fbpx

The Dividend Guy Blog

One Guy's Journey to Freedom Through Passive Income

Main navigation

Canadian Dividend Stocks

5 Canadian Consumer Stocks Rewarding their Shareholders

· · Leave a Comment

Five years ago, I created Dividend Stocks Rock. The idea was to build the most comprehensive and effective dividend investing platform. Throughout the past five years, our portfolios have done very well (see for yourself). A key part of this success is attributed to asset allocation.

For our Canadian portfolios, we went against the current and diminished our energy position to a minimum. To this date, I’m still not a fan of energy dividend stocks. I keep a very small amount of companies on my watch list.

On the opposite, I’m a big fan of both consumer defensive and consumer cyclical stocks. The first sector adds stability to your portfolio and provides investors with steady dividend growth. The latter is all about growing through healthy economies. A mix of both was definitely a winning strategy for the past five years. Here are five of my favorite consumer (defensive or cyclical) companies on the Canadian market.

Metro (MRU.TO)

Metro operates over 600 grocery stores under banners such as Metro, Super C and Food Basics. It is mainly active in Quebec and Ontario. Metro also has a pharmaceutical sector operating 250 drugstores under banners such as Brunet, Clini Plus, and Pharmacy & Drugs basics. Finally, Metro operates a pharmaceutical distributor named McMahon, which has about 200 affiliated pharmacists. Metro completed the acquisition of Jean Coutu in May of 2018.

Metro has put a strong emphasis on its private-label brands which sell for 20% less than original products. In a world where price is the first consumer driving decision factor, this is a key advantage. We like the recent acquisition of Jean Coutu as we believe it will give additional stability in Metro’s business model. Plus, the company has the possibility of unlocking values to shareholders by spinning-off its real estate business. Metro is well established in two provinces with strong economies; Quebec and Ontario. Metro is also pushing its online services to gain additional customers.

Magna International (MG.TO / MGA)

Magna International is more than an international automobile part supplier; it also designs, develops, manufactures, assembles and engineers automobile parts. Magna sells to OEMs (original equipment manufacturers) across 26 countries. It offers a wide variety of 86 products that go from seating to roofing systems.

Source: MG Q3 2018 investors presentation

MG is a leader in the auto parts industry and this serves it well as many manufacturers tend to concentrate their processes with fewer suppliers, offering wider product ranges. This is exactly where Magna stands in the market. While MG relies on Detroit automakers for about 50% of its sales, the overall automobile business is looking brighter. Magna has done several partnerships with European manufacturers. Finally, there is a high switching cost for automakers to change manufacturers such as Magna. This makes its niche a highly repetitive and stable market.

Intertape Polymer (ITP.TO)

Intertape Polymer Group manufactures and sells a variety of paper and film-based pressure-sensitive and water-activated tapes, polyethylene and specialized polyolefin films, woven coated fabrics and complementary packaging systems for industrial and retail use.

Source: August ITP investors presentation

With the rise of online shopping, the packaging industry should benefit from this tailwind. ITP expects to reach $1.5 billion in sales by 2022. Intertape is #1 and #2 in its main market in North America and shows international expansion opportunities. Management also expects to grow by acquisition to expand its current line of products, consolidate its activities, and open additional doors in international markets.

Andrew Peller (ADW.A.TO)

Andrew Peller owns wineries in British Columbia, Ontario and Nova Scotia. The company is definitely part of my favorite consumer defensive stocks on the Canadian market. ADW not only produces its own wine, but also markets it along with other products. It owns several brands like Peller Estates, Trius, Hillebrand, Thirty Bench, Sandhill, Copper Moon, Kalona Vineyards Artist Series VQA wines and Red Rooster. Currently it has an estimated 14% share of its total wine market and a 37% share of domestic wines.

Andrew Peller is known to grow its revenues through acquisitions. Since 1995, management invested over $114M to purchase 14 vineyards. The company built a solid relationship with provincial liquor stores, but also maintained company-owned retail stores in Ontario. In late 2017, it acquired 100% of three estate wineries located in British Columbia’s Okanagan Valley. ADW used $79M from its credit facility to complete those acquisitions.

