Power of Dividend Growth 2009 edition

[2 yen]

Mr. Grestoni thinks the bank (Royal) could easily boost its dividend by 10% to 20%, perhaps when it reports its full year results. "Their earnings have held up, capital ratios are well north of the minimums and probably well above any new requirements coming."

Haha. That's just laughable. Grestoni is a salesman first and foremost.
Also disagree about the telecoms. I would be very careful about owning any of them in the new competitive environment. I own Telus and am looking to unload it. The whole sector is a great question mark right now.

[zaman]

I could be wrong, but I think the telecoms will find one way or another to increase their earnings...eventually. Even if they can just maintain their current earnings for now, the dividends are substantial. I think that with wireless, a decrease in pricing will be offset by an increase in volume (especially data)

[Taggart]

Still looking at adding to the Telecom sector. Haven't done so yet, but fascinated to see, it must be Canada's most hated sector. This article makes me even more interested.

-------------------------------------------------------
John Heinzl

From Thursday's Globe and Mail Published on Thursday, Oct. 22, 2009

Where to look for good dividends at good value

Bissett's Juliette John picks three sectors

[Bylo Selhi]

Reach for Stock Yield, and You Might Get Bit

With the income from bonds withering away, investors are piling into dividend-paying stocks... Think twice before you join the stampede... don't kid yourself into thinking stock dividends and bond interest are interchangeable. They aren't.

[Taggart]

Reach for Stock Yield, and You Might Get Bit

With the income from bonds withering away, investors are piling into dividend-paying stocks... Think twice before you join the stampede... don't kid yourself into thinking stock dividends and bond interest are interchangeable. They aren't.

I must be reading this wrong or something when Zweig says:

"But the dividend aristocrats fell 21.6% last year. Yes, that beat the 37% loss on the S&P 500 as a whole. And if you had invested $10,000, you would have earned a solid $388 in dividend income. Yet you still finished the year with $2,155 less than you started with."

That didn't ring true even before I checked the one year graph of SPY and SDY.

Nah, it's got to be me that's wrong. Someone, please point out the error of my ways.

[Taggart]

Reach for Stock Yield, and You Might Get Bit

With the income from bonds withering away, investors are piling into dividend-paying stocks... Think twice before you join the stampede... don't kid yourself into thinking stock dividends and bond interest are interchangeable. They aren't.

I must be reading this wrong or something when Zweig says:

"But the dividend aristocrats fell 21.6% last year. Yes, that beat the 37% loss on the S&P 500 as a whole. And if you had invested $10,000, you would have earned a solid $388 in dividend income. Yet you still finished the year with $2,155 less than you started with."

That didn't ring true even before I checked the one year graph of SPY and SDY.

Nah, it's got to be me that's wrong. Someone, please point out the error of my ways.

Found out from another site that Zweig is referring to 2008.

[Taggart]

The nice thing about choosing what dividend growth stocks go on my watch list, is that I don't have to be so stringent about what stays in and what goes out.

-------------------------------------------

Banks are no longer pillars of this select dividend club

Monday, December 14, 2009
JOHN HEINZL

Canada's most exclusive dividend club just got a whole lot smaller.

After a year in which some high-profile companies slashed their dividends and many others failed to increase their payments as they dug in for the recession, the S&P/TSX Canadian Dividend Aristocrats index is losing 15 members - including most of the banks - and gaining just one.

[NormR]

The nice thing about choosing what dividend growth stocks go on my watch list, is that I don't have to be so stringent about what stays in and what goes out.

Isn't that called style drift?

[Taggart]

The nice thing about choosing what dividend growth stocks go on my watch list, is that I don't have to be so stringent about what stays in and what goes out.

Isn't that called style drift?

True enough, but I don't want to be accused of being a "closet" indexer either, even if it is for the Aristocrats.

I've got a lot more patience with holding a stock in the last few years, than I had in the past. An example was holding onto Manitoba Telecom until a few weeks ago. I bought it in 2003, it's last dividend increase was in 2004, and since waiting for a dividend increase never materialized and there had been threats from analysts warning of a dividend cut over this period of time, it was time to let loose. Sometimes having patience works, sometimes not. In this case it didn't.

Anyhow, I think you're just jubilant, because one of your picks from a few years ago, Laurentian, was the only Canadian bank to increase it's dividend in 2009. Unfortunately, I didn't own it.

