At the beginning of each month, I produce a recap of the dividend yield and ex dividend dates of the TSX 60. In addition to this recap, I decided to briefly cover the result of my Best 2013 Dividend Stock Book. This book includes 30 stock analyses (20 US and 10 CDN) for only $2.99. So far, my results are:

20 US Dividend Stocks: +19.67% (beating the index by 6.26%)

10 CDN Dividend Stocks: +6.34% (beating the index by 1.81%)

If you want to read more, just continue past the TSX 60 Dividend Yield & Ex-Dividend Date charts…

TSX 60 Dividend Yield & Ex-Dividend Date

Best 2013 Dividend Stocks Results

At the beginning of the year, I produced a list of Best dividend stocks for 2013 (click on the link to get my metrics and see the list). Out of this exhaustive list, I pulled out 30 stocks to be my “favorite” picks among these lists. They are not stock recommendations and I strongly suggest you do your own analysis and read the financial statements. This book is simply a compilation of my own stock analysis for 30 stocks that are being held in my portfolio or are on my watch list.

I’ve broken down the results per market:

Best 2013 US Dividend Stocks Results

The average portfolio is showing an amazing return of 19.67% that is 6.26% over my benchmark (VIG with 13.41%). Oh! Did I mention that my portfolio also produced 1% more in dividend yield than VIG? .

After such high returns over the first five months of the year, you may ask if there is still room in this list to make more money by the end of the year. I recently bought shares of McDonald’s (MCD) and the stock is only up by 9.48% which is below the benchmark. Since MCD has been trailing this so far this year, I think this is one of the stocks that could benefit from the present stock squeeze situation. Another interesting stock to consider from this list is Kellogg. While most food stocks jumped this year, Kellogg is another company trailing with an YTD performance of +11.09%. I’m pretty sure it can continue to grow in the upcoming months. As an example, Western Union (WU) has jumped by 10% last month after announcing strong revenue guidance for 2014.

If you want to learn more about those companies, you should buy my book for only $2.99:

Best 2013 Canadian Dividend Stocks Results

I continue to offer strong performances on both the US and Canadian stock markets. The Canadian stock list is beating its benchmark by 1.81% (6.34% vs 4.53% for XDV). BTI is now showing a 18.75% YTD return and raised its dividend back in March by 17%. I would expect a better performance of my banking stocks National Bank (NA) and Royal Bank (RY) as they both beat analyst estimates while BMO and BNS were trailing behind.

Readers, which stock is your favorite among my lists?

Yesterday, I took a look at one company chosen to be part of my best 2012 dividend stock; IGM Financial. Today, we are taking a look at its big sister, a stock in my Best 2013 dividend stocks; Power Corporation.

Power Corporation (POW) Business Description:

Power Corporation is a holding company. It owns interests in several other companies such as Investors Group (IGM), Great West (GWO) and London Life (Freedom 55 anyone?). Their primary core of business is investments, financial planning and life insurance. It also owns interests in communications and media through Square Victoria Communication Group.

There aren’t many holding companies in Canada and Power Corporation is most probably the biggest with a market capitalization of $12.33B with participation in several important companies.

POW Stock Graph

POW Dividend Growth Graph

POW’s dividend payouts have been relatively flat for the past 5 years. In fact, the latest dividend increase was made in 2008 when the quarterly dividend went from $0.24 to $0.29 per share.  We can understand that their main business (mutual funds and life insurance) has been severely hit in 2008. A quick look at their earnings per share will show us why the stock hasn’t increased its dividend:

A big part of the insurance companies’ values obviously lies within their assets used to back the insurance policy payouts. For insurance companies; it’s all about actuarial valuation of their insurance payouts vs their premiums and assets under management. The recent interest rate collapse hurt this business as the actuarial calculations all went bust. POW wasn’t spared from this event and this is why you can see how difficult the following years were.

