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Dividend Growth Index Q1 Results

 

The Dividend Growth Index is a fun project created by Mike over at The Dividend Guy.  The Index is comprised of 8 dividend growth bloggers selecting 3 stocks each, for a total of 24 dividend paying companies in the Index.   I think this is a great initiative.  Not to mention, fun to participate in!

This is my first update since the Index was created back in late September/early October 2011.

My three selections for the Index are:

Abbott (ABT:US).

Bank of Nova Scotia (BNS).

CML Healthcare (CLC).

Before I go any further, I must say these selections are not recommendations for purchase. Like my blog, this Index is for fun.  I should disclose I own all three companies though.  While I don’t expect these companies to clobber the market in the short-term I do expect these companies to perform well over the next few years.   In fact, even if they don’t perform well in the short-term, that’s OK.  I’m buying these great companies, on the cheap, while prices are low and getting more shares for every dividend paid.

I’ve selected each company for a variety of reasons:

  • I think this small collection of companies balances risk and reward.
  • All these companies have a good, and in some cases, a very long history of paying dividends.
  • I obtain a moderate average dividend yield by owning these companies.

For each company below I have in the Index, I’ll provide you with some recent company news and some key metrics courtesy of TMX.

1. Abbott Laboratories (ABT:US)

Key Metrics as of Jan. 3:

 

Update:

In the healthcare sector, Abbott remains a heavy weight; it is one of the biggest companies in the world, engaged in the discovery, development, manufacture, and sale of a diversified line of health care products. I work in the healthcare industry, these guys are everywhere.

Since my introduction of the Dividend Growth Index, Abbott declared its 352nd consecutive quarterly dividend since 1924.  That’s right, you read that correctly:  352nd dividend.  In the fall, Abbott also announced plans to split off its pharmaceutical business into a separate publicly traded company.  This new company will be run by Richard Gonzalez, the top drugs lieutenant to Abbott Chief Executive Officer Miles White.  While will now head the diversified products business that includes medical devices, diagnostics and nutritional -products.  The new pharmaceutical company is likely to be an attractive acquisition target once established.  I suspect some heavy hitters like Merck (MRK.N) or AstraZeneca (AZN.L) could scoop it up.  This is just a guess, down the line.

2. Bank of Nova Scotia (BNS)

Key Metrics as of Jan. 3:

Update:

Banks’ prime objectives are to make money, lots of it.  If banks make money, as a shareholder, you probably will too.

Last time I wrote about BNS, I said it was trading closer to its 52-week low than high and that was good for me because I was a buyer.  I try to buy my stocks near 52-week lows, if not lower, and never sell them.  For the last few months, thanks to decent BNS prices, I’ve added more BNS stock to my portfolio every month via a full DRIP.  I now have enough BNS shares to run a synthetic DRIP in my brokerage account.  Enough about me and why I own Bank of Nova Scotia; back to the Index.

Scotiabank is one of North America’s premier financial institutions and arguably Canada’s most international bank. International banking and commercial banking operations are in more than 45 countries outside Canada and they employ more than 48,000 employees.  Bank of Nova Scotia has thousands of branches and ABMs in the Caribbean and Central America, Mexico, Latin America and Asia.

Bank of Nova Scotia has paid dividend, since, get this, 1832.

In Early December, Scotiabank achieved record net income of $5,268 million for 2011, meeting or exceeding its four key financial and operational targets.   Net income was up 21% from last year.

“Our straightforward and diversified business model combined with solid execution of our strategy has enabled us to weather what was an increasingly volatile economic environment over the last year,” said Rick Waugh, Scotiabank President and CEO.  “While we are not immune to these forces, Scotiabank continues to be strong, stable and successful, delivering record annual net income and fourth quarter results that were higher than the same period a year ago.”   I would agree Rick.

3. CML HealthCare (CLC)

Key Metrics as of Jan. 3:

Update:

This company may be unfamiliar to some but it’s a player in Canadian healthcare space.   They are a small company, certainly dwarfed in comparison by my other two Dividend Growth Index selections, with a market cap below $1 billion.

2011 was a year of change and volatility for CLC.  Effective January 1, 2011, the company converted from an income trust to a dividend-paying corporation.  Their subsidiaries in the United States in 2011 were a major money-losing venture.  Because of the losses, in May 2011 the company parted ways with their President and Chief Executive Officer and Chief Operating Officer.  In the fall, CLC agreed with the Ontario Ministry of Health and Long Term Care on a new funding agreement for laboratory services.  Finally, to clean-up the mess that began some time ago, CML exited medical imaging operations in the United States by entering into two separate agreements to sell the business to RadNet, Inc. (“RadNet”) and The Johns Hopkins Health System Corporation (“Johns Hopkins”) for a combined total consideration of US$51.5 million.  From a CML Healthcare press release:

“After conducting a thorough review and financial assessment of its U.S. operations, divesting this business was determined to be in the best interests of the Company and its shareholders. CML wishes RadNet and Johns Hopkins well as they continue to offer excellence in patient care to the community in Maryland, Delaware and Rhode Island,” said Patrice Merrin, Chairman of the Board and interim Chief Executive Officer. “CML will build on its businesses in Canada, operating 118 laboratory collection centres and 77 diagnostic imaging centres across Ontario, 19 imaging centres in British Columbia, and nine imaging centres in Alberta,” she continued. “Kent Wentzell, Senior Vice President U.S. Operations will return to CML as Senior Vice President, Imaging Operations.”

