Tuesday, November 17, 2009

Sysco, Intel, Leon's dividend news

Food distribution powerhouse SYSCO (SYY) has raised it's dividend by 4% to $0.25 per share. This marks SYSCO's 160th quarterly dividend. As far as I can see SYSCO has raised their regular dividend every year since I was born in 1979.

I recently bolstered my position in SYSCO on June 15 of this year when the stock traded at $22.82. The stock now trades at $27.35 and yields 3.7%.

Another notable dividend raise came from chip maker Intel (INTC) who raised their dividend by 12.5% on November 16. That stock now yields 3.1%.

Leon's Furniture (LNF) issued a special dividend of $0.20 per share to celebrate their 100th year of business. Congrats to Leon's shareholders. I wish I had purchased Leon's during the downturn when it traded at $8.00, as I believe that it is a great Canadian business. The stock is trading at $10 per share with a yield of 2.80, a P/E of 12.5 and a debt/equity ratio of only 0.36. Sales and earnings have been down pretty significantly lately due to their sensitivity to the downturn.

Saturday, November 14, 2009

net worth update, Nov 09

It's time to report my bimonthly net worth. I report my net worth on the moneygardener or around the 15th of May, July, September, November, January, and March.

Net worth results for the 2 Months Ended November 15, 2009:
  • Debt/Asset ratio dropped to 0.47 from 0.48 (record low)

This is a measure of our financial health. Total debts divided by total assets. So currently for every $1 of assets that we have, we have $0.47 of debt. Back in May of 2006 our debt/asset ratio was a whopping 0.77. What is your debt/asset ratio?

  • Net Worth gained 3.3% (record high)

Net worth is probably the best barometer of one's financial health. The recent financial crisis caused our net worth to drop by about 14% at one point. Since then our net worth has rebounded 37%. How has your net worth fared in 2009?

  • Total Assets rose 1.3% (record high)
  • Total Liabilities shrunk by 0.9%
  • House Value/Total Assets fell to 62.8% (record low)

I like tracking this because it shows us how diversified we are. Our asset base is made up 62.8% by the value of our humble abode.

  • Non-Registered Portfolio grew 3.4% (record high)
  • Net Worth Calendar Year to Date Gain/Loss: +27%

2009 is shaping up to be a great year for our net worth. The year began amid the credit crisis and our net worth has grown leaps and bounds since then as the market has risen.

Thursday, November 12, 2009

ADP dividend up 3%

Automatic Data Processing (ADP) reported better than expected fiscal first quarter earnings and hiked their dividend 3% to $0.34/share per quarter. This is the 35th year in a row that ADP has raised their dividend. Mounting unemployment in the U.S. continues to have an impact on ADP's revenues, as fewer workers for their clients means less fees to ADP.

ADP has forecasted EPS for fiscal 2010 to come in at about $2.37 per share. The stock is currently trading at 18.3x that forward earnings number and yielding 3%. The current dividend pay out indicates a pay out ratio of 57% on estimated 2010 earnings.

The stock is up 8% since I started a position in ADP inside my wife's RRSP. An interesting thing to note is that this stock seems to have really taken off despite the fact that US unemployment is at best flattening out. Could this be an indicator of the next 6 months to one year? Time will tell. If the job market turns up slower than expected, or stays at depressed levels, ADP could suffer.

* My wife owns shares of ADP in her RRSP.

Friday, November 6, 2009

Telus fails to raise dividend

Canadian telecommunications firm Telus (T.A) has failed to raise it's dividend for the first time in several years. Telus left it's quarterly dividend at $0.475/share for payment on January 4, 2010, the fifth straight quarter of this payment amount.

Some analysts believe that Telus is viewing 2009 as a year of investment in their business and they will resume dividend growth in 2010. Telus is striving to get ahead of the competition as they compete with Bell (BCE) and Rogers (RCI.B) among others including new potential entrants in Canada.

Telus announced earnings today that beat analysts estimates but were still virtually flat from last year at $0.88/share. They also lowered their full year sales and earnings outlook. The best analysts can say is that things don't seem to be getting any worse in the wireless area.

Tuesday, October 27, 2009

Rogers results look good

Given the slow advertising market lately the results reported today from Canadian telecommunications company Rogers Communications (RCI.B) (RCI (NYSE)) looked pretty good.
  • Earnings per share were up 12%
  • Wireless revenue up 7%
  • Overall revenue up 2%

Roger's Canadian exclusivity on the Apple iPhone helped these results. This tailwind will be taken away now as competitors get the phone as well. Once advertising picks up again Rogers earnings should continue to grow. They are well positioned in the Canadian market and have gobbled up a lot of Bell Canada's customers over the last few years. I think this is a good company to hold for the long term as they have pretty consistent cash flow coming from a stable product. They have also been friendly to shareholders in the past with stock buybacks and dividend increases.

My wife owns Rogers shares in her RRSP.

Wednesday, October 21, 2009

Inter Pipeline raises distributions

Inter Pipeline Fund (IPL.UN) has announced a 7.1% increase to their distribution level. They are raising their pay out from $0.07 per unit per month to $0.075. They have a confident outlook for their business.

This bodes very well for shareholders, me included, especially as their forced conversion to a tax paying corporation looms in 2011. They previously stated that they would keep the distribution level constant going into this conversion. I guess they have one upped that today.

Friday, October 9, 2009

bought ADP

This week I started a position in Automatic Data Processing (ADP) within my wife's RRSP. I've had my eye on ADP shares for a few years and I decided to take the plunge now, even though the shares are not at bargain basement levels.

I wrote about ADP last year here.

