The market didn’t start the way we thought it would in 2014. I was in the camp of optimists believing the rally would continue with the earnings season. But there were some hiccups and the S&P 500 is down -3.56% and the S&P TSX was timidly up by 0.54%. The sad part is the hiccups came from the earnings. In other words: companies didn’t make as much profit as anticipated.
For the superstitious, the first month of the year on the stock market means a lot. When we look at the stats over the past 35 years, the S&P 500 has followed January’s direction 71% of the time (source CNBC). In other words; you have a 29% chance of having a good year (I’ve told you, I’m an optimist! Hahaha!).
But seriously, January is historically a good month on the market. On the other hand, there are some very good Januarys that still finish in very bad years. Can you really make a play on market timing? Personally, I would rather stay invested and cash in my precious dividends!
How Can You Explain a January Slump?
There are several reasons why January wasn’t the month we expected. The first one, probably the most important factor, is negative forward guidance from 44 companies out of 54 in January. When you look at the overall earnings season so far, both sales and profits beat analysts’ estimate on average for 70% of the companies who have reported their earnings as at January 31st (read the report from Factset).
So the problem is not coming from the previous quarter but it is what is waiting for us in 2014. Most companies which publish forward guidance were well under analysts’ estimates. This is quite a concern for investors as they just got notice that the 2013 party was over. The easy money is gone and we don’t know how well companies will perform in 2014. As a good bi-polar personality, the market had to react brutally and then dropped over 3% in a single month.
The second reason why January was a failure was the fact that emerging markets are not able to push the machine anymore. Their economy can step-up and boost commodity prices as they used too. China, the world’s second largest economy can’t find a solution to get back to double-digit growth anymore. In other words, US companies thought they could count on emerging markets to compensate for their homeland’s mature market forever, this strategy is over. Growth is still there, but at a much smoother pace.
Finally, we can put the blame for a messy January on some profit taking. After such a great year, many investors have the “chicken reflex”. They would rather sell while the market is up and cash out their profits while waiting for another drop. Kudos to them, they made a great amount of profit…. But now is the most difficult question they have to answer; when do you jump back into the market? I know for a fact that some investors have been sitting on the sidelines for the past three years and are still waiting. How much do you think they left on the table?
Nonetheless, I’m very proud of my 2014 picks for the first month. I actually beat both my US and Canadian benchmarks by a lot. At the beginning of each year, I pick 20 US and 10 Canadian dividend stocks to be the best performers for the year. You can read about my results for the previous year here:
Best Dividend Stock Picks 2012 (-1.47% vs VIG (US dividend ETF), + 8.32% vs XDV (CDN dividend ETF)
Best Dividend Stock Picks 2013 (+11.07% vs VIG, + 0.77% vs XDV)
Top US Dividend Picks -4.03% (vs VIG at -5.01%)
I don’t disclose my stock picks anymore as it is not fair for those who purchase my book and the members of Dividend Stocks Rock who get access to my picks along with real-world portfolios and filtered dividend stock lists.
As you can see, I already beat my benchmark by 1% and my portfolio is paying a 3.10% dividend yield currently. I know it’s only one month so I will not brag too much about my results. I’ve also highlighted in green all stocks that did better than the index. I also have 4 very bad picks which went sideways and dropped by more than 10%. I can’t say that I’m very happy about this and might sell some of them in the upcoming month if I want to continue to keep my advance against the benchmarks.
Top Canadian Dividend Stocks + 0.75% (vs XDV at -2.74%)
I’m very proud of my picks on the Canadian stock market as I only have 1 bad pick out of 10. 7 out of 10 picks beat the index and I also have 2 surging stocks among them (hint, I hold one of them in my portfolio, check-out my dividend holdings!). I don’t expect to make any trades at the moment for this portfolio as I’m happy with the performance. Canadian earnings will start to be released very soon and it will give me a good idea of what is going on in the market for the upcoming months!