In November 2011, CML reported their financial results for the three and nine month periods ended September 30, 2011.  Their revenues increased 3.1% to $93.4 million and cash flow provided by operating activities from continuing operations increased 17.2% to $23.1 million.

Hopefully the drama is over for CLC now that 2011 is over as well.  Time will tell.

How have the holdings in the Dividend Growth Index performed? 

Here is the performance using $1,000 for each stock as a starting/purchase price a few months ago:

 

Blogger Stock New Shares # New Price Live-CAD$ Live-USD$
My Own Advisor ABT US Equity 19.72932352 56.72 $1,131.02 $1,119.05
BNS CN Equity 19.16579992 51.59 $988.76 $978.30
CLC CN Equity 108.4407012 9.71 $1,052.96 $1,041.81
The Dividend Guy Blog INTC US Equity 47.27672314 24.54 $1,172.58 $1,160.17
KO US Equity 14.9050914 70.14 $1,056.63 $1,045.44
NA CN Equity 14.4590418 73.12 $1,057.25 $1,046.05
The Dividend Monk ETE US Equity 29.24446203 40.54 $1,198.26 $1,185.57
NVS US Equity 17.93 58.18 $1,054.33 $1,043.17
WMT US Equity 19.39021108 60.33 $1,182.33 $1,169.81
Dividend Ninja HSE CN Equity 44.62997459 24.87 $1,109.95 $1,098.20
PEP US Equity 16.2900375 66.4 $1,093.23 $1,081.66
SPLS US Equity 75.72477952 14.215 $1,087.95 $1,076.43
Passive Income Earner CNR CN Equity 14.3387766 79.71 $1,142.94 $1,130.84
CNQ CN Equity 32.58354756 39.86 $1,298.78 $1,285.03
AFL US Equity 28.8230738 44.88 $1,307.42 $1,293.58
Wealthy Canadian RY CN Equity 21.04372296 52.82 $1,111.53 $1,099.76
FTS CN Equity 55.72287528 33.18 $1,848.89 $1,829.31
BIN CN Equity 46.65521141 19.8 $923.77 $913.99
Dividend Mantra COP US Equity 15.94545048 74.17 $1,195.33 $1,182.67
PM US Equity 16.19092699 78.59 $1,286.06 $1,272.44
PG US Equity 15.95795612 66.83 $1,077.88 $1,066.47
DividendGrowth Investor CVX US Equity 10.886571 110.37 $1,214.41 $1,201.55
MCD US Equity 11.47530922 98.84 $1,146.36 $1,134.22
EPD US Equity 25.24942992 46.67 $1,191.00 $1,178.39
$28,719.39 $28,415.34

A few comments about the Index performance to date:

  • Index, as a whole, is “up” from last quarter.
  • Index was buoyed by The Wealthy Canadian’s pick of Daylight Energy (DAY).  Shareholders of DAY got a premium for their shares when the company was sold, and so did The Wealthy Canadian in his virtual investment.  He put his windfall from DAY into another stock, Fortis (FTS).
  • Index was promoted by Aflac (AFL:US) returns, this company is way up.

You can read about the other participant picks by clicking on their name below:

The Dividend Monk

Dividend Ninja

Passive Income Earner

Wealthy Canadian

Dividend Mantra

Dividend Growth Investor

Dividend Guy.   Regarding The Dividend Guy, check out this post to get his new FREE eBook about 29 great dividend-paying stocks for 2012!

What do you make of this Index?  

What do you make of my picks/holdings:  ABT:US, BNS and CLC?

Share your thoughts!

Filed in: Dividend Growth Index

10 Responses to "Dividend Growth Index Q1 Results"

  1. CLC sounds very interesting. I didn’t know that the health care industry was so profitable.

    How can I participate in the next quarter?

    • @Steve,

      CLC is a bit risky, but some of my stocks, relatively speaking, are not that risky. Read in: bank stocks, pipelines, KO and JNJ in the U.S. I like the balance of having a smaller companies, more risky companies, and some large very stable blue-chips.

      I think we’ve got our pool of bloggers for this year, but I’ll keep your name in mind when The Dividend Guy is looking for more recruits for potentially year two of the Dividend Growth Index. OK? :)

      Are you thinking of buying CLC? Other stocks?

  2. Solid picks going forward. How much exposure do you think the Canadian banks have to the Eurozone financials that people are so worried about? I think any real threat has already been priced into the stocks right? I mean the American financial system took a real kicking the last few years, and if we had exposure to anything it was that system. BNS and the others seem to be doing well despite this. Lets hope dividend raises from those banks kick in for you guys in 2012.

    • I think the CDN banks have some exposure, but little I would think but then again, I really don’t know the details. Their financials are a bit of a black box for small-time investors like me.

      I would think almost everything is “priced in”. There is little in the market, that is not.

      I hope BMO, CIBC and BNS raise their dividends next year. It’s been some time for BMO, they are due first :)

      Thanks for your comment. I need to visit your blog now!

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