Investing

Investing Idea - Dividend Growth

  • Last Updated:
  • Jan 15th, 2019 12:23 pm
Newbie
Nov 19, 2017
56 posts
39 upvotes
taal wrote:
Jan 4th, 2019 7:17 pm
What do folks think of cineplex ?
Enbridge is a good business because everyone needs heating.
Big 5 banks...market will continue to go on.
McDonalds...there will always people who buy food and coffee there.
Cineplex? People will watch movies, yes. However, despite that, earnings are dropping. How are they going to fix this? No one wants their overpriced popcorn to begin with, are they going to raise prices for that even more? For one movie, Cineplex charges more than what Netflix charges for a subscription. I grew up going to Cineplex but I am having a hard time defending them as a business.
Member
Apr 21, 2010
231 posts
19 upvotes
organeer wrote:
Jan 5th, 2019 5:43 pm
Enbridge is a good business because everyone needs heating.
Big 5 banks...market will continue to go on.
McDonalds...there will always people who buy food and coffee there.
Cineplex? People will watch movies, yes. However, despite that, earnings are dropping. How are they going to fix this? No one wants their overpriced popcorn to begin with, are they going to raise prices for that even more? For one movie, Cineplex charges more than what Netflix charges for a subscription. I grew up going to Cineplex but I am having a hard time defending them as a business.
Yeah I definitely get that, but I don't think the experience of "going to a movie" is going away anytime soon ; It's generally an outing with friends/family/... something you can't easily do in 1 person's house / apartment (much more so for the later).

But in terms of revenue growth, I just don't see any of that; Better phrased it's all dependent on what movies are released so it'll go through cycles as box office attendance has shown in the past ! So I'd assume little to any revenue growth ... I agree they can't just keep raising prices; I also think there other initiatives (VR / Recroom) will fail or produce little revenue growth.

I think VIP cinemas were a great initiative, they seem to do very well, though I can never get myself to go to one (paying more for a smaller screen).


Anyway, ok say they don't growth revenue, can they still sustain the current dividend which is obviously very compelling.
Jr. Member
Mar 6, 2010
137 posts
31 upvotes
Brampton
I have a simple question for dividend veterans - Lets assume that top 5 banks stocks have 4.1x % yield. So am I correct in my assuming that if I buy such stocks worth $100, 000, I will be getting at least 4% income every year? (regardless of stock price movements)
Newbie
Nov 19, 2017
56 posts
39 upvotes
luking wrote:
Jan 5th, 2019 10:43 pm
I have a simple question for dividend veterans - Lets assume that top 5 banks stocks have 4.1x % yield. So am I correct in my assuming that if I buy such stocks worth $100, 000, I will be getting at least 4% income every year? (regardless of stock price movements)
Yes you are correct. Only scenario where that doesn't occur is if big 5 banks reduce their dividend. However, that hasn't happened even in the last 2 major market crashes.
Deal Fanatic
Feb 9, 2009
6996 posts
4004 upvotes
luking wrote:
Jan 5th, 2019 10:43 pm
I have a simple question for dividend veterans - Lets assume that top 5 banks stocks have 4.1x % yield. So am I correct in my assuming that if I buy such stocks worth $100, 000, I will be getting at least 4% income every year? (regardless of stock price movements)
Yep... so you would be getting $4100 of dividend income for ever $100k invested.

I wish I could back in time to 2008 and get that sweet 10% dividend of BMO's again -- i think we all do :)
Newbie
Nov 19, 2017
56 posts
39 upvotes
We need to create a buy-big5-when-low support group.

When the doom and gloom is strongest, and the big 5 bank prices are lowest, we must remind ourselves:

NO THE BIG 5 AREN'T GOING BANKRUPT
NO THEY'RE NOT CUTTING THE DIVIDEND
YES CANADA IS GOING TO BAIL OUT IF NEEDED
...BUY
Deal Addict
Feb 4, 2015
3898 posts
1028 upvotes
Canada, Eh!!
organeer wrote:
Jan 6th, 2019 5:10 am
We need to create a buy-big5-when-low support group.