The Company Ratios and Financial Info:

POW Stock Technical Analysis

POW is currently trading on a strong uptrend. It might be a good time to explore this stock. Click here to get a free stock analysis report on POW.

Power Corporation Upcoming opportunities and dangers:

Power Corporation is an important player in the financial services arena in Canada. Notably, Investors Group is the biggest mutual fund company in Canada. It is a well-diversified dividend paying machine. EPS was down during the economic crisis (from 2008 to 2010) but POW show stronger metrics since 2011.

If interest rates continue to stay low (which will probably be the case), the life insurance (Great West, London Life, Canada Life) segment of Power may continue to hurt. As the investment market is shifting towards low cost ETFs, Investors’ mutual funds and its high MERs may also be at risk. However, they are doing a good job at selling financial planning to their clients in exchange for higher MERs on funds.

Now that insurance companies master a little bit better the “new” economic environment, we can bet that their future returns will be better. Private investments, infrastructure along with other alternative investments are taking more space in their asset allocation and this may be the way to avoid volatility and still earn decent interest payments.

Final Thoughts on Power Corporation

If I had to choose between POW and IGM, I would definitely take the first stock. Power shows more diversification and owns a good part of IGM nonetheless. This enables the company to play on both the insurance and mutual fund industries and operate one of the most admired Canadian conglomerates.

The reason why I picked POW in my Best 2013 dividend stock portfolio was based on my expectation of stability both in terms of value and dividend payout. You can’t expect to hit a homerun with each selection and this stock is a good “stabilizer” for me. At over 4% dividend yield, this is definitely a great alternative to bonds!

Disclaimer:  I do not hold shares of POW

I have sent out a couple of emails about investing strategies through my mailing list lately and it has generated some interesting discussion about certain stocks. Two of them were brought to my attention as they are somewhat similar: IGM Financials (Investors Group) and Power Corporation. Since I have covered IGM in my best 2012 dividend stocks and picked Power Corporation for 2013 (download the book here), I thought of sharing more views about both stocks. Here’s my IGM stock analysis.

IGM Financial (IGM) Business Description:

IGM Financials is mostly known for the name Investors Group, the largest mutual fund company in Canada. The company also manages Mackenzie Investments and belongs partly (57%) to Power Corporation (POW). Investors Group provides financial planning services along with mutual funds and insurance services. Through a partnership with National Bank, they also provide regular banking products and loans to their clients.

Investors Group has been particularly strong in Western Canada. This was a happy coincidence for them as the oil industry has propelled Alberta to become the richest Canadian province. IGM has also been known for their aggressive leveraging strategy (borrowing to invest). During the 2000s (before 2008), this strategy gained a lot of adept investors and you can bet that most consultants made a lot of money out of this “new” way of getting funds from their clients.

Their latest quarter results (were published on Feb 8^th) were on target with analysts’ expectations. Unfortunately, they have failed to increase their sales in 2012 compared to 2011 (5.78 billion Vs 6.02 in 2011). I guess that their high MERs funds have started to hit their salesforce.

IGM Stock Graph

IGM Dividend Growth Graph

As you can see, there is a very small dividend growth over the years but nothing too impressive. The current payout ratio (65%) leads me to think that we won’t see a huge dividend increase in the upcoming years. The dividend yield is relatively strong for a financial company (over 4%) which makes it an interesting stock nonetheless.

The Company Ratios and Financial Info:

The company shows a high ROE and Earning per shares growth for the past 5 years. The fact that IGM had it rough in 2012 makes it a good contender to bounce back in 2013. Still, I don’t expect impressive sales from IGM this year.

IGM Stock Technical Analysis

IGM is currently trading on a strong uptrend. It might be a good time to acquire this stock. Click here to get a free stock analysis report on IGM.

