Yield Charts May 2009

STALWART YIELDS ARE HIGH: “What is it that most investors fail to consider?” (answer just below) I've been watching my weekly-plotted yield charts recently. They go back to 2000. (My monthly charts go back to 1985) Our old stand-by stocks near the bottom of our list have not had such high yields in years. BCE, in fact, has not had a higher yield this century, TRP since 2001, Enbridge since 2004, Telus was higher in 2002 and 2003 with the dividend reduction hubbub, CU, as you can discern from its chart, had a higher yield in early 2004. Fortis' yield pattern is different…down evenly from 2000 to nadir in 2005, and then rather evenly up since then. Generally*, it might be a good time to buy if you are interested in adding one of these utility-type commons to your portfolio. Keep an eye on what's going on with prices of these stocks in the near future. Investigate before you invest. The yields on these few stocks seem to have stop going up and are going sidewards. Yield could go higher as many investors consider 'utilities' to be yield-sensitive: Ten year Treasuries are up a full percent since the start of 2009. On the other hand, maybe they have peaked: yields could go sidewards, or maybe start down (all bank stock yields are well down from their peaks). We do not know. Investors seem to be abandoning these stalwarts and rushing into other, shall we say more exciting, stocks since the lows of early March. This is good. It could give us a chance to pick up some solid dividend payers…stocks that have been increasing their dividends even in the midst of the turmoil…stocks that have a long consistent record of dividend payments (well except for Telus) and a more dependable rate of growth. I uploaded TRP and CU's yield charts as examples. Click on Yield Charts. Notice how the last few plots (on the right of the chart) are 'kind of' next to each other (sidewards?) in the CU chart, but down a bit in the TRP graph. I put the GWO yield chart up too as an example of what yields are doing in financial stocks.

* By 'generally', I certainly do not mean today. We have been waiting years. But roughly, looking only at the charts, these few stocks seem to be in a buying range. ♣ OBSERVATION: with stocks in the list doing different things at different times, we have diversification (non-correlation) within the list itself. ♣ I write this the day after Standard and Poor's lowered its outlook on British debt from stable to negative. The impact of what governments are doing to curtail the financial mess are being accessed. The deficits are huge. Could America lose its AAA rating? And what effect would that have? Profound, needless to say.