When the doom and gloom is strongest, and the big 5 bank prices are lowest, we must remind ourselves:

NO THE BIG 5 AREN'T GOING BANKRUPT
NO THEY'RE NOT CUTTING THE DIVIDEND
YES CANADA IS GOING TO BAIL OUT IF NEEDED
...BUY
Couldn't decide which banks to buy so just got RBNK.TO recently, as an investment. Do hold a little bit of individual bank stocks as a trade.
Jr. Member
Nov 21, 2015
114 posts
24 upvotes
Vancouver
Hi Rod,

Totally agree with you. I don't think it's a good time to play buy-and-forget strategy right now. Especially during this volatile market early 2019. There should be a lot of opportunities but needs to be patience.
Do you think we should focus less ETFs and more individual stocks? E.g. Stocks have potential due to section rotation or look at emerging markets?

Two questions for you and I think it's worth paying attention.

  • Do you think it's good timing to get into small amount gold in the portfolio?
What do you think of AT & T these days? Are you planning to sell them very soon? With its debt, do you still think the dividend is sustainable? What do you think compare to a company like GE?

Thanks!


rodbarc wrote:
Dec 31st, 2018 8:05 am
Happy Holidays to you too! Excellent question.

First, many companies are still around and paying dividends for much longer than 50 years. Scotiabank has paid dividends to common shareholders every year since its foundation in 1832. It has increased its quarterly dividends in 43 of the last 45 years. Enbridge has been paying dividends for the last 64 years. On the US side, it's even longer: companies like Procter & Gamble has paid dividends since 1891 and it has increased dividends for 62 consecutive years. Coca-cola has paid dividends since 1893 and has increased it for 56 consecutive years.

However, I don't believe in buy-and-forget. We have lots of examples of companies that were the best at one time, and they fold, because they stop innovating or they can't comprehend industry changes or management makes a series of risky decisions and mistakes that eventually destroy a once well-run business. Kodak and Sears are 2 great examples. Citibank were severely affected, and although it's making progress to recover, it never reached previous levels. The most recent example for this kind of failure as an investment is GE.

How to avoid? You can't avoid every case. You can predict some cases, by monitoring earnings and cash flow, and if payout rate is too high (the company is borrowing to pay dividends) or if revenues and sales are struggling and the yield is too high, management typically decides to cut / suspend dividends to free up cash flow to grow again, either by investing in innovation or acquire other businesses. And if the company doesn't meet my criteria as a sound business to partner with, I sell, no matter how low the stock is - it's important to not be emotionally attached with a stock or the money involved when making these decisions, because it has to be a rational decision. I go through this exercise every year, by looking at the financial report of every company that I own, and evaluate if I'm still comfortable of how the business is operating (I don't look at stock price). Some companies I decide to sell because earnings and cash flow have been declining for a business cycle or so, or if the industry is clearly changing and the business isn't / can't catch up. Others I sold because they no longer meet my income growth goals, probably due to dividend cuts, either because the company has positioned to be a growth company or because dividends were cut to free up cash flow as they were having challenges to grow.

Remember, investing is not about avoiding risks, it's about managing risks. And how to manage this scenario? Having a diversified portfolio. By screening for quality and valuation, we are employing our best abilities to partner with a business that meet these criteria, with the information that is available today. When we buy a stock, we're buying a piece of a business and their earnings potential. Only time will tell if that earnings growth will materialize the way we expect. That's why I like to look at the past and present, since past tells me a lot about the quality of the company, their ability to react and adapt to other challenging times, their ability to keep or grow dividends, how long it took for them to grow earnings and cash flow, etc. It tells me nothing for how they will do in the future, it just tells me how resilient they were in the past, and to me, that's good information on how competent management has been. The present tells me valuation, by comparing the intrinsic value of the business, based on their most recent earnings and what they are estimated to make this year, versus the multiple ratio that company is trading at - and if that multiple is aligned with how the business is growing and how the market typically price that business or its peers. Lastly, the future is about forecasting. It's not a pure guess, as we can use corporate guidance and institutional firms covering these companies to help to determine where the company is headed, and plot different scenarios to evaluate potential total return. On my case, my primary goal is income and growth of that income, so I don't care much about total return, I care mostly on the company cash flow and their ability to generate and grow that cash flow - cash flow and dividends are way more predictable than stock price.