Alimentation Couche-Tard (ATD.B.TO)

Alimentation Couche-Tard is the largest convenience store operator in Canada and 2nd largest in North America. While constantly expanding its presence in the US and Europe, it successfully built a convenience store including daily use products. Many stores are also combined with fuel service stations. ATD operates 12,081 stores (7,863 in North America, 2,708 in Europe and 1,510 internationally). Instead of simply selling chips and beers, ATD focuses on a superior offer including fresh food, private labels and strong product concept offerings.

Source: Alimentation Couche-Tard 2018 investors presentation

An investment in ATD is definitely not for an income producing stock. However, if you are looking at the long-term horizon, your dividend payouts will grow in the double digits for a while and you will enjoy a strong stock price growth. ATD potential is directly linked to its capacity to swallow and integrate more convenience stores. ATD shows a perfect combination of the dividend triangle: revenue, EPS and dividend strong growth.

This list includes many low yielders. How can I build my retirement income with them?

If producing income with your portfolio is your priority, this article probably left you empty handed (besides ITP.TO). Unfortunately, there is a price to pay for quality and the first indication is often a low yield. It has become more complicated to identify safe high yielders. If you are looking for them, you might want to take a look at my latest articles covering 5 stocks with 5%+ yield.

Also, keep in mind that low yielding stocks often offer high growth potential. Take a look at the following graph and you will notice how the four low yield stocks mentioned in this article crushed the TSX in the past five years:

Source: Ycharts

How’s waiting working for you?

Investing when the market is high is not a simple task. You may think you found the right company, but the stock is clearly overvalued. Therefore, you wait until the market offers you an opportunity.

Last year, I didn’t hesitate to invest over $100K in the market. I did it while the market was at an all-time high.

I didn’t blink. I didn’t flinch. Do you know why? Because I know something. A truth. The simple truth of investing: Five years from now, those companies will trade at a higher price.

I’d like to tell you more about my investing methodology by sharing with you my top five stocks to hold for the next five years. Therefore, you won’t have to wonder if they will drop in the next six months – you will lock them in for a long period of time. Join me at my webinar and I’ll share not only five US dividend stocks I like, but five Canadian ones, too!

Click here to register to the webinar (email required)

Disclaimer: We are long all of the above.

Top 5%+ Juicy Canadian Dividend Stocks

· · 2 Comments


Yesterday, I’ve made my list of my favorite 5%+ yielder on the U.S. market.  Finding solid companies paying high yields is a very difficult task. Many investors think they can simply pull out a filter including a 5 year history and some more metrics and they can build their portfolio by picking any stocks in this basket. This sounds a lot like the perfect recipe to suffer from dividend cuts in a few years from now!

Since I started Dividend Stocks Rock 5 years ago, I haven’t suffered a single dividend cut. This is mostly because I follow a strict investment process and follow each company quarterly. The following are examples of companies that meet my retirement rules.

Inter Pipeline (IPL.TO)

Inter Pipeline Ltd. is an energy infrastructure business engaged in the transportation, processing, and storage of energy products across western Canada and Europe. IPL is among the rare companies making our list of the top dividend energy stocks. The company operates four distinct business segments: Oil Sands Transportation, consisting of three pipeline systems; NGL Processing, including both natural gas and off-gas processing facilities; Conventional Oil Pipelines, consisting of 3,900 km of pipeline across three systems; and Bulk Liquid Storage.

Inter Pipeline (IPL.TO)

Source: IPL Q3 2018 fact sheet

IPL stock has been down most of 2018. This is the case with many pipeline companies. However, you can see that it’s a “sector thing” as IPL just closed a record year with double-digit FFO increase for the year. Management increased its dividend significantly and still shows an FFO payout ratio well under control.

Polaris Infrastructure (PIF.TO)

Polaris Infrastructure Inc is a renewable energy company. It is engaged in the operation, acquisition, and development of renewable energy projects in Latin America. In fact, Polaris owns and operates San Jacinto Geothermal power plant in Nicaragua. PIF has a contractual price per MWh (Power Purchase Agreement or PPA) with the government including annual escalator through 2029. Management recently announced the acquisition of Union Energy Group Corp. This transaction will open the door for many hydro electric projects in Peru and will help PIF to diversify its business model.

