Investing

Investing Idea - Dividend Growth

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  • Mar 31st, 2020 6:12 am
[OP]
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Dec 14, 2010
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conexity wrote: Dividend payout is 130% and is increasing. Cash flow is negative... they might cut the dividend if is too high.
From the big canadian oil players only suncor and cnq are ok in my opinion.
Payout is not 130%. Are you looking payout from earnings? That's incorrect given the amount of depreciation that drags EPS lower. You need to look at operating cash flow, specially because dividends come from cash, not earnings. Payout is at 84%. They just announced results. Until 2021, nothing significant is happening and price will continue lower. Once the new plant starts accruing, they will generate more cash flow. IPL will be further tied to commodity prices, which means volatility price wise, but they have enough operating cash flow to sustain and grow the dividends.


Rod
Build a comprehensive portfolio based on Investing and Trading strategies. Check out these threads and join the discussion:

Investing strategy based on dividend growth

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[OP]
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Dec 14, 2010
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strawk888 wrote: Hi Rod,

Love your thread here, thanks for all your time and efforts in helping the community.

Been tracking IPL.TO lately and was hoping you can share your thoughts on this one. Their current dividend yield is quite high (8%+) and I believe they increase every year, too.

The fact that the yield is so high is a bit of red flag for me. Not sure if it's sustainable and if a dividend cut is imminent? Seems likes share price continues to fall.

Thank you.
Waiting to read the earnings call transcript from their last results and diving into their latest presentation. Will post an update soon, but at a glance dividends are sustainable as lots of investment are going on to generate further growth.


Rod
Build a comprehensive portfolio based on Investing and Trading strategies. Check out these threads and join the discussion:

Investing strategy based on dividend growth

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Newbie
Dec 16, 2018
21 posts
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Not related to thread, but would like to get info:

My investment is distributed between 3 accounts..
I google’d and thinking to use Sigfig to track all at one place.!

If you have investments in multiple accounts, Do you use portfolio tracker to track.?

Thanks in advance..
[OP]
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Dec 14, 2010
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applexs wrote: Not related to thread, but would like to get info:

My investment is distributed between 3 accounts..
I google’d and thinking to use Sigfig to track all at one place.!

If you have investments in multiple accounts, Do you use portfolio tracker to track.?

Thanks in advance..
I use Interactive Brokers watchlists to track each trading model and investing account. You can accomplish the same with the investing.com app. Not familiar with the app that you mentioned above. The biggest challenge I see with these apps is that they are poor to track dividend income, growth of that income and adjusted splits.


Rod
Build a comprehensive portfolio based on Investing and Trading strategies. Check out these threads and join the discussion:

Investing strategy based on dividend growth

Trading strategy based on Graham principles.
Deal Guru
Jan 27, 2006
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Vancouver, BC
rodbarc wrote: Payout is not 130%. Are you looking payout from earnings? That's incorrect given the amount of depreciation that drags EPS lower. You need to look at operating cash flow, specially because dividends come from cash, not earnings. Payout is at 84%. They just announced results. Until 2021, nothing significant is happening and price will continue lower. Once the new plant starts accruing, they will generate more cash flow. IPL will be further tied to commodity prices, which means volatility price wise, but they have enough operating cash flow to sustain and grow the dividends.


Rod
Thank Rod for the correction!

Unfortunately, many people, including analysts, use earnings instead of cash flow - some as an 'honest' mistake and others, I'm sure, on purpose, as they might be short on a stock.
Newbie
Jul 24, 2017
32 posts
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rodbarc wrote: Payout is not 130%. Are you looking payout from earnings? That's incorrect given the amount of depreciation that drags EPS lower. You need to look at operating cash flow, specially because dividends come from cash, not earnings. Payout is at 84%. They just announced results. Until 2021, nothing significant is happening and price will continue lower. Once the new plant starts accruing, they will generate more cash flow. IPL will be further tied to commodity prices, which means volatility price wise, but they have enough operating cash flow to sustain and grow the dividends.


Rod
You are right Rod. Appreciate your replay and also what you are doing with this thread for the community.
Still, I am considering that IPL will have issues in the future and price will go down. What if the NG and oil price will stay down for a few years? People are chasing the dividend and sometime will get hurt. I did this in the past to myself.
As now, there are better opportunities and market will still go down.
Newbie
Jul 24, 2017
32 posts
15 upvotes
The things are getting uglier and now is the time to get into the market.
Here are a few orders I have on the list:
RY-under 98, TD-uder 70, BNS-under 68, CM-under 100, BMO under 90, OTEX under 55, CNR around 100, CP around 280...
APPL under 240, Visa under 160, MA under 270, AMD under 38, BRK.B under 200...