So although we might say that we're comfortable holding a company forever, I believe it's paramount to do a sound check every year on how the business is performing, and having well defined rules when to enter and when to exit a partnership. If you are consistent following these rules, and if you have a diversified portfolio to have exposure to many of these quality companies (which were acquired at a decent valuation), you will do very well, because that's the essence of investing and how most successful investors built their wealth. The hard piece is not finding a good business or be lucky to buy during the bottom of a recession. The hard piece is being consistent with the method that you choose to employ and have the discipline to stick with this method no matter what the market does. As long as you don't let greed buy higher than you should and you don't let fear sell lower than you should (as this would typically be emotion driven), I think it's safe to say that we'll see many solid companies to fold during our lifetime, but we'll exit before they actually fold, and by monitoring our portfolio for operating business performance, the gains will outpace the losses.


Rod
Last edited by Jackson75 on Jan 6th, 2019 10:19 pm, edited 1 time in total.
Deal Fanatic
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Sep 8, 2007
6197 posts
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Way Out of GTA
organeer wrote:
Jan 5th, 2019 5:43 pm
Enbridge is a good business because everyone needs heating.
Big 5 banks...market will continue to go on.
McDonalds...there will always people who buy food and coffee there.
Cineplex? People will watch movies, yes. However, despite that, earnings are dropping. How are they going to fix this? No one wants their overpriced popcorn to begin with, are they going to raise prices for that even more? For one movie, Cineplex charges more than what Netflix charges for a subscription. I grew up going to Cineplex but I am having a hard time defending them as a business.
The elephant in the room for Cineplex...is the toxic garbage Hollywood has taken to producing. Either pushing SJW agendas at a level never before seen and then add to it devoid of creativity relying on remakes, old franchises, etc. Cineplex can only do so much with that as source material.
Penalty Box
Dec 27, 2013
7915 posts
3779 upvotes
Toronto
cartfan123 wrote:
Jan 6th, 2019 4:48 pm
The elephant in the room for Cineplex...is the toxic garbage Hollywood has taken to producing. Either pushing SJW agendas at a level never before seen and then add to it devoid of creativity relying on remakes, old franchises, etc. Cineplex can only do so much with that as source material.
yeah pretty much. have not felt the urge to see a movie in theaters in ages. I will just wait for it to be released on netflix.
Newbie
Nov 24, 2017
50 posts
9 upvotes
What are your thoughts on MAXR these days? It's really taken a beating, and is down around $8 /share.
Newbie
Nov 19, 2017
56 posts
39 upvotes
Wondering this myself. With HCG, management responded throughout the price decrease with numbers. MAXR is kind of silent. The only point I have an opinion on is that I don't think a Satellite loss will be the end of the world. I am wondering if their [previously] safe cash flow/payout and debt are still manageable for dividend?

Any other thoughts or insights?
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Sep 8, 2007
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opekoe wrote:
Jan 9th, 2019 2:33 pm
What are your thoughts on MAXR these days? It's really taken a beating, and is down around $8 /share.
Would not own as a dividend stock. There’s not much safety to it right now.

If you did want to own it, it would fit better in a more event driven bucket. As it’s not a name you can buy and just tuck away.
Newbie
Nov 24, 2017
50 posts
9 upvotes
cartfan123 wrote:
Jan 9th, 2019 4:15 pm
Would not own as a dividend stock. There’s not much safety to it right now.

If you did want to own it, it would fit better in a more event driven bucket. As it’s not a name you can buy and just tuck away.
yeah, I already own it. Lost about $8k on it :( I bought it right before the first dive a few months ago. Blah. It's been a crappy year for my investments.
Sr. Member
Jul 14, 2013
502 posts
69 upvotes
Can cineplex SP get any lower? Or even go out of business?

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