My reasoning for buying into this company for the long term:
  • ADP is the dominant industry player and the class of their field
  • They have a great earnings and dividend growth history
  • They earn a high ROE and have low debt
  • The company is experiencing a flat earnings period due to a sharp drop off in jobs and economic activity, but I believe they will accelerate out of this well
  • I like their potential to grow outside of the US, Canada, and Europe in the coming years
  • Feels like a good time to buy this company when unemployment is high, even though the stock has had a bit of a run from it's March lows

ADP is due to to raise their dividend, however their current pay out ratio sits at 50% of earnings.

Tuesday, October 6, 2009

why McDonalds is a good investment

Grab some shares of McDonalds (MCD) now and you might not have to work there in retirement.

You can say what you want about how morbidly unhealthy the food is, or how they market to kids, but they do know how to grow the value of your investment. The fast food icon, which is actually the world's sixth most valuable brand, and the second most valuable food related brand, second only to Coca-Cola, has been around forever and is showing no signs of going away. What makes McDonalds shares such a good place to have your money invested? Let me count the ways...

1. The Food Tastes Good
Ok, I happen to believe that Brussels sprouts taste good as well but you can't pull up to a shiny window and order a 6 pack of sprouts with dipping sauce. The taste of McDonalds food appeals to many convenience seeking people, and they adapt their menu well to cultural tastes in any country they operate. It's quick, it's predictable, it's convenient, and it satisfies.

2. They Market To Kids & Adults Don't Really Mind
Oh, what a bonus for a two year old to get a free toy out of a drive through trip to the golden arches. Perhaps Mom & Dad will feel better getting the optional apple slices instead of fries with their happy meal. They have play gyms inside their stores, they sponsor kids sports, they give loads to charity, they are armed with a team of on-staff cartoon characters including Ronald and whatever movie Disney is pumping this month. McDonalds is basically a well-honed marketing machine that neither 'Super Size Me' nor 'The Subway Diet' can stop.

3. The Fundamentals
Mmmm, the dividend growth, just makes my mouth water. They've raised their dividend each and every year since 1976. They just recently raised it by 10%, at a time when other company's CEO's are eating Quarter Pounders and liking it, to cut costs wherever they can. McDonalds annual sales growth has been very consistent, their EPS growth over the long term has been great, and they generate returns on equity in excess of 15% most years. All this while maintaining a moderate debt level of $0.76 per $1.00 of equity.

4. The FutureBold
The key to this companies future lies in management and adaptation. They've proven in the past that they are able to adapt to changing tastes and customer preferences. As they move through the developing world I am confident that quality of life improvements will go hand in hand with the need for convenient food that the kids like too.

Buy McDonalds in any economy. This is not a recession stock. Don't let that analyst with Big Mac sauce on his tie fool you.

Monday, October 5, 2009

Walgreen recovering from the flu

From the moment that I saw Dr.Oz receiving a flu shot from a Walgreens representative on his new daytime show, I knew that only good could come of it.

A combination of cost cutting, the H1N1 flu, and the recession coming to an end in the US seems to have Walgreen (WAG) up and at 'em again. The US drugstore chain beat expectations handily in their fiscal fourth quarter thanks in part to $0.07/share in savings from their Rewiring For Growth initiative.

Their September sales report also looked very strong as sales came in over 10% higher and sames store sales clocked in at an increase of 5.3%. Those are very strong numbers and probably reflect the extra emphasis on flu season this year in addition to the cost initiatives.

2009 turned out to be an extremely rare year for Walgreen, as they failed to grow their earnings per share. Walgreen has grown their EPS each year smartly from $0.76/share in 2000 to $2.17 in 2008 and it fell to $2.02 in 2009. Analysts are expecting great things from this stock in 2010 as the average estimate is for $2.32, which is a 15% rise. Applying a P/E of 16x, which is more than warranted due to Walgreen's stellar history and current market presence, you get a share price of around $37, which is about one dollar below where the shares trade today.

The street has made an about face on Walgreen stock as the shares change hands for almost twice what they went for back March. Ah.....opportunity missed.....

Thursday, October 1, 2009

portfolio update Q4 2009

It has been quite a while since I updated my progress with my non-registered stock portfolio. the moneygardener blog was really born as a journal for this portfolio, so I like to summarize every now and again. Here are some of the key metrics that I track:

*All results to October 1, 2009
Return, (including dividends) Year To Date = +16.9%
S&P 500 Return To Date (no dividends) = +14.0%
XDV (Canadian Dividend ETF) (no dividends) = +26.5%

Current Yield = 4.4% ($8.75 per day)
Yield On Cost = 3.9%
One Year Dividend Growth Rate = 24.7% (includes purchases)

My one year dividend growth rate is in serious risk of going negative on November 1 as I am now starting to have tough comparables. Husky Energy (HSE), Yellow Pages Income Fund (YLO.UN), Manulife Financial (MFC), and General Electric (GE) have all cut their dividends over the past year. This will put pressure on my one year dividend growth rate from November 1 to at least May 1, assuming no more cuts come.

Average Portfolio Savings Per Month Last 12 Months = $893
Portfolio Value = $73,264
Leverage Ratio = 24.5% (percentage funded by HELOC)

My goal is to grow this portfolio to $175,000 with a leverage ratio of 0% by February, 2014. This will be very difficult, but not impossible, given the credit crisis' impact as well as another upcoming maternity leave. We are currently not meeting our goal of saving $1,000 per month but we are coming close.

Top Performing Stock Versus Cost = Royal Bank of Canada (RY) +28%
Worst Performing Stock Versus Cost = Bank of America (BAC) -53%

Overall this portfolio is still underwater including dividends, although there is a good chance that I could poke my head above water sometime in late 2009 or early 2010.