certainly better than nothing, it's clear that it doesn't compare to what you're doing with FAST Graph and Portfolio123. My question to you is, how did you come to discover these tools? Would you say that one could still confidently apply your methodology with only free tools, without losing out on too much extra time?
Thanks for the kind words, and I'm happy to help. This area is a mystery to many, and I've been trying to demonstrate that anyone can do it, anyone can get better returns than the market, and anyone can setup a strategy for perpetual growth income, regardless if the market crashes.

The cost of the basic membership for FAST Graphs is fairly low and worth it. It's a great tool to help you to determine valuation - the more diversified your port, the more you'll need it. The "free" alternative is to go over the financial statements of each company being analyzed and plot the numbers in Excell - you're paying to have that automated and save you time. Since it's a fixed cost, as your investments grow, it becomes cheaper considering the value it brings to help you manage your investments.

The advanced membership and portfolio123 costs the same, and it's expensive. Portfolio123 is a platform to develop algorithmic models, that also contains all fundamentals you need - unless you're developing trading or investing models, it's a complicated tool to pull fundamentals only. The advanced membership of FAST can be paid monthly for this purpose, and you only need to check fundamentals if earnings start to drop, and there's no need to check more than once a year. It would also be paid to do diligence on a new company being considered for your watchlist. So when you pay on that month, you can use that period to double-check fundamentals of the companies you're in doubt, as well as finalize your research for new companies that you might be considering. The only thing you should NOT do is to skip proper diligence - all information is publicly available on a company's website. So until you're ready to use other tools, you can always plot and research it manually, with the aid of ofher screeners.

I came to know FAST Graphs many years ago, since I was following David Fish for his Dividend aristocrat / champion / challengers list and through him I got to Chuck Carnevale, who is the founder of FAST Graphs and have been using that for his own investments (and managing his client's portfolios). I discovered portfolio123 when I was learning quant investing and was evaluating tools that could offer access to Capital IQ'a data to model using fundamentals, and as far as I know, they're the only ones that do that.

The methods that I've been using can be applied in many ways - from totally manually (which takes the longest) to be semi-automated (using screeners and maybe tools from your brokerage) to be fully automated (where you can apply pre-modeled rules to give you the metrics that you're looking for). There are some decent free US screeners, like finviz, but I don't know any decent free screener for the Canadian market. That's part of the value that I want to bring on my website, by continuing to share my strategies and help anyone with the initial diligence regarding quality and valuation, which would make use of these tools. Besides offering algorithmic trading for the short term as well. I've also started to work in modeling passive stratregies - trading with very low turn over focused on quality and valuation, that combined with other asset allocations, could become an Improved Couch Potato, offering a potential better alternative to those that like to index and don't want to trade often. We'll see how that pans out.


Rod
Everything about my Investing and automated Trading strategies to boost your income: https://boostyourincome.ca

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