IGM Financial Upcoming opportunities and dangers:

IGM is the Canadian leader in mutual funds sales with over $120 billion in total assets under management. They are still showing a very strong position and I would not underestimate their salesforce (which is their strongest asset in my opinion). They have successfully built a fence around their clients by offering all banking products through the National Bank back office (coupled with a non-competing clause). During volatile markets, sound financial advice is needed by investors and IGM will be there to meet clients’ requests. They show a positive 5 years sales growth despite a disastrous year in 2008.

With the coming of low fee investments such as Vanguards’ products, high MER funds such as IG’s and Mackenzie will face fierce competition. Their added value through sound financial planning will be challenged by clients who will require additional reasons to pay over 2% in management fees. New legislation around leveraged loans (a popular strategy at IG) may also affect mutual funds sales.

Final Thoughts on IGM Financial

If you are looking for a good financial stock paying a healthy dividend IGM may be a good pick for a few years. However, when I look at the long term perspective, I really wonder how IGM financials can continue to sell such high MERs fund competing with Vanguard for example.

I think they will have to review their business model and a good financial planner won’t be good enough to keep clients paying over 2.00% in management fees. What do you think?

Disclaimer: I do not hold any shares of IGM

At the beginning of each month, I always publish the TSX60 dividend yield and ex-dividend date. I wanted to add more information to this post so I decided to track my choices of best dividend stocks on a monthly basis as well.

At the beginning of 2013, I picked 30 stocks to be the Best 2013 Dividend Stocks. Last year, I outperformed the XDV by 8% and trailed the VIG by less than 1% (all that because of RadioShack! hahaha). I hope I’ll be able to beat both indexes this year!

TSX 60 Ex-Dividend Date

Best US Dividend Stocks

I’m currently trailing the index by a few bips but I’m not too worried. Since my overall portfolio pays a dividend over 1% more than the VIG, I’m still beating the index for the current month. The fact that I only have 1 stock in the red is also good news!

You can read my complete analysis of these 20 stocks by buying my eBook for $2.99. Click here to proceed.

Best Canadian Dividend Stocks

I’m starting strong with my picks but I better outperform the index in terms of capital growth since XDV is paying a higher dividend than my portfolio! I’m fairly confident that my picks will beat the index this year again!

You can read my complete analysis of these 10 stocks by buying my eBook for $2.99. Click here to proceed.

If you are Canadian, you know that the RRSP season is about to start. To be honest, it has already started for some good financial advisors . Since half of my readers here are Canadians, I thought of publishing some RRSP contribution information along with 5 of the best RRSP investment strategies to boost your retirement savings.

2012 RRSP Contribution Limits

The RRSP contribution limit for the taxable year of 2012 is $22,970. This does not include unused past contributions. In order to know your exact RRSP contribution limit for 2012, you must look at your 2011 Notice of Assessment (the document returned by the CRA once you filed your tax report).

The RRSP date limit is March 1^st 2013. Contributions after that day will count for your 2013 tax report. Therefore, RRSP contributions after March 1^st 2013, will not generate a tax return to be received this year but in 2014.

The RRSP contribution limit for the taxable year of 2013 is $23,820. Some people are ahead of others and make their contribution for the year of 2013 at the beginning of the year. They benefit from an additional year where their investment is tax sheltered but they only receive their tax return based on the RRSP contribution made for the year 2012.

The TFSA contribution limit jumps to $5,500. This has nothing to do with your RRSP contribution, but I think it’s important to know that if you have maxed your RRSP contributions, you can add an additional $5,500 (previously $5,000 for the years 2009 to 2012) to your Tax Free Savings Account.

RRSP Investing Strategy #1 – Keep Your US Stocks Tax Sheltered

There is a tax treaty between Canada and USA establishing that all stocks kept in a registered account will not be subject to withholding taxes. Therefore, the best place to keep your US stocks is definitely in your RRSP. Dividend payouts are not taxed in RRSPs but will be subject to withholding taxes in a TFSA. The withholding tax is set at 30% but you can drop it to 15% by filing the W8-BEN form (click here to download the PDF from IRS).

