Investing

Investing Idea - Dividend Growth

  • Last Updated:
  • Jan 14th, 2021 9:18 pm
Deal Addict
Feb 26, 2017
1807 posts
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BigDurian wrote: Which would you add to between CPX and FTS? I already have EMA and CU, but would like to add one more. I saw today in the G&M that EMA was the only stock on the TSX they listed as being in oversold territory this week (RSI of 26).
I think it depends on why your buying it and what you're goals are.

My view is that CPX has a higher potential return but its riskier. Its basically all power generation and has some risk based on electricity pricing. It does have 25% of its revenue from renewables which I don't think they're getting enough credit for. It also has coal which is being converted to NG and is mostly Alberta which is a negative due to the poor growth although they're diversifying. They have one more year they've given guidance to raise the dividend 7% and after it will likely be a bit lower.

FTS is very safe and has something like 93% of its revenues which are fee based transmission and distribution. It looks like it can provide around a 10% return based on the current price and estimates which are based on their capital backlog. I think they have 3 or 4 more years where they given guidance to 7% dividend growth.
Sr. Member
May 23, 2007
846 posts
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Calgary
With FTN re-establishing its dividends is it worthwhile to get in?
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Oct 16, 2008
926 posts
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Toronto
kuznagi wrote: With FTN re-establishing its dividends is it worthwhile to get in?
Curious to find this out myself as I held a sizeable position pre-covid which dropped quite a bit. The news of them extending the period of their fund for another 5 years and and reinstating dividends seem bullish to me. However, these types of instruments are tricky as they often seem to payout more than they can really sustain. Their strategy basically uses a cover call position (Long Financial Stocks, Short Call), to pay out dividends by selling the call options. This strategy only works well when financials do well, but given the recent recovery of the financial sector, I'm curious why the stock price hasn't risen more - perhaps they are too much in the hole from covid?
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Dec 14, 2010
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hellohello wrote: Rod,

Any thoughts on Real Matters (real.to)
Not familiar with them, but it seems to be a growth stock worth researching it. At a glance, it appears fairly valued now considering how earnings and cash flow are estimated to grow in the next 2 years - but it will be largely driven how well they execute this.

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Rod
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Dec 12, 2009
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Pho6 wrote: Curious to find this out myself as I held a sizeable position pre-covid which dropped quite a bit. The news of them extending the period of their fund for another 5 years and and reinstating dividends seem bullish to me. However, these types of instruments are tricky as they often seem to payout more than they can really sustain. Their strategy basically uses a cover call position (Long Financial Stocks, Short Call), to pay out dividends by selling the call options. This strategy only works well when financials do well, but given the recent recovery of the financial sector, I'm curious why the stock price hasn't risen more - perhaps they are too much in the hole from covid?
Out of interest, I took at look at how a mutual fund company holding a handful of Canadian and US banks can pay 15% in dividends annually when the average dividend paid by the holdings is probably 4%. It is lot of ask of banks to provide double digit annual in capital appreciation. They seem to be active in selling shares every year, presumably to fund the ongoing operations (new shareholders pay existing shareholder dividends). Anyway, the company issued 2.6 million class A shares at $9.80 and same number of preferred shares at $10.15 with closing on January 14. Don't expect the share value to be much different than this share offering price for the next little while.

It seems like the company has a 5 year renewable life span which is pretty risky. If the company ceases operation, return of capital would leave the class A shareholders with a pretty big divot. The current book value per share is $5.05. Over the years, it hovers up to as much as $6-7. This might be a reasonable risk if the shares sold at close to book value.
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Feb 26, 2017
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treva84 wrote: @Chance7652 what do you think of IFC?
Looks pretty good from Fastgraphs and I like how its been a good investment over the last 10 years (12% IRR).

I don't own any of the insurance companies but also just took a look at the Life and Health ones (I'm guessing Covid is a concern for them). IAG, SLF and MFC also looked pretty good. IAG and MFC out of those look like the best picks based on historical valuations.
Member
Dec 26, 2019
202 posts
127 upvotes
@rodbarc If you have a couple of minutes, could you help me understand why AQN and CPX didn’t make it to your 2021 Watchlist? What metric(s) ultimately knocked them out?

Thank you in advance
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Sep 21, 2007
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Do any of you guys hold SPY or VOO in your portfolio?
"An essential aspect of creativity is not being afraid to fail." -- Edward Land
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Dec 21, 2010
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Toronto
faken wrote: Do any of you guys hold SPY or VOO in your portfolio?
I have VOO, good ETF with low MER ... I'm wondering if I should dump if TESLA moves down hard.
Newbie
Jul 24, 2017
35 posts
16 upvotes
Hi Rod,

What do you think about Alimentation Couche-Tard (ATD.B) after the last couple days drop?

Thank you

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