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.
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.