You can also find more information on tax optimization with Dividend Growth – Freedom Through Passive Income sold at Amazon.

RRSP Investing Strategy #2 – Focus on Long Term Dividend Growth Stocks

The power of compounding interest has never been more powerful than within a RRSP account. If you can invest your RRSP contribution with a long term investment strategy, the dividend payouts will be quite impressive over the long haul.

For example, a stock like KO doubles its dividend every 6.5 years or so. Therefore, if you invest $10,000 in KO in your RRSP today and wait for your retirement in 30 years, your dividend yield on that $10,000 will be around 13%. Dividend growth stocks definitely come handy when it’s time to draw an income from your RRSPs!

if you are looking for stock picking ideas, here’s my list of the Best 2013 Canadian Dividend Stocks.

RRSP Investing Strategy #3 – Do Not Take an RRSP Loan – Invest Periodically Instead

What’s the difference between someone who takes a $30,000 RRSP loan amortized over 5 years to maximize their RRSP contribution and someone who invests $552 (the cost of a RRSP loan payment at 4% for 5 years) per month after 5 years? About a $1,000 in favor of the RRSP loan guy ($38,500 vs $37,539) if we consider an investment return of 5%.

If you factor the tax return in the equation and you invest that money as well, you will get a difference of $1,400 in favor of the RRSP loan guy ($53,901 vs $52,500). So why am I telling you that the RRSP loan is not a good strategy compared to the periodic investment? Because of the following considerations:

#1 You invest all your money in one shot instead of averaging the market over the next 5 years. This could play in your favor or your disadvantage (imagine if you would have put $30,000 on January 2008 vs investing $552 per month from Jan 2008 to Jan 2013…)

#2 If your borrowing cost if higher than 5%, the periodic investment will generate a better return than the RRSP loan.

#3 You are creating a serious habit of saving money with the second option. This habit will be a major advantage for your personal finance in the future.

Note: There are some exceptions where the RRSP loan is a good strategy to max out your RRSP contribution. For example, if you plan on buying a house this year, you may do a loan, pay it back under the HBP plan and use the tax return as cash down.

RRSP Investing Strategy #4 Max Your RRSP Contribution and Go on Vacation!

Budgeting will inevitably become one of the toughest sports for most Canadians as we keep spending money like we own the FED. A Financial advisor once told me during the RRSP campaign that he was competing against Future Shop; his clients were debating if they would invest $5,000 in their RRSPs or buy a brand new Plasma TV with surround sound… quite pathetic.

So here’s my advice; put as much as you can in your RRSP and collect the tax return to do something you like. If you invest $5,000 in your RRSP account, you will receive a nice tax return. It will probably be enough to pay for your next vacation. With this strategy, you finance both your retirement and your vacation at the same time. So you don’t have to wait until you retire to go at the beach!

RRSP Investing Strategy #5 Don’t Chase Dividend Yield, Chase Dividend Growth

have received several emails from my newsletter subscribers asking for stock reviews paying over 5% in dividend yield. If you follow this blog, you already know that I don’t cover such companies. The reason is simple; I’m chasing dividend growth and not dividend yield. The highest dividend yield stocks always hide something. And it’s usually pretty ugly.

Add more metrics to your stock screener and start your online stock research with a strong investing process in hand. By chasing dividend growth, you are chasing companies that will make more profit in the future and reward your patience as an investor. This is the whole point of dividend investing.

If you are looking for a good place to start investing money in dividend stocks, my book Dividend Growth – Freedom Through Passive Income is on sale at Amazon:

For the beginning of the year, I did some research on a lot of stocks and wrote the Best Dividend Stocks for 2013 eBook (you can download it for only $2.99 here). This eBook includes 30 Dividend Growth Stocks (20 US and 10 Canadian) that have been showing very solid dividend metrics.

