Investing

Investing Idea - Dividend Growth

  • Last Updated:
  • Oct 16th, 2020 5:52 pm
Deal Addict
Feb 26, 2017
1628 posts
1664 upvotes
From the G&M (National Bank shakes up its Dividend All-Stars portfolio). I own 6 of the names and have owned another 3 of the names in the past.

https://www.theglobeandmail.com/investi ... portfolio/
National Bank released an update to its 2020 Dividend All-Stars portfolio on Wednesday.

The firm initially published its recommended list of high-yield securities to own in 2020 on Feb. 10. Since then, the portfolio has underperformed the S&P/TSX Composite Index.

The Dividend All-Stars portfolio has delivered a total return, including yield, of negative 26 per cent compared to a total return of negative 4 per cent reported by the S&P/TSX Composite Index.

This underperformance resulted from a significant exposure to the real estate sector (representing 26 per cent of the companies) as well as the energy sector and a low exposure to the technology and materials (gold and silver) sectors. Many of these companies do not pay a dividend or have low dividend yields.

Since the initial report was published, seven securities have been removed from the portfolio while five securities have been added.

The following have been removed: Chorus Aviation Inc. (CHR-T), Enerflex Ltd. (EFX-T), H&R REIT (HR-UN-T), Pason Systems Inc. (PSI-T), Secure Energy Services Inc. (SES-T), Sienna Senior Living Inc. (SIA-T), and SmartCentres REIT (SRU-UN-T).

Chorus Aviation was removed from the portfolio after the dividend was suspended. Enerflex was deleted from the portfolio after the dividend was slashed by 83 per cent. Similarly, H&R REIT, Pason Systems, and Secure Energy Services all cut their dividends and as a result were removed from the All-Stars portfolio. Finally, Sienna Senior Living and SmartCentres REIT were subtracted from the portfolio given the negative impacts from COVID-19.

Conversely, these equities were added to the group:

* Alaris Royalty Corp. (AD-T): According to analyst Zachary Evershed, “Alaris targets an IRR [internal rate of return] of approximately 22 per cent through a combination of initial yield, yield growth, exit premium, and more recently, common equity participation.”

The company offers investors an attractive yield, currently at 9 per cent, and has a conservative payout ratio of between 65 per cent and 75 per cent. Mr. Evershed anticipates the stock will deliver a potential total return of 28 per cent with his target price set at $15 target price.


* Brookfield Infrastructure Partners L.P. (BIP-UN-T): Analyst Rupert Merer He highlighted BIP’s defensive attributes and distribution growth, noting: “About 95 per cent of its cash flows are regulated or contracted, with approximately 75 per cent indexed to inflation and roughly 65 per cent carrying no volume risk.” He adds that, “BIP has grown distributions at a CAGR [compound annual growth rate] of 11 per cent since 2009 and targets 5 to 9 per cent organic growth per year”. The current yield is 4.4 per cent.

Mr. Merer has a target price of US$52.

* Choice Properties Real Estate Investment Trust (CHP-UN-T): Toronto-based Choice Properties has a portfolio of over 700 properties with Loblaw Companies Limited being its primary tenant.

Analyst Tal Woolley said: “CHP has one of the most defensive portfolios in retail, deriving 56 per cent of its rent from Loblaw, and with over 75 per cent of its retail portfolio leased to necessity based tenants. CHP’s leases with Loblaw have a weighted average term to maturity of approximately eight years with very limited maturities until 2023. The REIT also has a strong financial sponsor with George Weston Limited holding a 63 per cent interest in the REIT.”

Mr. Woolley has a target price of $13. The current yield is 5.8 per cent and the AFFO payout ratio is 89 per cent based on the analyst’s 2020 forecast.

* Crombie Real Estate Investment Trust (CRR-UN-T): Mr. Woolley also recommended this defensive high-yielding REIT for the All-Stars portfolio. He highlights CRR as having a “defensive portfolio structure [that] provides stable cash flows.”

He noted: “CRR has one of the longest weighted average terms to maturity on leases in the Canadian public retail REIT universe at 9.9 years. CRR generates 75 per cent of its annual minimum rents from grocery and pharmacy anchored properties”.

Grocery chain Sobeys is the REIT’s largest tenant. The analyst has a target price of $14.50 and the current yield is 6.8 per cent.

* TransAlta Renewables Inc. (RNW-T). Mr. Merer has a $17.50 target price on this renewable independent power producer with wind farms, hydro facilities, a natural gas plant, and solar assets.

He remarked on a potential catalyst: “With interest from a few activist shareholders, parent company, TA [TransAlta Corp.], could see change. RNW could be helped by being spun out as this could support increased growth at higher returns, higher leverage and generation of new tax shields.”

Here are the 21 stocks in National Bank’s updated All-Stars portfolio.

