R E S E A R C H
I firmly believe what Jeremy Siegel said in The Future for Investors on page.134: "paying dividends - an action that gave
tangible evidence of the firm's profitablity and proof that the firm's earnings were authentic" So I keep track of dividends
very carefully and do precious little extra research¹. I do not perform detailed analysis on individual companies.
I also believe, as Gerald M. Loew says in his 1935 book (I have the 1965 edition) The Battle for Investment Survival, that
"Market values are fixed only in part by balance sheets and income statements; much more by the hopes and fears of
humanity; by greed, ambition, acts of God, invention, financial stress and strain, weather, discovery, fashion and numberless
other causes impossible to be listed without omission."
Let me begin, however, with the second last paragraph in Steven Jarislowsky's The Investment Zoo. Buy this great book.
"I don't believe that small investors should abdicate responsibility, believing that the task [investing on your own] is beyond
them. By learning to use some simple, well-tested yardsticks and acting on them in a disciplined manner, they should do very
well. Go for long-term growth and top-quality and be a patient, long-term investor." added March 3 2006
Very Basic Research: Rip the stock page out of a newspaper dated early January. Underline the stock(s) you own or are thinking of buying and note the amount of the dividend. Do the same thing next January and in Januarys thereafter. Notice what's happening to the dividend. If the dividend is up it gives tangible evidence of the firm's profitablity. Don't worry. Hold the stock and relish the increasing income and the growing capital. Note that last clause. Your capital will grow at the same rate as the dividend...eventually. Believe it. That's where the real money is. But you have to be patient. Do not be concerned about price fluctuations or daily market price changes. It will all work out in the end as long as you hold excellent companies and their dividends keep growing.
You could, to keep track of dividend more closely, buy the Monday Financial Post. Each Monday, in the Financial Post, there is a list of dividends declared the previous week, of dividends paid that week and of dividend increases that week. This dividend data is compiled by FP Data Group. It's posted at the National Post web site over the weekend too. I have kept track of this data for decades. FP Data also has an annual dividend record of this data which comes out in February. With tax, the price is about $100. This data is also available on a couple of discount brokerage web sites. I obtain it at my Scotia discount site where I have my own little RRSP and at TD Waterhouse where Louise has her account. The TSE Review also tracks dividend increases.
¹ In the Report on Business every Saturday, the earning per share are given. Keep and eye on earnings too. Dividends are a portion of profit paid from earnings. Earnings should be roughly twice the dividend. Fast growing businesses will be lower, usually, and utility type corporations more than 50%. This relationship, earnings divided by dividends is called the payout ratio. I keep track of the payout ratio too. I'd add a bit more here soon on other things I keep track of..
If you use Scotia Bank's discount brokerage as your discount broker, you can obtain, and print out for study, a one page
summary of Scotia MacLeod's research on the companies they follow. It's called their 'Company EDGE report'. I use these
summaries extensively. It contains, among many other figures, five years of dividend data and two year of estimated
dividend data. It also has an estimate of dividend growth a couple of years out. Forecasting is dangerous enterprise, but it
can give you an idea of their current thinking.
If you use RBC's Action Direct discount brokerage account, you can get 'Company financials'. This data, in my view, is not
as useful . It's powered by Globe Investor.
If you use CIBC's Investor's Edge, as I do for my niece's account, you get...well, actually, I've had trouble finding stuff on
individual companies...I'll have to try again.
At TD Waterhouse, where my wife has her account, you have access to FP Data's dividend material and . . .
I do not have an account at BMO and so can't tell you what available for research there.
WEEKLY YIELDS - If you really want to get serious about this stuff and find out when to actually buy these stocks (buy doing yield charts), you can do what I do. Each Saturday, rip out the stock TSE stock prices page from the Report on Business. Besides prices, the Saturday R.O.B. has yields, earnings and P/E ratios. My collection goes back into the 1960s. Each week I key the yields I am interested in following into a spread sheet. It only takes a few minutes a week. Yield signals work for individual stocks and for the list of stocks you are following as a whole. The beauty of doing this is this. You can decide to follow a new stock, by doing its yield, at any time. You have saved the newspaper data, just go back through it with the new stock idea and find out if it's a good time to buy the stock. START COLLECTING NOW! When you do it yourself, you get a 'feel' for what's going on. Added March 1st 2006
I'll be adding to this page from time to time
Keyed February 23 2006...my brother's 61st birthday
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