Dividend Investing – Telecom, Real Estate and Energy

The following is a guest post by Donald Dony, who is the technical analyst and author behind the Technical Speculator.

Bell Aliant: 7.11%

The telecom giant has gone through a much needed transformation over the last few years.  From multiple mergers to restructuring the company into deferent components, the company has transformed its self into a communication company giant. Based in Atlantic Canada, with over 9,000 employees, this company is still 44% owned by its larger parent company of Bell  Canada.

The fundamentals are what investors expect from a big telecom company. Steady earnings, a modest P/E and a good healthy dividend.

And for investors looking for low volatility, this is a good pick.  The beta is 0.027.  With earnings per share (EPS) at 1.44 and a P/E of 18.50, this is definitely not a growth story.  Valuations still rank in the top half of all telecom/utilities companies in Canada.

The big plus is the dividend.  There are few telecoms that can match the 7.11% dividend.

BA-2013-05-06

Technically, BA is slowly advancing over the last two years.  Currently at a resistance level of $26.50-$27.00, the stock is expected to continue its gentle rise in 2013 toward the year-end target of $29.

Bottom line: For investors looking for a low volatile stock with a high payout and a slow rise in price, BA is hard to beat.


Artis Real Estate Investment Trust

AX/UN is a diversified Canadian real estate trust that invests in office, industrial and retail properties since 2004.

Artis executives have planned an aggressive but disciplined grow strategy for the company.  They have built up an impressive portfolio of commercial properties in Canada and the U.S.  Most of their assets are located in Western Canada.

The fundamentals are on par with its competitors.  EPS is 3.21, trailing P/E is 5.20 and the beta is 0.879.

The dividend is the highest within the Canadian real estate sector.  With a 6.49% dividend payout, the yield from AX/UN is almost a full percentage point above its closest competitor.

The stock price is a little misleading.  At first glance, an investor would think that AX/UN is a growth stock verses a real estate trust.  The stock price has moved up 41% in the last 12 months.  Undoubtedly because of the aggressive growth of the company and the large dividend.

AX/UN is starting to breakout.

AX-UN-2013-05-06

Bottom line: Artis Real Estate Investment Trust is expected to continuing to advance in this current business cycle.  With an experienced management team, an aggressive growth strategy plus an impressive dividend. this stock should appeal to a wide variety of investors.


ConocoPhillips: 4.6%

This major player in the global energy sector is both on a strong financial footing and it also has a hefty dividend yield of 4.6%.

Earnings from current operations remain robust but have lagged many of its competitors.  COP recently has sold some of its lower producing assets and have added some new assets, which are primarily in the Gulf of Mexico, will deliver long-term growth to the company.  Cash margins are also expanding in Q4 and Q1.

COP is trading at a reasonable multiple of 8.75 and forward P/E is expected to be 9.86.  Earnings per share (EPS) is a solid 6.72 and ROE is a robust 13.10%.

COP has broken out.  Price support is at $57.

COP-2013-05-06

The dividend yield is 4.60% which should keep most dividend investors content.

The outlook on COP is modest.  Our models point to a $64 target.  There is some price resistance building at $61.00-$61.50 and support at $56.

 Bottom line: COP has solid fundamentals and little reason to be worried about the dividend payout.  Though the stock price is not expected to advance too much further, there is still another 8%-9% upside anticipated. Coupling this plus the 4.6% dividend and COP could be an attractive addition to a portfolio.


Occidental Petroleum: 2.95%

Low payout ratios are not a guarantee of future dividend growth, but when a company only dishes out a small portion of its earnings, and those earnings are substantial, there is a very good chance that the dividends will increase.

Occidental Petroleum (OXY) has a payout ratio of only 35.83%.  This is fairly small compared to the thousands of U.S. companies that issue dividends.  The fundamentals are impressive on this company  too.  The p/E multiple is 12.22, EPS at 7.09 and a healthy ROE at 11.42%.

Q1 earnings also beat the street estimates by a good margin as new and existing production adds to the bottom line.

The outlook for the rest of 2013 is for a potential stock buyback.  Earnings should continue to increase into 2014.

Technically, this stock is just starting to move.  After bouncing  off of the $75-$80 base for most of 2012, OXY looks to be starting to rise.  Buying momentum has recently pick up as has buying volume.

The improving earnings appear to be catching investors attention.

OXY-2013-05-06

Bottom line: This higher beta company (1.5) looks as if it is finally breaking out of a year long base. With improving earnings, a good dividend yield, this stock is a favourable bet for a both capital gains and future dividend increases.

With a target of $98, there is the potential for a 17% return, counting the 2.9% dividend.


Donald W. Dony, FCSI, MFTA is a technical analyst.  He is also an instructor for the CSI, frequent national and international speaker on stock market trends and editor of the Technical Speculator.com, a website focusing global economic and technical trends.   Through the monthly newsletter,  he also reviews individual equity opportunities for income and growth.

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