As we watch the market rise and fall, sometimes we see a big drop – the perfect opportunity to push some capital into the market and make some dividend growing investments. However, when this happens, many will watch and become lost in the vast amount of opportunities and potential investments. Which one is the best fit? Which one has the greatest expected dividend growth? These exact queries are the reason it’s so incredibly useful to make or follow a stock watch list every month, so when opportunities present themselves in abundance you know where to put your money.
Following are my picks for the month of May; these stocks are in no way recommendations; they are simply the stocks that I watch throughout the month and am hopeful to allocate capital to if given the chance and opportunity.
My stock watch list follows a simple formula; of which the details can be read below. Things I like are coded in green, while things I dislike are coded in red. Companies which add up to 3 or more points (things I like – things I dislike) have their name coded in green, and are generally considered high-quality assets by me.
Things I like are:
- P/E below 10
- Yield above 4.00%
- Payout ratio below 50%
- 5-Year Yield Growth above 10%
- 10-Year Dividend Growth Streak
Things I dislike are:
- P/E above 20
- Payout Ratio above 80%
May’s watch list has seen a lot of change over the prior months. There are now quite a few names which I already own on my list (Fortis Inc., Exchange Income Corp., and TransAlta Renewables Inc.); this is because I’ve allocated capital into starter to mid positions in these companies and would love to invest even more in the companies, if the price were to fall a decent amount from my purchase price. This is unlikely for the time being I believe, which is why the other half of the list are companies which I have no vested interest in yet.
Unfortunately the $CAD has dropped down again quite a bit from it’s most recent high of around $0.80 CAD, so I’m sticking with the Canadian names again this month. I’m still finding new names and opportunities, so I’m satisfied for now; but I know this will eventually run dry. There are only so many dividend growth stocks on the TSX.
Well, this month we have, as usual, 3 attractively valued high-quality assets, being:
- Corus Entertainment
- Exco Technologies
- Magna International
I’ve just recently looked into Corus Entertainment, as the entire time I’ve been hearing about it I paid it no attention, playing it’s downfall to Netflix and other pick-and-play type TV subscribers, but after looking at the facts – it looks like quite the decent company; with an incredibly juicy yield of greater than 9%, with a payout ratio of 65%. Not to mention I love the fact that I’d be investing in my childhood TV channels, like YTV, and Cartoon Network.
Exco Technologies is another auto parts company like Magna International and we can see they both have great dividend growth and payout ratios. Exco has a better track record of increases but Magna is definitely catching up; not to mention it has a lower P/E and a slightly higher yield; though this changes along with the CAD since the dividends are paid in USD. Unfortunately, while these auto parts companies sport high dividend growth, the yields are not very exciting.
If you find comfort in holding a stock watch list through each month, I implore you to subscribe to The Dividend Beginner newsletter, and you will receive my monthly stock watch lists directly in your e-mail inbox at the time of posting.
[mc4wp_form id=”709″]
How do my fellow investors’ watch lists look like? What are you thinking of buying this month? Why?
Your three stocks are some of my favourites as well. Also Corus just completed the purchase of Global Television from Shaw so that should help boost earnings.
Hey Matt,
Shaw will definitely add to earnings for Corus but I’m a little concerned about the debt they had to take on and if it will cause a dividend cut. They allude to maintaining the dividend or having difficulty doing so going forward.
Thanks for the watchlist DB. I’m thinking I might add more to Corus and start a new position in Magna. I’ve been watching Magna the last couple of months and like it as I have no positions in the automobile sector.
Can’t wait to see what you buy. Cheers bud.
Hey Tyler,
I’m super interested in opening a position in Corus but I really have to analyze the dividend. 9% monthly seems way too good to be true. I’ve also been watching Magna for months but it’s been all over the place and the yield isn’t much.
I recently bought Corus Ent. I own Fortis, Exco and Exchange Income. Now, thanks to your post, I’ll take a look at Magna. It would be helpful if you posted your buy price range.
Also, just a comment about your objectives;
” Things I like are:
•P/E below 10
•Yield above 4.00%
•Payout ratio below 50%
•5-Year Yield Growth above 10%
•10-Year Dividend Growth Streak
They are sure compelling, but I think very few companies meet these criteria.
Hi helen,
Looks like we share a passion for a lot of similar names on the TSX. That’s great. Good to see another Corus buyer too, they’re all popping up now. Indeed those are very compelling metrics, and I don’t expect any one company to meet them all. It’s just how I rank my list. Thanks for commenting.
I notice you have Trans Alta Renewables on your list. Northland Power and Pattern Energy are a couple others that pay a good dividend. These Company’s have long range power purchase agreements and one should not have to be concerned about dividend cuts. Both these Co’s have major projects on the go that will enhance their income stream and in turn one could look forward to dividend increases.
Hi Earl,
I also took a look at Northland Power and a lot of other renewables on the TSX, none fit the bill quite like RNW. Thanks for the recommendations though. Good luck investing!