Dividend stocks to monitor

watch list

It's hard to believe that our last dividend stock purchase was back in September. I have to admit, it's a bit weird not to have purchased anything for the last 3 months. However considering that we have roughly purchased about $45,000 worth of dividend paying stocks so far 2016 (excluding DRIPing and ignoring exchange rate, just counting dollar value here), I think it's totally OK to take a small break.

Now the US election is over and we know who the next president will be (I'm very surprised with the result), the stock market has been somewhat volatile. Mr. Trump has stated some controversial policies during his campaign. Will he go through with them? Unfortunately I don't have a crystal ball to see that. What I know is that the stock market will go up over the long term. Therefore, it is a good idea to purchase during market downturns or during market volatility.

Here are some dividend stocks I am monitoring. They are all Canadian stocks as the current CAD to USD exchange rate is not advantageous for us Canadians to convert our loonies into greenbacks.

 

Fortis Inc (FTS.TO)
As you may know, we already own Fortis in our dividend portfolio. The stock price has come down over the last few months so it might be a good idea to add some more shares. Fortis currently trades at a PE ratio of 21.5, a dividend yield of 4%, and a payout ratio of 86.5%. While both the PE and payout ratios are a bit higher than my liking, Fortis has managed to grow its dividend payout for 42 years with a 5 year dividend growth rate of 9.3%. Within the last year, Fortis grew its dividend by 10.3%.

Fortis is a nice and stable dividend paying stock. It's boring but it works for me. I think it's a stock that we can hold for a very long time (like forever) and treat it as a bond.

 

WestJet (WJA.TO)
We purchased WestJet shares at a higher price than current price level so it might be a good idea to lower our cost basis. WestJet currently trades at a PE ratio of 8.61, a dividend yield rate of 2.59%, and a payout of 22.3%. WestJet has a 6 year dividend growth streak with a 5 year dividend growth rate of 62.1%. Within the last year, WestJet increased its dividend payout by 16.7%.

The airline industry is extremely competitive. NewLeaf, an ultra-low-cost airline just recently started operating. It appears that a couple of ultra-low-cost airlines will show up in the near future. Can traditional airline carriers like WestJet and AirCanada hold off the competition? I think they will be able, hence for monitoring WestJet stock price.

 

Canadian Tire Corporation Ltd(CTC-A.TO)
If you live in Canada, I am sure you have been to a Canadian Tire store or seen one of the odd yet funny Canadian Tire commercials. For those that don't know Canadian Tire, it's a little bit like the Canadian version of Wal-Mart, expect Canadian Tire do not sale food items. Canadian Tire currently trades at a PE ratio of 15.65, a dividend yield of 1.88%, and a payout ratio of 29.5%. While the dividend yield is pretty low, Canadian Tire has managed to grow its dividend payout at 20.1% over the last 5 years.

Given our investment timeline is quite long, we want to have a good mix of high growth and high yield stocks. Canadian Tire would fall under the high growth stock. Who knows, if they continue increasing the dividend in such impressive rate, in 5 years the yield on cost would be pretty high.

 

Metro Inc (MRU.TO)
On first glance, Metro doesn't seem to be an appealing dividend growth stock, given a low dividend yield of 1.34%. But what is enticing for dividend growth investors like me is the consistent dividend growth streak. Metro has a 21 year dividend growth streak with a 10 year dividend growth rate of 13.8%. In the last 3 years, Metro managed to grow its dividends at 18.7%. I believe we will continue seeing such impressive growth rate considering a very low payout ratio of 24.2%.

I like Metro's business because everyone needs to buy grocery somehow. Metro has about 340 supermarkets and 200 discount stores across Canada. While the grocery store segment is ultra-competitive, given Metro's size and long history, I think Metro can continue to grow its profits and dividends.

So these are the dividend stocks that I am monitoring. Dear readers, which stocks are you monitoring? I would love to hear your picks.

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25 Comments

  • Reply
    Matthew
    November 17, 2016 at 7:07 am

    Thanks for the post Tawcan. I am currently looking at Westjet, Brookfield Infrastructure Partners, Power Corp (POW), Algonquin Power & Utilities and Canadian Utilities.

    • Reply
      Tawcan
      November 17, 2016 at 3:48 pm

      Brookfield and Canadian Utilities both look interesting as well. 🙂

  • Reply
    Riada
    November 17, 2016 at 8:00 am

    Hi Tawcan..I'm looking at averaging down on Linamar and Magna..all of this talk regarding Trump threatening to change the ways of NAFTA has made investors jittery with these two excellent stocks IMO. Would love to hear your thoughts on these cyclical holdings.

    • Reply
      Tawcan
      November 17, 2016 at 3:50 pm

      Good call on NAFTA uncertainly. Linamar's dividend yield and growth rate is too low for me to consider. We own Magna, kinda missed the chance to add some when the price was much lower earlier this year. If I were to add more Magna shares, would wait for the price to drop. I'm uncertain whether we'd hold Magna for the super long term though.

  • Reply
    Vivianne
    November 17, 2016 at 10:15 am

    I think you're on the right path buying Canadian stocks while the US dollars is strong. Any companies you buy right now would return big for you once the currency market cools down.

    Cheers!

    • Reply
      Tawcan
      November 17, 2016 at 3:51 pm

      Very true. I will only buy US stocks using dividend received from US stocks that we already own.