Alaris Royalty Corp. (AD-T). Mr. Evershed has a target of $15. The current yield is 9 per cent.
AltaGas Ltd. (ALA-T). Analyst Patrick Kenny has a target of $20. The current yield is 5.4 per cent.
BCE Inc. (BCE-T). Analyst Adam Shine has a target of $64 on this telecom stock. The current yield is 5.8 per cent.
Brookfield Infrastructure Partners LP (BIP-UN-T). Mr. Merer has a target of US$52. The current yield is 4.4 per cent.
BSR Real Estate Investment Trust (HOM-UN-T). Analyst Matt Kornack has a target of US$12. The current yield is 4.8 per cent.
Capital Power Corp. (CPX-T). Analyst Patrick Kenny has a target of $38. The current yield is 7 per cent.
Choice Properties Real Estate Investment Trust (CHP-UN-T). Mr. Woolley has a target price of $13. The current yield is 5.8 per cent.
Crombie Real Estate Investment Trust (CRR-UN-T). Mr. Woolley has a target of $14.50. The current yield is 6.8 per cent.
CT Real Estate Investment Trust (CRT-UN-T). Mr. Woolley has a target of $15.50. The current yield is 5.8 per cent.
Enbridge Inc. (ENB-T). Mr. Kenny has a target of $56. The current yield is 7.5 per cent.
Exchange Income Corp. (EIF-T). Cameron Doerksen has a target price of $36. The current yield is 7.2 per cent.
Genworth MI Canada Inc. (MIC). Cameron Doerksen has a target of $36. The current yield is 7.2 per cent.
Intertape Polymer Group Inc. (ITP-T). Mr. Evershed has a target of $17.50. The current yield is 4.9 per cent.
Keyera Corp. (KEY-T). Mr. Kenny has a target of $16. The current yield is 7.7 per cent.
KP Tissue Inc. (KPT-T). Mr. Evershed has a target of $16. The current yield is 6.2 per cent.
NFI Group Inc. (NFI-T). Mr. Doerksen anticipates the share price may rally to $22. The current yield is 5.2 per cent.
Pembina Pipeline Corp. (PPL-T). Mr.Patrick Kenny has a target of $39. The current yield is 7.1 per cent.
Royal Bank of Canada (RY-T). Analyst Gabriel Dechaine has a $106 target. The current yield is 4.4 per cent.
TransAlta Renewables (RNW-T). Mr. Merer has a $17.50 target on this renewable independent power producer. The current yield is 6 per cent.
Transcontinental Inc. (TCL-A-T). Analyst Adam Shine has a $18 target. The current yield is 5.7 per cent.
WPT Industrial REIT (WIR-U-T). Mr. Kornack has a target of US$15.25. The current yield is 5.9 per cent.
Deal Addict
Feb 26, 2017
1628 posts
1664 upvotes
treva84 wrote: @Chance7652 can you please copy / paste this one too? TIA

https://www.theglobeandmail.com/investi ... -safe-gic/
Here you go.
Dividend-rich renewable energy stocks: Good under Trump, better under Biden?
Renewable energy stocks have performed superbly under the tenure of coal-loving U.S. President Donald Trump, David Berman writes. Now, some observers believe that if Joe Biden is elected, his administration will give the green sector – including a number of Canadian stocks – its next big push. Already, he has issued a climate plan, establishing bold targets for creating a green U.S. energy grid by 2035 and spending US$2-trillion on renewable energy infrastructure and clean-energy research and development over four years.

*
Last edited by MrDisco on Aug 24th, 2020 9:38 pm, edited 1 time in total.
Reason: please don't copy/paste
Newbie
Dec 16, 2018
34 posts
17 upvotes
Hi everyone/ @rodbarc ,
Looking to open new position in SPG and WBA.

Do you consider them worth buying at their current prices or more like HOLD due to uncertain?
Can you provide Fast Graphs for SPG and WBA.

Or do you suggest CVS over WBA? (Added this line)

TIA.
Deal Guru
Jan 27, 2006
14547 posts
7444 upvotes
Vancouver, BC
applexs wrote: Hi everyone/ @rodbarc ,
Looking to open new position in SPG and WBA.

Do you consider them worth buying at their current prices or more like HOLD due to uncertain?
Can you provide Fast Graphs for SPG and WBA.