Last week, I pulled out the Best 2013 US dividend stocks with an impressive list of 96 stocks. This is a lot more than the 20 picks I selected for the best 2013 dividend stocks (30 stock analyses in this book). Unfortunately, the Canadian market is not as deep nor diversified. I have applied the same specific metrics described in Dividend Growth Freedom Through Passive Income. These metrics have been proven to combine both dividend and capital growth for each company. While I pulled 96 US stocks, only 22 made the list from the Canadian market.

Here’s the list of the filters I’ve used to create my list.

Dividend yield over 3%

5 year positive dividend growth

Dividend payout ratio under 75%

Return on equity (ROE) over 10%

5 year positive annual income growth rate

Current price / earnings ratio (PE) under 20

Top 2013 Canadian Stocks

Out of 22 stocks, 45% come from the financial services sector (6 Canadian Banks and 4 Insurance/Investment holding companies). Let’s just say that you can’t really build a complete dividend portfolio by using this list! Choosing Canadian banks seems like a no brainer but while they pay a healthy dividend, the Canadian housing market should remain a concern for 2013. I also found some interesting picks with Andrew Peller and Emera (which I recently covered on The Dividend Guy Blog).

They Are Not Stock Pick Recommendations

I have done a lot of research to produce this list of stocks (and even more to write my book for 2013!) but they cannot be used as stock recommendations alone. I truly believe in creating a proper mix of asset allocation for your own portfolio. The other thing is when I look at my 2012 results, I had 1 stock that didn’t do well out of 9 (IMG). I know that my Canadian portfolio beat the index by more than 6% but still, I’m not a professional and I am not giving stock picking recommendations.

Among the 22 stocks on this list, I’ve picked 10 companies for my Best Dividend Stocks for 2013:

Andrew Peller – ADW.A

Black Diamond Group – BDI

Calian Technologies – CTY

Emera – EMA

Evertz Technologies – ET

National Bank – NA

Rogers Communications –RCI.B

Power Corporation – POW

Royal Bank – RY

Telus – T

I hope to beat the market by 6% again this year ;-D

If You Are Looking For The First Canadian Dividend Book – Here it Is:

Disclaimer: I hold NA & T

Similar to the consumer staple dividend stock analysis series (including CLX, CL,  KMB, PG, JNJ) I published in October, I am starting a new one on Canadian utilities dividend stocks. Canadian utilities can be quite interesting for both Canadian and US investors as they offer great diversification within their power sources. They show great strengths in both oil (pipelines) and electric power plants. Here’s the list of Canadian companies that will be cover before Xmas:

Emera Inc – EMA

Encana Corp – ECA

Fortis – FTS

Transcanada Corp – TRP

Emera (EMA) Business Description:

Emera is an energy and services company holding $7.4 billion in assets and showing revenues of $2.1 billion (2011). Emera’s focus is through electricity generation, transmission & distribution. EMA owns Nova Scotia Power (province’s main electricity provider) along with other electrical utilities in Canada, USA and the Caribbean.

Over the past 5 years, EMA made a major switch in its energy sources. Back in 2011, 57% of its energy came from coal compared to 80% 5 years ago. Let’s hope they continue this way and look for cleaner energy sources. They are notably working on hydro electric power plants along with developing wind energy.

EMA Stock Graph

EMA Dividend Growth Graph

EMA dividend growth has been shy for a few years but, much the opposite of ECA, Emera started to increase its dividend at a relatively good rate since 2007. The huge EPS boost that happened 5 years is certainly linked to dividend payout strategy. More recently (from 2009 to 2011), the EPS growth has been in line with the dividend growth. The company seems comfortable with a payout ratio around 65%. The 5 year dividend growth is 8.65% which could double the dividend payout every 8 years or so.

The Company Ratios and Financial Info:

When I look at the financial info, I have the impression of reading ECA’s report upside down to tell you how Emera is different than Encana even though both company names are similar . The sales numbers are strong and the company is profitable.

