Douglas Kee is chief investment officer of Leon Frazer & Associates. His focus is on Canadian dividend paying stocks.
Talisman Energy – Bought at $9.85. Company currently yields 2.8%. This is primarily a call on North American natural gas prices where they have been successful and disciplined on the exploration front. TLM also has interesting exposure in the North Sea, Columbia and South East Asia which differentiates the company from other Canadian producers. We're not expecting much dividend growth until natural gas prices rebound but the stock is priced that way.
Rogers Communications – Bought at $36.00. This stock has suffered due to rising competition in the wireless and cable business. However this is reflected in the current valuation which is the cheapest in the sector. RCI yields 4.4% and has the best record of dividend increases in the last 5 years as well as stock buybacks.
Goldcorp – Bought at $36.35. Goldcorp has lagged its competitors on raising its dividend. It remains a low yielder at 1.5%. But we see substantial up side to dividend growth. At $1,500 per ounce gold and with an enviable growth profile we believe that the dividend growth potential is attractive.
Past Picks: May 25, 2011
Total return: +9.56%
Penn West Petroleum
Total return: -38.80%
Total return: -4.82%
Total Return Average: -11.35%
Equity markets remain challenged by slow economic growth, deleveraging of balance sheets, and continuing challenges in Europe. We still see a trading range for the S&P/TSX Index of 11,000 to 13,000. With 10-year government bonds yielding less than 2.0% and inflation of 2.0 % plus, dividend growing stocks look attractive.
Compiled by Rob Moysey/BNN Market Call Tonight