Polaris Infrastructure (PIF.TO)

Source: PIF October presentation

The investment thesis around Polaris Infrastructure is a risky play that could pay off a lot. While management has proven its ability to increase its revenue and cash flow consistently since 2014, the stock plunged severely in 2018. This all happened because of the violence in Nicaragua. PIF shows a solid contract and great execution providing increasing cash flow and allowing management to pay off debts. Geothermal energy is part of the future for many countries, and it is a reliable & green source of power. Unfortunately, political instability gathers all the attention. If you are willing to take the bet, PIF could definitely make you richer. While there is a problem with the current president, Nicaragua shows the strongest GDP growth in Central America. Now that the company has found another growth vector in Peru. We think PIF will be a solid investment in the Utility sector.

Enbridge (ENB.TO)

Enbridge owns and operate an impressive network of liquid (OIL) and natural gas pipelines. ENB is able to transport energy from coast to coast, from north to south. ENB shows about 96% of its business done through “take-or-pay” contracts. The pipeline is like a toll on a highway; people pay for each use and the company piles-up the cash.

Enbridge (ENB.TO)

Source: ENB Q3 2018 presentation

Companies do not pay a high yield for no reason. ENB raised its debts and number of shares with the merger of Spectra. As pipelines require lots of capital to build and maintain, Enbridge may find itself in a position where cash is missing. After all, management has plenty of projects to fund, a double-digit dividend growth promise to keep and larger debts to repay. There is always a possibility where this scenario turns bad.

Enbridge clients enter into 20-25-year transportation contracts. The company is already well positioned to benefit from the Canadian oil sands (as its Mainline covers 70% of Canada’s pipeline network). Now that is has merged with Spectra, about a third of its business model will come from natural gas transportation. The company has a handful of projects on the table or in development. Among those projects is the Line 3 replacement. The company expects the completion of this project in mid-2019.

Emera (EMA.TO)

Emera is an energy and service company. Emera’s main market is Nova Scotia as it owns Nova Scotia Power, the province’s main electricity provider. Emera owns power plants and distributes natural gas in Canada, the USA and the Caribbean. This utility employs over 7,000 workers and serves more than 2.5 million customers. Tampa Electric (41%), NSPI (14%) and Maritime Link (11%) generate most of EMA’s earnings.

Emera (EMA.TO)

Source: EMA Q3 2018 investors presentation

Emera has been increasing its dividend payment each year for over a decade now. With the purchase of TECO energy, management intends to continue its tradition. The company forecasts a 4-5% dividend growth rate throughout 2020 while targeting a payout ratio of 70-75% (Emera Investors Presentation). At 5%+ dividend yield, this is a keeper for several years.

Emera is a very interesting utility with a solid core business established on both sides of the border. EMA now shows $28 billion in assets and will generate revenues of about $6.3 billion. It is well established in Nova Scotia, Florida and four Caribbean countries. This utility counts on several “green projects” with hydroelectricity and solar plants. This decreases the risk of future regulations affecting its business as the world is slowly moving toward greener energy.

BCE (BCE.TO)

BCE is the largest Canadian telecom by market cap, about twice the size of Telus. It shows the most balanced business model among this small group. BCE has shown a very solid dividend profile for several years and my analysis proves it will continue to rise in the future. All BCE services are based on some sort of monthly subscription generating a consistent base for cash flow.

BCE (BCE.TO)

Source: BCE investors fact sheet

BCE debt level is not be underestimated. BCE is a giant… with a giants debt. This is not a perfect situation as interest rates are now rising. And, as the Canadian Government keeps pushing for more competition in the wireless industry, BCE may see additional competitors adding more pressure on margins in the future.

When you have the opportunity to invest in a strong yielder like BCE, and still hope for a small stock appreciation growth, you must take a hold of it. BCE shows a well-diversified business model and will continue to generate strong cash flow in the future. The company is a real money printing machine. As BCE is part of an oligopoly (Telus, Rogers and BCE controls about 90% of wireless market), there is limited competition and high barriers to entry. Since BCE offers a wide array of products, it can increase revenue generated by each customer.