EMA Stock Technical Analysis

EMA is currently trading on a strong uptrend. It might be a good opportunity to acquire this stock. Click here to get a free stock analysis report on EMA.

Emera Upcoming opportunities and dangers:

There is a big chunk of EMA revenues coming from Nova Scotia Power which concentrates its income source. In 2012, two large industrial clients in NS closed their operations and therefore cut Nova Scotia Power sales by almost 20%. This loss has wiped-out the positive impact of higher power rates. On a positive note, the sales drop barely affected EMA’s overall results (-0.1% as at June 2012). This is mainly due to a higher cost of energy charged to its other clients.

Emera’s will for diversification is demonstrated by the implication in a 29% participation in the Maritime Link project in Labrador along with an undersea power cable. Both projects currently await regulators approval and, if approved, should start in 2017.

Final Thoughts on Emera

I’m still bugged by the fact that EMA produces 57% of its energy from coal but the new projects are all related to cleaner energy sources which is great news. Out of the four Canadian utilities dividend growth analysis I’ve done, EMA and FTS seems like the best investments. EMA is paying a higher dividend yield but FTS shows highly stable numbers for the past 4-5 years. Emera has gone through an important jump and this is why I would be tempted to look at FTS first… just my two cents!  What do you think? Which one if your favourite?

Disclaimer: I do not hold EMA, ECA, FTS in my portfolio

Similar to the consumer staple dividend stock analysis series  (including CLX, CL,  KMB, PG, JNJ)) I published in October, I am starting a new one on Canadian utilities dividend stocks. Canadian utilities can be quite interesting for both Canadian and US investors as they offer great diversification within their power sources. They show great strengths in both oil (pipelines) and electric power plants. Here’s the list of Canadian companies that will be covered before Xmas:

Emera Inc – EMA

Encana Corp – ECA

Fortis – FTS

Transcanada Corp – TRP

Encana (ECA) Business Description:

Encana is a leader in North America for energy production related to natural gas, oil and NGLs. Its activities are related to the exploration, development and production of energy sources above cited. ECA is operating under four divisions:

• Canadian Division
• US Division
• Market Optimization (responsible for sales)
• Corporate & Others (including gains & losses incurred from derivatives financial instruments)

ECA Stock Graph

ECA Dividend Growth Graph

When I look at this graph, I don’t know if I can call ECA a dividend growth stock. After the “golden years of Canadian oil sands” at the beginning of the 2000s ECA’s dividend growth had been hit by a train. After doubling its dividend back in 2007, ECA cut it back by 50% in 2010 and hasn’t touched it since. With such a ridiculous payout ratio (459%!) you can tell that ECA will either finance its dividend or cut it again in the near future.

The Company Ratios and Financial Info:

Well… what can I say… Sales growth is down the hole while P/E ratio is through the roof and I don’t even want to mention the dividend payout ratio. Needless to say that ECA doesn’t fit my dividend growth ratios.

Encana Upcoming opportunities and dangers:

In my opinion, the most important problem with ECA is its mathematically proven inability to sustain its dividend payout in the upcoming years. This means that either Encana will finance its dividend or either it will have to cut it. Unless… for the most optimistic, Encana shows a huge growth in their sales and profits in the upcoming years.

Since the sales are down for the past 5 years and the margins are under pressure, I’m definitely not optimistic in the case of ECA. I think the company knows it as well since the dividend payout were barely increased over the past 5 years and nothing seems to forecast a significant growth in 2013. ECA is a good example of the difficult transition between the famous oil income trusts to a “real corporation” paying real taxes!

Final Thoughts on Encana

Hum… do I really need to tell you that ECA won’t be part of my portfolio next year? Honestly, the existing dividend yield is not even attractive for me to take the risk of investing in a company with a dividend payout ratio way over 100%. This metric may change overtime but I can already buy better stocks with a higher dividend yield and better growth financial ratios. Just think of the Canadian banks for example .

Disclaimer: I do not hold ECA in my portfolio.