What are we looking for?
Stocks that will pay you to hold on during these volatile times. The goal of today’s screen is to highlight equities that are steadier than the general market and that also pay dividends, with growing cash flow to support those distributions. Stocks like these are not too exciting, but they can be ideal for investors nervous about the economic outlook.
More about today’s screen
Craig McGee, senior consultant at CPMS Morningstar Canada, created today’s offering. He filtered the CPMS database of Canadian companies to select stocks that:
- were in the lowest quartile of the TSX composite based on price volatility (defined as the standard deviation of daily returns over the past year);
- had an expected payout ratio (dividends over the past four quarters divided by expected cash flow) of less than 100 per cent;
- had a positive change over the past 90 days in analysts’ median cash flow estimate.
Mr. McGee restricted any one sector to no more than five stocks.
More about CPMS
CPMS, a division of Morningstar Canada, provides quantitative North American equity research and portfolio analysis to institutional clients and financial advisers through software and Web-based tools. It covers more than 700 Canadian and 2,200 U.S. stocks, and adjusts for unusual accounting items in each company’s quarterly results to make sure screens can perform correctly.
What did we find?
A list heavy with real estate investment trusts, utilities, grocers and retailers of affordable necessities. While there are no guarantees, each of these firms seems decently positioned to weather whatever the economy can throw at it.
Note, however, that many have already seen their share prices rise as investor pursue havens. If you’re looking to make big gains on rising share prices, they’re probably not for you. On the other hand, if you’re hunting for stability and a bit of income, they may be ideal. “With the fog of market uncertainty growing, these stocks may be reasonable choices for investors looking to get paid to wait out the turbulence,” Mr. McGee says.
Dividend Stocks with Relatively Low Price Volatility and Growing Cash Flows
|Company||Symbol||Price $ (June 7)||Market cap ($ mil.)|
|Bell Aliant Inc.||BA-T||25.98||5,918|
|Capital Power Corp.||CPX-T||23.44||1,624|
|Primaris Retail REIT||PMZ.UN-T||22.87||2,007|
|North West Co. Inc.||NWC-T||21.64||1,047|
* Grades relative to all stocks in the S&P/TSX composite index. Source: Morningstar Canada
|Company||Symbol||Price $ (June 7)||Market cap ($ mil.)||Price volatility *||Expected yield||Expected payout ratio||Cash flow revision||Total return YTD|
|Bell Aliant Inc.||BA-T||25.98||5,918||A+||7.3%||39.8%||2.3%||-7.5%|
|Capital Power Corp.||CPX-T||23.44||1,624||A-||5.4%||31.5%||2.8%||-5.4%|
|Primaris Retail REIT||PMZ.UN-T||22.87||2,007||A+||5.3%||81.3%||0.7%||13.4%|
|North West Co. Inc.||NWC-T||21.64||1,047||A-||4.8%||49.1%||7.1%||8.7%|
|Cdn. Utilities Ltd.||CU-T||67.27||8,586||A-||2.6%||21.5%||3.7%||10.7%|
|Loblaw Cos. Ltd.||L-T||32.55||9,160||A-||2.6%||14.7%||0.6%||-14.9%|
|George Weston Ltd.||WN-T||59.50||7,627||A+||2.4%||10.4%||2.3%||-12.1%|
|Jean Coutu Group||PJC.A-T||15.40||1,614||B+||1.8%||24.3%||2.2%||21.8%|