Final Thought

Most of those companies have been selected in our 100% Canadian retirement portfolio. You can learn more about how we created safe portfolios generating 4-5% yield each year (and growing their dividend!). I’ve recently hosted a free webinar on this topic and you can now watch the free replay here:

Click here to watch the webinar replay

(must enter your email to register).

Disclaimer: We hold IPL, PIF, ENB, EMA and BCE in our portfolios.

 

Featured Image Source: Pixabay

Video of the Week: BCE – The Phone is Ringing, Will You Pick It Up?

· · Leave a Comment


As you might have read about it here, I do live webinars and certainly have fun doing so. I have been surprised by the positive interest attendees had towards many of my stock picks. This is how I came to the idea of sharing here some of my “Video of the Week”, during wich I go through a company recent news or results and explain why I believe it is currently a good or a bad pick for a dividend investor.

Investors looking for a safe consumer defensive stock during tougher market times will be served with Pepsi (PEP), part of the consumer defensive sector. Having 90% of its brands as #1 or #2 in their sector, this Dividend Aristocrat is there to stay. Its recent healthier products are also interesting moves for the future!

Video

If you enjoy the videos format and want more of them, subscribe to my YouTube channel!

Verbatim

00:02 Mike Heroux: Hello fellow investors, this is Mike Heroux from Dividend Stocks Rocks. I hope you’re doing well today. For the stock pick of the week, we are going back on Canadian territories. Once again, I wanna discuss a leader in its market a company that is paying a 5% dividend yield with lots of growth going on over there, but for some reasons, it has been ignored by the stock market and now the stock is down double digits since the beginning of the year. So let’s talk about BCE also known as Bell. Ticker is BCE as well, both trading on the Canadian and on the US market. So even my fellow American investors can pick some shares of BCE which I think it’s probably a better investment than the AT&T or Verizon.

00:54 MH: What is important to understand is about 40% of BCE’s revenue are coming from its wireline business. This includes the phone wireline that is probably dying, cable that is not doing so well, but it also includes its internet services. And as a client of Bell, I can tell you that their internet is very fast and reliable. I think there is a good growth potential over there. And also to mention that client cutting down the cable is a phenomenon, but it’s not that common in Canada. So I think that Bell will be able to benefit from this cash cow for several years, also because 10% of its revenue is coming from BCE media.

01:42 MH: So they’re producing their own content, they have their own channels, they’re involved in sports, so in MLS in hockey with The Toronto Maple Leafs. So they have an interesting growth vector over there as well, so they’ll be able to produce original content and not lose all their cable clients at the same time. But the real growth vector is obviously wireless. That is the other 40% of revenue for Bell. So this is the largest telecom company in Canada. It’s important to understand that wireless industry is dominated by three players in this country. So we’re talking about Bell, TELUS, and Rogers. So together, all three, they control about 90% of the wireless market. So in other words, they are working in oligopoly, they pretty much put their service and their fees at whatever they want.

02:42 MH: It’s a subscription-based model, so each month the money’s coming in, so highly recurring which is very great for a company that’s paying a 5% dividend yield right now. So it’s quite an opportunity for income-seeking investor because you have the opportunity to invest in a company that is quite stable, evolving in a protected area with the wireless, and that is known across Canada. So I think that Bell will continue to increase its dividend, probably around 3% to 4% each year, but that’s enough to keep up with inflation and still earn a good living from this stock. What’s wrong with BCE? I guess the major concern is around its debt level. The company bought Manitoba Telecom a few years ago, MTS, so now they are well involved and well present in this province, but this help to crank up the debt a little bit higher. So obviously, as interest rates are rising, it will be a little more difficult for Bell to do other deals like that as profitable and they will still also have to reimburse that debt.

