For a few years now, I’ve been a fan of and investor in Canadian dividend paying stocks. Although dividend investing is not without some risks, I believe (long-term) that holding a diverse basket of Canadian companies that consistently rewards shareholders via dividend payments can be a healthy way to grow your portfolio. Readers of the TSI Network feel the same. The Successful Investor newsletter routinely covers some analysis for Canadian stocks for long-term investment plays.
For today’s post, I thought I would highlight some of the stocks I found in The Successful Investor newsletter, and provide my own commentary on them.
TELUS CORP. $40 price as of December 2015 (Toronto symbol T; Conservative Growth and Income Portfolios, Utilities sector; www.telus.com)
Telus plans to launch several new cloud computing services that will use Microsoft’s cloud software and Internet equipment from Cisco Systems. The company aims to work closely with its clients to develop cloud-based systems that are secure, fast and easily expandable. More businesses are shifting to a cloud platform, as it lets them avoid the high cost of buying new computers and continuously updating software. Over the next five years, companies are forecasted to spend up to eight times more on cloud services than non-cloud technologies. Telus is a buy.
My Own Advisor: I’ve owned Telus for many years and I reinvest all dividends paid every quarter to buy more shares commission-free. Telus tends to raise their dividends every year, and in recent years, they have raised their dividend a couple of times per year. I believe another dividend hike is coming in 2016. Long Telus.
TRANSCANADA CORP. $44 price as of January 2016 (Toronto symbol TRP; Conservative Growth and Income Portfolios, Utilities sector; www.transcanada.com)
TransCanada has several smaller projects to focus on after the U.S. government’s rejection of its proposed Keystone XL pipeline. Their biggest project is Energy East, which would ship oil from Alberta to refineries in Eastern Canada. TransCanada recently modified the route to avoid environmentally sensitive areas, which will increase the project’s cost by 30.8%, to $15.7 billion. If approved, Energy East could start up as soon as 2020. TransCanada is also building other pipelines and upgrading its power plants. It plans to spend $13 billion on these projects by the end of 2018. These investments will allow the company raise its dividend by 8% to 10% each year through 2020, they have already told shareholders this is their plan. TransCanada is a buy.
My Own Advisor: I’ve owned TransCanada for many years and I reinvest all dividends paid every quarter to buy more shares commission-free. Even without Keystone XL, given TRP’s commitment to dividends, I believe another dividend hike is coming in 2016. Long TransCanada.
ANDREW PELLER LTD. $20 price as of January 2016 (Toronto symbol ADW.A; Income Portfolio, Consumer sector; www.andrewpeller.com)
Andrew Peller Ltd. is Canada’s second-largest wine producer, after Constellation Brands. In the second quarter of its 2016 fiscal year, which ended September 30, 2015, the company’s sales rose 2.9%, to $85.2 million from $82.8 million a year earlier. Earnings jumped 41.7%, to $0.51 a share from $0.36. Andrew Peller is a buy.
My Own Advisor: I do not own this company (yet) and I would need to do more research to see if this stock meets my long-term investing objectives.
FORTIS INC. $36 price as of December 2015 (Toronto symbol FTS; Conservative Growth and Income Portfolios, Utilities sector; www.fortisinc.com)
Fortis has agreed to buy Chevron Corp.’s 93.8% stake in the Aitken Creek underground gas storage facility in northeastern B.C.; BP Canada owns the remaining 6.2%. Fortis will pay $266 million U.S. when it completes the purchase in early 2016. To put that in context, the company earned $145 million (Canadian), or $0.52 a share, in the third quarter of 2015. Fortis currently leases one-third of Aitken Creek’s capacity, so the purchase should lower its costs. Fortis is a buy.
My Own Advisor: I’ve owned Fortis for many years and I reinvest all dividends paid every quarter to buy more shares commission-free. I believe Fortis can and will continue to deliver the energy we use every day, as such, it is a staple in my portfolio. Fortis has an excellent history of growing its dividend, one of the best Canadian dividend growers there is. Long Fortis.
BANK OF MONTREAL. $79.70 price as of December 2015 (Toronto symbol BMO; Conservative Growth and Income Portfolios, Financial sector; www.bmo.com)
For BMO fiscal 2015 fourth quarter, which ended October 31, 2015, the bank’s revenue rose 7.4%, to $5.0 billion from $4.6 billion a year earlier. Overall earnings improved 13.8%, to $1.3 billion from $1.1 billion, while earnings per share gained 16.6%, to $1.90 from $1.63, on fewer shares outstanding. These figures exclude unusual items, such as costs to integrate recent acquisitions. On that basis, the latest earnings easily beat the consensus forecast of $1.74 a share. Earnings from Canadian retail banking (45% of the total) rose 6.5% as low interest rates spurred loan demand and credit card spending. Higher fee income also contributed to the gain. The U.S. retail banking division (13%) reported a 3.1% profit increase, mainly because it set aside less money to cover potential bad loans.
The bank’s overall loan-loss provisions fell 24.7%, to $128 million from $170 million a year earlier. It set aside less money for potential bad loans at its Canadian retail banking division and sold some of its bad corporate loans. The strong results prompted the bank to raise its quarterly dividend by 2.4%, to $0.84 a share from $0.82 in late-2015; dividend payable this month.
My Own Advisor: I’ve owned BMO and other Canadian banks for years and I reinvest all dividends paid from Canadian banks every quarter to buy more shares commission-free. I believe BMO, along with other big Canadian banks, will survive and then thrive after this current market downturn is over. BMO has been paying dividends since the 1800s. My bet is they will continue to do for the foreseeable future. Long BMO.
If you want more research like this, consider this special offer to My Own Advisor readers courtesy of the TSI Network.
Readers who subscribe to The Successful Investor newsletter will benefit from the following:
- Investing advice and updated reports on up to 20 stocks that TSI has identified as having the greatest potential to reward investors with capital gains and dividends—in every monthly issue.
- Suggestions regarding when to buy, hold or even sell stocks – based on three portfolio risk profiles – Conservative Growth, Aggressive Growth and Income-Seeking Investors.
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Thanks for reading.
Disclaimer: My Own Advisor owns some of these companies above but these are not recommendations by My Own Advisor for purchase. I am responsible for all my investing decisions, so are you. This article represents my opinion only. I am not a financial advisor. I encourage you to consult with a financial professional, such as fee-only-planner, before you make any major investment decisions. Refer to my disclaimer & privacy page for more details.