Or do you suggest CVS over WBA? (Added this line)

TIA.
My suggestion is CVS over WBA as CVS is more vertically integrated in the healthcare system. As they pay down their debt from the recent purchase, CVS should see their bottom line improve even if their underlying business is flat.
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Sep 30, 2001
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guys please don't copy/paste entire articles. as per the forum rules:

"Do not copy and paste entire articles from outside websites (2-3 paragraphs max and include a link to the source"

to read most (all?) newspapers use the online public library in your city (here's the TPL: https://www.torontopubliclibrary.ca/pressreader-help/)
FS: Xbox One X (NEW)

We're all in this together. Be kind and civil with one another
Deal Addict
Nov 9, 2013
3909 posts
3595 upvotes
Edmonton, AB
MrDisco wrote: guys please don't copy/paste entire articles. as per the forum rules:

"Do not copy and paste entire articles from outside websites (2-3 paragraphs max and include a link to the source"
Noted - I'll stop asking posters to get themselves in trouble Face With Stuck-out Tongue And Tightly-closed Eyes
Keep calm and go long
Jr. Member
Dec 26, 2019
147 posts
82 upvotes
@rodbarc
Hi Rod,
Just wondering if you plan to update your DGI watchlist in your Boost Your Income website in the near future. This is a resource that I use to verify many of my decisions before making a purchase.

Thanks,
[OP]
Deal Fanatic
User avatar
Dec 14, 2010
6081 posts
6956 upvotes
reversi wrote: @rodbarc
Hi Rod,
Just wondering if you plan to update your DGI watchlist in your Boost Your Income website in the near future. This is a resource that I use to verify many of my decisions before making a purchase.

Thanks,
I typically do at the beginning of every year, but will do it sooner because I already made some decisions on new names that I added to my list and some companies that I no longer partner with.

Been very busy with some other projects, but will post something soon.


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.
Jr. Member
Dec 26, 2019
147 posts
82 upvotes
rodbarc wrote: I typically do at the beginning of every year, but will do it sooner because I already made some decisions on new names that I added to my list and some companies that I no longer partner with.

Been very busy with some other projects, but will post something soon.


Rod
Thanks Rod. Much appreciated!
Sr. Member
Oct 31, 2009
564 posts
100 upvotes
Hi Rod,

I know that you hold PPL and KEY on your portfolio. I also hold a small portion on these energy companies in my non-registered accounts. I also knew that they are at a discount right now and are attractive due to their high dividend yield but their pay out ratio of 139% and 144% respectively concerned me hence have not added more. Is it the right time to add more or hold?
Deal Addict
Feb 26, 2017
1628 posts
1664 upvotes
CU is starting to look pretty good to me with a 5.4% dividend. I've not done very well with the stock but a yield that high for a Utility with a A- credit rating a 50 year dividend streak looks mispriced.

Just for discussion, another utility name that looks pretty interesting in Fastgraphs is NYS:UGI.
Deal Addict
Nov 9, 2013
3909 posts
3595 upvotes
Edmonton, AB
Chance7652 wrote: CU is starting to look pretty good to me with a 5.4% dividend. I've not done very well with the stock but a yield that high for a Utility with a A- credit rating a 50 year dividend streak looks mispriced.

Just for discussion, another utility name that looks pretty interesting in Fastgraphs is NYS:UGI.
I'm a long term CU holder and I'm not sure what to think about it at present. On the one hand, they have a long track record of increasing dividends, although as of late that appears to be slowing. On the other hand, they are currently pivoting their business and have offloaded many old coal burning assets. It seems they are trying to pivot to a "consultation / utility servicing" type business model that is a little bit more asset light. I've done some digging but I actually can't find any concrete investor communication on this. It makes me question what their future is.

Given Atco is the majority (controlling) shareholder (which, as I'm sure you know, is also run by the Southern family), I think they are less transparent to shareholders.

I don't think I'm going to sell, but I am hesitant to add, at least at this point.
Keep calm and go long
Deal Addict
Feb 26, 2017
1628 posts
1664 upvotes
treva84 wrote: I'm a long term CU holder and I'm not sure what to think about it at present. On the one hand, they have a long track record of increasing dividends, although as of late that appears to be slowing. On the other hand, they are currently pivoting their business and have offloaded many old coal burning assets. It seems they are trying to pivot to a "consultation / utility servicing" type business model that is a little bit more asset light. I've done some digging but I actually can't find any concrete investor communication on this. It makes me question what their future is.

Given Atco is the majority (controlling) shareholder (which, as I'm sure you know, is also run by the Southern family), I think they are less transparent to shareholders.

I don't think I'm going to sell, but I am hesitant to add, at least at this point.
I sold about 1/3 of my cu in July at 34 to buy more aqn. Its about a 17% spread in the stocks since then in favor of aqn. Cu looks undervalued and I was thinking of adding but likely won't . I'm also not sure what they're actually doing right now...
Sr. Member
Oct 31, 2009
564 posts
100 upvotes
Chance7652 wrote: I sold about 1/3 of my cu in July at 34 to buy more aqn. Its about a 17% spread in the stocks since then in favor of aqn. Cu looks undervalued and I was thinking of adding but likely won't . I'm also not sure what they're actually doing right now...
My wife and I hold CU in our TFSA as a long term holder not planning to sell unless fundamentals go sour. We were not reinvesting our dividends from CU instead started positions with AQN too.

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