S&P TSX 60 DIVIDEND YIELD AND EX DIVIDEND DATE
I know I’m a bit late for this report for January, but I was very sick for 2 weeks, the blog has been left aside so I can get better. I’m now back in business J
|Ticker||Name||Price||Dividend Yield||Payout Ratio||Ex-Dvd Date|
|CPG||Crescent Point Energy Corp||37.66||7.33||488.53||2/26/2014|
|COS||Canadian Oil Sands Ltd||19.86||7.04||81.29||2/19/2014|
|PWT||Penn West Petroleum Ltd||8.16||6.86||294.25||3/26/2014|
|SJR/B||Shaw Communications Inc||24.41||4.51||61.58||02/12/2014|
|BMO||Bank of Montreal||67.62||4.5||46.86||4/29/2014|
|CM||Canadian Imperial Bank of Commerce/Canada||85.81||4.48||44.49||3/26/2014|
|POT||Potash Corp of Saskatchewan Inc||34.99||4.45||64.42||04/08/2014|
|NA||National Bank of Canada||83.2||4.44||38.36||3/25/2014|
|ARX||ARC Resources Ltd||28.49||4.21||256.75||2/26/2014|
|BNS||Bank of Nova Scotia||60.59||4.12||46.06||3/28/2014|
|SLF||Sun Life Financial Inc||35.43||4.07||61.12||2/24/2014|
|RY||Royal Bank of Canada||68.5||3.94||45.2||4/23/2014|
|POW||Power Corp of Canada||29.6||3.92||64.18||3/19/2014|
|RCI/B||Rogers Communications Inc||46.07||3.75||47.35||03/12/2014|
|HSE||Husky Energy Inc||32.5||3.69||59.73||03/05/2014|
|TRI||Thomson Reuters Corp||39.44||3.46||51.28||2/25/2014|
|TCK/B||Teck Resources Ltd||26.29||3.42||61.37||06/11/2014|
|CVE||Cenovus Energy Inc||28.53||3.38||66.97||03/07/2014|
|YRI||Yamana Gold Inc||10.26||2.7||40.7||3/26/2014|
|MFC||Manulife Financial Corp||19.62||2.64||61.95||2/21/2014|
|AEM||Agnico Eagle Mines Ltd||35.21||2.64||56.18||2/26/2014|
|TLM||Talisman Energy Inc||11.71||2.41||225.2||03/06/2014|
|L||Loblaw Cos Ltd||42.39||2.26||36.8||03/12/2014|
|SU||Suncor Energy Inc||35.64||2.25||27.76||2/27/2014|
|CNQ||Canadian Natural Resources Ltd||36.15||2.21||24.35||03/12/2014|
|WN||George Weston Ltd||76.24||2.17||62.44||03/12/2014|
|BAM/A||Brookfield Asset Management Inc||41.59||2.15||27.21||4/29/2014|
|SNC||SNC-Lavalin Group Inc||45.69||2.02||43||04/02/2014|
|SC||Shoppers Drug Mart Corp||58.3||1.96||36.12||3/26/2014|
|CTC/A||Canadian Tire Corp Ltd||94.89||1.85||20.39||4/28/2014|
|THI||Tim Hortons Inc||56.49||1.83||32.35||03/06/2014|
|CNR||Canadian National Railway Co||58.71||1.7||27.72||03/06/2014|
|SLW||Silver Wheaton Corp||23.92||1.58||21.13||04/02/2014|
|MG||Magna International Inc||92.09||1.48||17.59||03/05/2014|
|IMO||Imperial Oil Ltd||45.45||1.14||14.67||03/03/2014|
|ABX||Barrick Gold Corp||21.42||0.98||N/A||2/26/2014|
|CP||Canadian Pacific Railway Ltd||163.4||0.86||27.98||3/26/2014|
|GIL||Gildan Activewear Inc||57.82||0.79||13.66||2/18/2014|
|FM||First Quantum Minerals Ltd||19.67||0.59||5.03||4/15/2014|
|ELD||Eldorado Gold Corp||7||0.28||33.85||08/12/2014|
|VRX||Valeant Pharmaceuticals International Inc||148.11||N/A||N/A||N/A|
|K||Kinross Gold Corp||5.06||N/A||N/A||3/19/2014|
|GIB/A||CGI Group Inc||33.35||N/A||0||N/A|