03:53 MH: I don’t think it’s justified. I don’t think that the value is justified right now. I think that there’s a good potential that BCE, it’s higher than 60 bucks shortly. So if you want a chance to pick a 5% yield, I think here it is. Once again, this cannot be taken as a buy or sell recommendation, it cannot be taken as a financial advice. I am not your broker or your personal advisor, therefore you cannot sue me after watching this video, if you’re ever losing money on BCE. But on the good side of things, you just have to give me a thumbs up if you’re making some. Don’t forget to subscribe to my YouTube channel and if you want more videos like this and more information about the stock market, head over to my blog, thedividendguyblog.com, and sign up for my newsletter over there. So hope that you have enjoyed this video, and we’ll see you next week.

 

Image source: pixabay

Two Canadian Dividend Stocks on Sale

· · 3 Comments

In a nutshell:

  • The latest market drop did not create amazing opportunity because it only dropped five percent.
  • However, there are companies that have decreased to double-digits for a while during this bull market.
  • Here are two of my favorite Canadian stocks that are deeply undervalued.

I am not going to tell you that the market dropped like a rock last week or that there are “stocks on sale” due to the latest drop.  You have already been submerged by those kind of stories already, right?  In fact, I want to talk about companies that have been deeply suffering for a while now.  You may think the TSX is on sale right now, but in fact, it is only down five percent.  Would you rush into the store if Boxing Day could get you five percent off of your next TV?

Source : Ycharts

I am talking about real stocks on sale that are deeply discounted.

For reasons I cannot explain, Canadian stocks, especially dividend ones, are completely ignored right now.  Great companies that I found overvalued, or fairly priced at best, are now on deep discount.  The worst part is that everybody is passing by the shelves and leaving them there.  Halloween is in two weeks and if you sit tight, you will get spooked by stocks falling faster than kids eating candy.  I have a few suggestions for the most courageous.

Cineplex (CGX.TO); a Horror Movie

Cineplex is Canada’s largest movie theatre operator with a huge market share of seventy-eight percent.  Including one hundred sixty-four theatres with one thousand one hundred sixty-seven screens.  With the rise of home theatre, we would have thought that the classic cinema date would become outdated. However, Cineplex was able to improve consumers experience with various combo offers, games, and VIP treatments.

As Cineplex evolved its business model toward more premium services, it enjoys not only a huge market share, but is able to generate interesting margins.  Cineplex is also in line with a successful online streaming platform.  Finally, CGX is gradually building a serious bond with its clients through SCENE loyalty program.  From six hundred thousand members in 2006, SCENE now counts almost eight million members.

Potential Risks

A poor movie line-up, minimum wages going up to fifteen dollars an hour, and difficulties to convince the market its business model will thrive in the future; this is what is happening recently around Cineplex.  Cineplex is highly dependent on what Hollywood puts on screen for our entertainment pleasure.  2017 was a horrible year in term of blockbusters and CGX paid the consequences.  With minimum wages rising everywhere and massive reinvestment needed (in new concepts such as the REC room), margins may also get hurt.

Dividend Growth Perspective

CGX has the advantage of paying a monthly dividend around five percent, which is great for income seeking investors.  On top of that, CGX pays its distribution monthly.  While the market feared a dividend cut, the movie giant offered investors a pay raise of 3.57% a few months ago.

Management remains cautious about its payout and I have reduced our dividend growth perspective accordingly (2% for the next 10 years).  Considering its current yield, I think CGX is a great pick as its distribution will follow inflation.  A strong leadership presence and steady income should be enough to reward shareholders.

What Will Happen Going Forward

I believe that this dominant player in the movie theatre business in Canada will continue to thrive.  For a moment, investors did not believe in my investment thesis and the stock plummeted.  2017 was a terrible year in the movie industry with a lack of blockbusters and poor overall attendance.  However, this summer, CGX reassured the market with EPS up from $0.02 to $0.38 and revenue growth of +12.4% ($409M).

Source: Ycharts

CGX finally posted a great quarter and shares surged back to $30 and up.  Strong revenue growth was supported by higher attendance (+5%), stronger box office per patron (+4.4%) and higher concession revenues per patron (+9.3%).  Free cash flow surged by 142% providing more room for management to support its dividend.  After reading this, one should understand why CGX increased its dividend last month.  New Rec Rooms are also bringing additional diversification and strength to the Cineplex business model.