[BRIAN5000]

The nice thing about choosing what dividend growth stocks go on my watch list, is that I don't have to be so stringent about what stays in and what goes out.

I hold 8 of these and would incur a $21,500.00 capital gain if I sold them off. Then I'd need to rebalance/buy something else to replace the lost dividend. I'd be at it for a long while.

Isn't that called style drift?

Or is it to much tinkering ?

How long is Long term? This says its 25 years.
http://www.kc.frb.org/Publicat/ECONREV/PDF/1q05Shen.pdf

[Norbert Schlenker]

Canada's most exclusive dividend club just got a whole lot smaller.

I think this is pretty funny. Because the "club" is completely formulaic, they dump four of the big six banks [added: and the two big lifecos] on the grounds that the dividends over the past 12 months are no better than the 12 months before and they won't let them back in for another five years.

By which time there's a decent chance that their dividends will be considerably higher than today.

[NormR]

The nice thing about choosing what dividend growth stocks go on my watch list, is that I don't have to be so stringent about what stays in and what goes out.

Isn't that called style drift?

True enough, but I don't want to be accused of being a "closet" indexer either, even if it is for the Aristocrats.

I've got a lot more patience with holding a stock in the last few years, than I had in the past. An example was holding onto Manitoba Telecom until a few weeks ago. I bought it in 2003, it's last dividend increase was in 2004, and since waiting for a dividend increase never materialized and there had been threats from analysts warning of a dividend cut over this period of time, it was time to let loose. Sometimes having patience works, sometimes not. In this case it didn't.

I'm reading Value Investing which is the latest collection of articles / book by James Montier. (Highly recommended, it's perhaps the best value investing book of the year.) He makes the case for long holding periods. (As did David Dreman in his book.)

Anyhow, I think you're just jubilant, because one of your picks from a few years ago, Laurentian, was the only Canadian bank to increase it's dividend in 2009. Unfortunately, I didn't own it.

It's about time too! LB is still a small personal holding but I really should have swapped it for one of the big 6 last spring. But I waffled and failed to double my money.

[NormR]

By which time there's a decent chance that their dividends will be considerably higher than today.

So, you're now bullish on Canadian banks?

[Norbert Schlenker]

To every thing there is a season.

I'm not particularly bullish on any of them. But I own BNS, RY, TD (and MFC and SLF) at considerably lower ACBs, plus bits and bobs of everything through XIC. Maybe they're all dead money.

I was really just commenting on what I see as a lack of wisdom in the "dividend aristocrat" methodology. Does it seem particularly wise to you to dump a stock from a portfolio because its dividend hasn't risen year over year every single year? It strikes me as bizarre.

[Taggart]

I'm reading Value Investing which is the latest collection of articles / book by James Montier. (Highly recommended, it's perhaps the best value investing book of the year.) He makes the case for long holding periods.

Thanks. Gives me an excuse to putter around the business shelves of the book store.

(As did David Dreman in his book.) (

Yes, I recall Dreman mentioning a holding period of "up to" eight years.

Anyhow, I think you're just jubilant, because one of your picks from a few years ago, Laurentian, was the only Canadian bank to increase it's dividend in 2009. Unfortunately, I didn't own it.

It's about time too! LB is still a small personal holding but I really should have swapped it for one of the big 6 last spring. But I waffled and failed to double my money.

So, I'm not the only one who has had a few hiccups in the portfolio. Give me another hundred years, and I may get it right.

[NormR]

I'm reading Value Investing which is the latest collection of articles / book by James Montier. (Highly recommended, it's perhaps the best value investing book of the year.) He makes the case for long holding periods.

Thanks. Gives me an excuse to putter around the business shelves of the book store.

My pleasure, but you'll probably have to head to a business bookstore. I doubt that it's a popular enough title for most stores. (Could be wrong tho!)

(As did David Dreman in his book.) (

Yes, I recall Dreman mentioning a holding period of "up to" eight years.

I think so. Montier seems to like a 5-year period.

So, I'm not the only one who has had a few hiccups in the portfolio. Give me another hundred years, and I may get it right.

Oh, I've probably made more than my fair share of mistakes

[NormR]

To every thing there is a season.

Trader Norbert strikes again! (Sorry, couldn't resist.)