S&P 500 will go to 3000-3040 (200MA) and if this level will be passed then 2800 might be the next level. This means another 10% down from existing level.
TSX will follow S&P500.
Deal Addict
Feb 26, 2017
1379 posts
1213 upvotes
conexity wrote: You are right Rod. Appreciate your replay and also what you are doing with this thread for the community.
Still, I am considering that IPL will have issues in the future and price will go down. What if the NG and oil price will stay down for a few years? People are chasing the dividend and sometime will get hurt. I did this in the past to myself.
As now, there are better opportunities and market will still go down.
It should be alright even if oil and NG pices go down. Lower oil prices could hurt their conventional oil pipeline if the producers stop production but the majority of their revenue comes from their oil sands pipeline. Their petrochemicals plant will be using propane as their fuel source and a low price on propane is a good thing for them.

That being said I like other pipeline names more (ENB, PPL, TC). The main negative is I don't see IPL as having a moat and most of their revenue comes from Canada.
Deal Addict
Mar 22, 2010
2541 posts
626 upvotes
conexity wrote: You are right Rod. Appreciate your replay and also what you are doing with this thread for the community.
Still, I am considering that IPL will have issues in the future and price will go down. What if the NG and oil price will stay down for a few years? People are chasing the dividend and sometime will get hurt. I did this in the past to myself.
As now, there are better opportunities and market will still go down.
All in all, this is dividend investing thread not market timing thread. As long as company pays dividend and we contribute set amount of fund into our dividend portfolio, things will hold.
Deal Addict
Aug 17, 2008
3476 posts
2525 upvotes
conexity wrote: The things are getting uglier and now is the time to get into the market.
Here are a few orders I have on the list:
RY-under 98, TD-uder 70, BNS-under 68, CM-under 100, BMO under 90, OTEX under 55, CNR around 100, CP around 280...
APPL under 240, Visa under 160, MA under 270, AMD under 38, BRK.B under 200...
What's your bid?
Deal Addict
Mar 22, 2010
2541 posts
626 upvotes
I have been watching SRT_un for a while now it just hit $12.59 (at this level, div yield is 9%) Rod, would you have any insight on this ticker? I know you have PLZ_un in your portfolio.

Thanks!
Newbie
Oct 20, 2018
27 posts
7 upvotes
rodbarc wrote: Waiting to read the earnings call transcript from their last results and diving into their latest presentation. Will post an update soon, but at a glance dividends are sustainable as lots of investment are going on to generate further growth.


Rod
Thanks Rod. Whenever you have time, no rush. At this rate, it'll be $16.00 in a week lol (it's currently under $19). Looks tempting for sure.
Deal Fanatic
Feb 9, 2009
8347 posts
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Bce yielding 5.4% I’m getting thirsty
Newbie
Feb 20, 2009
79 posts
Toronto
Hi Guys

I had more of a mindset question in planning for retirement and a steady income stream.
Some sectors like financials, energy, utilities, communications have great companies in Canada and pay a handsome dividend.
However, sectors like non-energy minerals (ie NGT, ABX) or retail trade (ie ATD.B, L, MRU) or even transportation (ie AC, CNR, CP) pay little or no dividend at all.
Is it important to diversify into these sectors even though the dividend yield is so low? Could you make some arguments for or against it.
I understand generally that diversification is useful for mitigating risk but is it enough in your opinion to go with as many high dividend yield sectors and ignore the rest or do you argue that exposure to all sectors is more important at the cost of lower yield.

Thanks
[OP]
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Dec 14, 2010
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ritz2 wrote: Hi Guys

I had more of a mindset question in planning for retirement and a steady income stream.
Some sectors like financials, energy, utilities, communications have great companies in Canada and pay a handsome dividend.
However, sectors like non-energy minerals (ie NGT, ABX) or retail trade (ie ATD.B, L, MRU) or even transportation (ie AC, CNR, CP) pay little or no dividend at all.
Is it important to diversify into these sectors even though the dividend yield is so low? Could you make some arguments for or against it.
I understand generally that diversification is useful for mitigating risk but is it enough in your opinion to go with as many high dividend yield sectors and ignore the rest or do you argue that exposure to all sectors is more important at the cost of lower yield.

Thanks
Don't look at the yield. Look at the growth of the income that the business provides. These companies pay a low yield today. They are the biggest drivers of increasing the stream of income beyond inflation. Since the yield is typically low all the time, that means capital appreciation will be there too.


A portfolio with a mix of high yield companies and low yield companies that keep growing dividend at a high rate provides the best combination to a perpetual stream of growing income beyond inflation in any market conditions.


Rod
Last edited by rodbarc on Feb 27th, 2020 11:43 am, edited 1 time in total.
Build a comprehensive portfolio based on Investing and Trading strategies. Check out these threads and join the discussion:

Investing strategy based on dividend growth

Trading strategy based on Graham principles.

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