BCE (BCE.TO): Will it let you hang yourself in there?

BCE is the largest Canadian telecom by market cap and about twice the size of Telus.  It shows the most balanced business model among this small group.  BCE has shown a very solid dividend profile for several years and my analysis proves it will continue to rise in the future.  All BCE services are based on some sort of monthly subscription, generating a consistent base for cash flow.

When you have the possibility to invest in a strong yielder like BCE and still hope for a small stock appreciation growth, you must take a hold of it.  BCE shows a well-diversified business model and will continue to generate strong cash flow in the future.  The company is a real money printing machine.  As BCE is part of an oligopoly (Telus, Rogers and BCE controls about 90% of wireless market), there is limited competition and high barriers to entry.  Since BCE offers a wide array of products, it can increase revenue generated by each customer.

Source: Ycharts

Potential Risks

BCE debt level is not be underestimated.  BCE is a giant with a giant debt.  That giant debt is sometimes compared to a $24.1B tab at the bar.  While BCE debt to equity ratio is lower than its peers (1.18 for BCE vs 1.47 for Telus (T.TO) and 2.17 for Rogers Communications (RCI.B.TO)), the dollar is a lot higher ($14.26B for Telus and $16.19B for Rogers).  This is not a perfect situation as interest rates are now rising.

As the Canadian Government keeps pushing for more competition in the wireless industry, BCE may see additional competitors adding more pressure on margins in the future.  One day or another, a major player will take its chance in the Canadian market and price will fall (good for customers, bad for BCE!). The simple mention of Verizon pushed the stock down a few years ago.

Dividend Growth Perspective

Management maintained a high, but under control, payout ratio over the past 10 years.  BCE’s current payout ratio is at 96%, but its cash payout ratio is at 82%.  Considering BCE is a real money-making machine, those ratios are manageable.

While distribution increased steadily since 2010, the payout ratio did not move much.  BCE should remain cautious, but there is room for dividend growth.  BCE is probably the best compromise for an income seeker.  While its stock is relatively stable, shareholders enjoy a steady yield.  Since payment is secure, BCE falls into the “buy and sleep” stock.

Want More?

If you are looking for high yield stocks, I suggest you read this article to understand how I pick them.  I make sure all of my picks show a safe dividend that will increase in the upcoming years.  A high dividend yield without growth is not interesting for me.  I am also hosting a webinar about my favorite stocks on sale this Thursday.  One would just have to follow-me to get all the information.

Do not get spooked by the market – here is my favorite Dividend Stocks On Sales

On Thursday, October 18th, I will be hosting a free webinar.  I will discuss more of my favorite dividend stocks on sale.  I aimed at companies with a strong dividend profile, but that has been ignored by the market like CGX.TO and BCE.TO.

Register to the webinar here (free)

Topic: Dividend Stocks On Sales

Date: Thursday, October 18th at 1pm EDT

You must register with Webinar Ninja to attend (if you did it in the past, no new registration is required). This is completely free and the webinar is free also. Webinar Ninja is the platform we use to run all our webinars. It works well and provide an optimal experience for everybody.

  • The presentation is about 30 minutes.
  • There will be a Q&A session of about 25-30 minutes.
  • The webinar works on Google Chrome or Safari from a laptop or computer. (not compatible with smartphones or tablets)
  • If you can’t make it on time, there will be a full replay available, but you must register to access it.

Register Here

Our webinar presentations are about 30 minutes long and the rest of the hour is dedicated to your questions.  We can discuss stocks, strategies or any economic events.  I will be happy to help you anyway I can, so prepare your questions.

Disclaimer: We hold CGX.TO, BCE.TO and T.TO in our Dividend Stocks Rock Portfolio

Looking for Zombies in a Red Market

· · 2 Comments

The market is down and then down again and now it seems that everything is  turning red, right? Even on Twitter, people are quick to remind us about the worst Mondays in history:

Source: OddStats

Now that we have this wind of panic on the market, it seems that everything you will buy will turn into a zombie. Once again, media is quickly reminding us many reasons for selling:

  • Trade war with China,
  • Interest rate increasing,
  • High household debt ratio,
  • Ridiculously high household debt ratio (Canadian),
  • Canadian housing market slowing down,
  • NAFTA negotiations going sideways,
  • Oil stocks are high, oil companies must go down (again?),
  • We are at the top of a bullish market (it must go down),
  • That’s a gloomy moment on the stock market, it seems that everybody is about to die, and this will be the apocalypse.