I was really just commenting on what I see as a lack of wisdom in the "dividend aristocrat" methodology. Does it seem particularly wise to you to dump a stock from a portfolio because its dividend hasn't risen year over year every single year? It strikes me as bizarre.

I tend to agree. But then again I'm not a big fan of demanding consistent growth from my stocks. (Call it the Enron effect.) I would think that many dividend growth fans would be fine with growth over the last 12 months and then a record of more growth over the prior 4 years or so (perhaps 9 for the more demanding).

As an aside, anyone spotted a good dividend growth screener for Canadian stocks? I find currency effects (CAD/USD payments) tend to be handled poorly.

[Taggart]

My pleasure, but you'll probably have to head to a business bookstore. I doubt that it's a popular enough title for most stores. (Could be wrong tho!)

Going down to First Canadian Place on Friday with my wife, so will probably head to "Books For Business" on Adelaide.

As an aside, anyone spotted a good dividend growth screener for Canadian stocks? I find currency effects (CAD/USD payments) tend to be handled poorly.

Not a Canadian dividend growth stock screener, but have you looked at Highest Yields in Market Data at the Financial Post. 5 year dividend growth figures and more given.

[Pickles]

The nice thing about choosing what dividend growth stocks go on my watch list, is that I don't have to be so stringent about what stays in and what goes out.

-------------------------------------------

Banks are no longer pillars of this select dividend club

Monday, December 14, 2009
JOHN HEINZL

Canada's most exclusive dividend club just got a whole lot smaller.

After a year in which some high-profile companies slashed their dividends and many others failed to increase their payments as they dug in for the recession, the S&P/TSX Canadian Dividend Aristocrats index is losing 15 members - including most of the banks - and gaining just one.

If I had owned an ETF/MF based on this index, what would the effect of the rebalancing be? Would I be facing some unwanted taxable gains due to the dropping of the banks/insurance "giants"?

[Taggart]

Globeinvestor

Wednesday, December 16, 2009
JOHN HEINZL

Dividend growth lives - if you know where to look

After years of fat dividend increases, 2009 was a wake-up call for dividend investors.

The big banks failed to usher in any increases. A few companies, including Manulife Financial and Yellow Pages Income Fund, slashed their dividends. Others announced token increases of a penny or two. Big whoop.

So, is it time to give up on the dividend growth game and move on to something less stressful, like GICs or government bonds, perhaps?

Heck no, says dividend guru Tom Connolly. Buying stocks that raise their dividends is still a sound approach, particularly for investors who need income. Folks just need to lower their expectations a little, said the author of the Connolly Report newsletter.

[Taggart]

Larry MacDonald links four dividend growth blogs in step 7, of his Investor Education article in today's G&M.

[Nemo2]

Larry MacDonald links four dividend growth blogs in step 7, of his Investor Education article in today's G&M.

One being Brad's site.

[Sensei]

It's nearing the end of the year, and I usually take this quiet time to reflect on what I'm doing as an investor.

One of the things that I find troubling is rebalancing. I think I asked a question about this a year ago. For example, one idea is that you should not hold more than 5% of any one stock. Yet, if you have no intention to sell a stock, and your only interest is in collecting rising and sustainable dividends, what is the rationale for rebalancing based on the stock price? It means you have to sell stock to rebalance, right? If the dividend is adequate, why should I do this? Also, should sector allocation be based on stock price? I keep thinking there should be a different way to do it, such as rebalancing with reference to the amount of dividends you draw from each stock or sector.

??????

Any thoughts?

[DenisD]

I keep thinking there should be a different way to do it, such as rebalancing with reference to the amount of dividends you draw from each stock or sector.

That's what WisdomTree does with some of its ETFs.
http://www.wisdomtree.com

[schmuck]

For example, one idea is that you should not hold more than 5% of any one stock.

Ever notice that these hypothetical limits are always rounded off to 5, 10, etc? and regardless of the volatility of the stock or sector?

I suppose most of us need some comfort level of diversification, but I would'nt panic over straying to 5.1% or even 9% in some widow's and orphan's utility stock that could be considered closer to a cash alternative than some high roller in the latest hot sector. Nor would I worry too much about missing the rebalancing deadline by a week or half a year.

Nothing wrong with discipline, but don't let it nickle and dime you to death.