  • Reply
    Mr. Tako @ Mr. Tako Escapes
    November 17, 2016 at 3:21 pm

    Sounds like a great list of stocks to watch. Who knows what the next four years is going to bring!

    If NAFTA disappears (as Trump wants), this could cause huge changes in both the U.S. and Canadian economy. Definitely something to think about before investing.

    • Reply
      Tawcan
      November 17, 2016 at 3:51 pm

      There are a lot of uncertainties right now when it comes to NAFTA. For long term stability of both countries, I hope NAFTA will stick around. I guess we'll have to wait and see.

  • Reply
    NRG
    November 17, 2016 at 8:36 pm

    After downsizing this fall I had cash to purchase shares.
    Added this week,
    AQN, SIA, ECI, POW, VNR, RNW, FTS, BCE, ALA, ABT
    This added $3395 to my annual retirement fund.
    Also added CXI to my growth portfolio.
    Sold DH , could not take sell off anymore.

    • Reply
      Tawcan
      November 18, 2016 at 8:45 pm

      Very nice that you picked up these shares.

  • Reply
    renewed investor
    November 18, 2016 at 2:14 am

    I added some fortis when the price when down. While i like fortis for its regulated revenue, i am concern about its big debt with interests rate rising. Also fortis has almost doubled its share base in the past 10 years. This dilutes the dividend per share.

    I have also purchased emera, telus and bce during the recent sell down.

    Renewed investor

    • Reply
      Tawcan
      November 18, 2016 at 8:45 pm

      True about the big debt with interest rate raising. Emera is something I've been looking at as well.

  • Reply
    Dividends Down Under
    November 18, 2016 at 8:22 pm

    Interesting choices Tawcan, not the generic huge ones that's for sure 🙂 It will be interesting to see if you buy any.

    Tristan

    • Reply
      Tawcan
      November 18, 2016 at 8:47 pm

      Haha yeah not the typical household names but some of these are pretty big in Canada though. Will keep monitoring.

  • Reply
    Divnomics
    November 19, 2016 at 8:25 am

    Fortis is also a Dutch bank, so was kind of confused there for a second 😉 As Vivianne stated it's probably a good thing to check out the local companies. We bought Unilever recently after it's price dropped. We're not that into Canadian stocks (only own BNS right now) so it's nice to read about some companies we didn't knew yet.

    p.s. noticed a typo in the title...or was that on purpose?

    • Reply
      Tawcan
      November 20, 2016 at 3:47 pm

      I'd love to buy UL but it's too expensive to convert CAN to US right now.

  • Reply
    Dividend Diplomats
    November 19, 2016 at 5:22 pm

    I'm proceeding with caution here and there are still a lot of details that need to be ironed out that could have major ramifications. The watch list I published today consisted of three large, boring stocks: UL, KMB, and VZ. I focused on big and boring with a long term history because of the belief they have seen, survived, and continued to increase their payouts in either times or prosperity or slowdowns (Right now, that could go either way. Only time will tell).

    Thanks for sharing!

    Bert

    • Reply
      Tawcan
      November 20, 2016 at 3:50 pm

      Hi Bert,

      Proceed with caution is a very good idea right now.

  • Reply
    Dividend Diplomats
    November 20, 2016 at 9:36 am

    Tawcan -

    Interesting companies. I find it so incredible to see these airlines popping u pall over the fricken place?! I thought those barriers to entry were high, but damn, have I been wrong. Even in the U.S. we have 3-4 airlines that are inexpensive (Frontier, Spirt, Xtra Airways, to name a few). I still cannot get past that they can keep starting up!

    Interesting companies you have though, nonetheless, I've never heard of a few of them, so thank you for sharing!

    -Lanny

    • Reply
      Tawcan
      November 20, 2016 at 3:51 pm

      Hi Lanny,

      I thought the barrier to entry is pretty high too but apparently not. It will be interesting to see if these ultra-low-cost airlines can stay for a while or not.

  • Reply
    DivGuy
    November 20, 2016 at 11:18 am

    Good pick with Canadian Tire. I like this company and it flies under many dividend investors radar because if its low yield. In the past couple of years, I've bought many companies with low yield and they are providing amazing results (DIS, AAPL, CNR just to name a few).

    Cheers,

    Mike

    • Reply
      Tawcan
      November 20, 2016 at 3:51 pm

      I think getting some low yield but high growth dividend stocks is the key for long term investing. 🙂

  • Reply
    dividendniche
    November 21, 2016 at 5:56 pm

    Those are some great names on your watch list. I'm with you on the sidelines for now for US and International stocks. I may wind up adding to one of my Canadian bank holdings with my CAD cash. Fortis might also be a good candidate if it can make it through my screen. I almost have enough USD to justify a move there, but holding off for now to see where things go.

    • Reply
      Tawcan
      November 22, 2016 at 11:24 am

      I'm holding off purchases for now. There are a few attractive stocks out there but I'm waiting for a more reasonable entry point.

  • Reply
    Ashley
    November 22, 2016 at 12:41 pm

    I bought FTS last spring, hope to have it for many years but yes, debt and rates are a concern. My most recent purchase was EMA so I'm happy with my utility diversification. Almost have enough to consider another purchase soon so thanx for the suggestions. I may give Canadian Tire another look.

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