I found 100 survivors!

Honestly, I don’t really mind if my portfolio is up or down. I don’t mind because I have faith in my investing strategy and it has been proven right over the past 6 years.  However, I can understand that many of you are freaking out right now. Nobody wants to pick a lose and see it bleed in your portfolio, I get that.

For this reason, I’ve gone through the market and tried to find companies that are showing momentum. While the market is dropping like a rock, those companies are popping like flowers during spring time (Ugh, we just got more snow this Sunday!).

When I pulled out my screener, I looked for dividend paying companies (1%+) with a dividend growth policy in place (positive 5 years dividend growth) and… double-digit return in 2018 (as of April 6th 2018). I found exactly 100 of them (keep reading, you’ll get the full list!). But I thought of present you my favorite 3 first.

Source: ycharts

03 Andrew Peller (ADW.A.TO)

I’m cheating a bit with this one since Andrew Peller doesn’t pay a 1%+ yield anymore. What’s wrong with Andrew Peller? Nothing besides the fact the stock jumped by 66% over the past 12 months. ADW’s momentum hasn’t been slowed down this year as it is currently up by 17.5% ytd.

The company is Canadian’s largest wine retailer. I’ve discussed ADW a few months ago to my DSR members when I purchased some shares for my pension account (I’m up 52% for the record). I like this company because it is a dominant player in a highly fragmented market. ADW estimates owing 14% share of total volume of the wine market and a 37% share of total volume of the domestic wine market.

Andrew Peller manages several well-known brands and keeps growing through acquisition. Back in October 2017, it purchased 3 BC wineries (Black Hills, Gray Monk & Tinhorn Creek) for $95M. While its dividend yield is low, the company increases it by double-digit on a regular basis. Hurry-up as the next dividend increase of 10% has been announced for June 2018.

02 Canadian Tire (CTC.TO)

Who said that retailers are dead? Surprisingly, in the 100 list of survivors, you will find names like Target (TGT) and Macy’s (M). I honestly think this will not be a sustainable rhythm for them. On the other side, I’m not surprised to find Canadian Tire among the surviving warriors.

CTC has 2 major advantages that help it compete against the “Amazon disruption”. First, the company owns several exclusive brands like Motomaster and Mastercraft. Canadian Tire benefits from a strong bond with Canadians and they are looking for those brands.

Second, Canadian Tire also offers a wide range of large items. It is a little bit harder to ship tires or fishing boats and remain competitive for online stores. Canadian Tires can easily sell their stuff online and arrange pick-up at their stores. The company also owns its real estate that was spun-off to create additional value under the ticker CRT.UN (CT REIT).

01 Gentex (GNTX)

This is one of my favorite “under the radar” companies. Gentex dominates its main market (auto-diming mirrors) with a whooping 92% market share. In other words; nobody does auto-timing mirrors besides Gentex. The beauty in this market is that only 25% of cars offer this feature. This will be a growing market in the upcoming years as car safety is a growing concern.

Going forward, Gentex has developed SMARTBEAM that automatically shifts from high beam to low beam while crossing another vehicle. This technology is used in Europe but hasn’t been promoted in North America yet.

Finally, GNTX is also making auto-diming windows! This is being used for airplanes to increase passengers comfort. This is another way that GNTX will be able to use its patented technology to grow in the future. Management increased its dividend again by another 10% a couple months ago.

Do you want the 100 list? Here it is!

This Friday, I’ll send the full list to all Dividend Guy’s blog newsletter subscribers. If you haven’t subscribed yet, all you need to do is to enter you email here and your will be on the list for Friday’s sending.

I hope you will find a few good stock picks out of those survivor’s!

Disclaimer: I’m long ATD.A.TO, GNTX, CTC.TO

JOIN 8,498+ SERIOUS INVESTORS