*** The following is a guest post (Our first official guest post to be exact) from our good friends at Sure Dividend ***
At Sure Dividend, we don’t use the term blue-chip loosely. While the term blue-chip gets thrown around a lot in the financial media, we have a specific definition of what constitutes a blue-chip stock. Blue-chips, in our view, are stocks that have at least 10+ consecutive years of annual dividend increases. There are three specific groups of stocks that fall into the category of blue-chip stocks: the Dividend Achievers (10+ consecutive years); the Dividend Aristocrats (25+ consecutive years); and the Dividend Kings (50+ consecutive years).
We believe blue-chip stocks are those that have maintained long histories of raising their dividends each year. A long track record of consistent annual dividend growth indicates a company with strong brands, durable competitive advantages, and a proven history of generating growth over the long run.
Canadian Natural Resources (CNQ) qualifies as a blue-chip dividend stock for Sure Dividend, as the company has now increased its dividend for 20 consecutive years. We also consider the stock to be undervalued, given the recent and significant decline in the share price. With a high current yield above 8%, Canadian Natural Resources is a blue-chip dividend stock.
Canadian Natural Resources is an energy company that operates in the acquisition, exploration, development, production, marketing, and sale of crude oil, natural gas liquids (NGLs), and natural gas. Geographic areas of production focus include Western Canada, the North Sea, and offshore Africa. The company is headquartered in Calgary, Alberta, and the common stock is cross listed on the Toronto Stock Exchange and the New York Stock Exchange, where it trades with a market capitalization of approximately US$17 billion.
The company has high-quality assets that will fuel its growth for many years. It has a massive asset base of long-life, low-decline assets which hold 27.8 years of proved reserves, and 36.0 years of reserve life based on proved-plus-probable reserves. Canadian Natural’s Oil Sands Mining and Upgrading assets have a reserve life of more than 43 years.
As a large exploration and production company, Canadian Natural Resources’ revenue and cash flow are dependent in part on the underlying commodity price. Reduced prices of oil and gas due to the negative demand shock posed by the coronavirus has put a dent in the oil and gas majors. Fortunately, Canadian Natural Resources has continued to perform well in recent periods.
In early March, Canadian Natural Resources reported financial results for the fourth quarter of fiscal 2019. In the year, average production grew 2%. In addition, the company reduced its operating costs by -10%, to $11.50 per barrel, and thus grew its adjusted earnings-per-share by 17%, from $2.06 to $2.40. Moreover, the company grew its adjusted funds flow by 13%, to an all-time high of $10.3 billion, and delivered record free cash flows of $4.6 billion.
Such a strong level of free cash flow permitted the company to return lots of cash to shareholders last year. Shareholder returns totaled $2.7 billion for 2019, including a 12% increase in the company’s quarterly dividend and over $940 million in share repurchases.
Canadian Natural Resources grew its reserves by 11% in 2019, to 10.99 billion barrels, and thus enhanced its reserve life index to 27.8 years. As this figure is more than twice as much as the average life of reserves of its peers (~11 years), it is impressive and certainly bodes well for the future growth prospects of the company.
In early 2020, Canadian Natural Resources declared a new quarterly dividend at a rate of $0.425 per share, for an annualized rate of $1.70 per share (US$1.21). This represented a 13% raise from the previous quarterly payout, meaning 2020 is the 20th consecutive year of a dividend increase for Canadian Natural Resources. This is an impressive history of increasing dividends, as it includes the global financial crisis and recession of 2008-2009, as well as the coronavirus pandemic.
Canadian Natural Resources is a high dividend stock, and is an attractive stock for income investors. Based on its recent share price, the stock has a high dividend yield of 8.6%. Compare this with the S&P 500 Index, which has an average dividend yield just above 2% right now. The combination of rising stock markets over much of the past decade, as well as falling interest rates, means it is more difficult to find suitable levels of investment income considering the lack of available alternatives.
The company has decent balance sheet strength as well, with an investment-grade credit rating of BBB from Standard & Poor’s. Canadian Natural Resources recently notified investors of recent developments surrounding the coronavirus crisis, and measures taken to protect the company’s financial position in an effort to secure the dividend. In 2019, Canadian Natural retired approximately $2.35 billion of bonds and term facilities, proving to be a wise decision as the global economy faces a potential recession in 2020.
Canadian Natural Resources has taken a number of steps to shore up its finances more recently, including suspending buybacks and cutting operating costs. Management is also confident regarding the liquidity position of the company. Current liquidity is approximately $5 billion consisting of cash, including approximately $1 billion in estimated cash reserves as at March 31st . Lastly, it is lowering its 2020 capital expenditure budget from $4.05 billion to $2.96 billion, a 27% reduction. In the company’s
view, its financial resources are more than sufficient to retire any current debt obligations when due.
The coronavirus crisis has weighed on the stock market over the past several weeks, particularly in the hardest-hit sectors such as energy. But this could simply be a good buying opportunity for long-term investors. There are many high-quality stocks that have seen their dividend yields rise dramatically as a result of their plunging share prices. And, valuations appear compressed across the energy sector.
Still, investors need to choose stocks selectively, to focus on high-quality businesses with sustainable dividends. Canadian Natural Resources has a strong business model and a long history of increasing its dividend each year. With a high dividend yield above 8%, Canadian Natural Resources is a blue-chip dividend stock.
** Just a reminder, this was a guest post from our friends at Sure Dividend. **
Always do your own stock research.
Passive Income Update For April 2020.
Diversified Royalty: $26.00(dripped 18 shares)
Artis Reit: $28.08 (dripped 3 shares)
Algonquin Power: $185.31 (dripped 10 shares)
Interrent Reit: $4.29
Plaza Reit: $29.44 (dripped 10 shares)
Chorus Aviation: $36.76(dripped 12 shares)
TFSA’s Total: $309.88
Canadian Equity Income Distribution: $351(dripped 13 shares)
Transcontinental: $192.83 (dripped 16 shares)
New Flyer: $57.16(dripped 4 shares)
Go Easy: $123.75
Total Passive Income April 2020: $1034.62
My portfolio jumped back up to: $329,207.77. This represents a increase of 14.78% from last month. This market is crazy. Over the last 3 months, my portfolio has gone:
– 5.41%, -19.73%, +14.78%
My long term plan hasn’t changed. I haven’t sold a single stock, and I continue to look for good deals. I’ve updated my watchlist, I am currently keeping an eye on: Manulife, First National Bank, Alimentation Couche Tard, Metro and Canadian Western Bank (among a few others).
Passive income in April was $1034.62. This was the second time in the first 4 months of 2020 my income was over a thousand! I only achieved $1000+ twice in all of 2019!
The Black Manhattan is one of my new favourite drinks. If you are a cocktail person, you are most likely familiar with a classic Manhattan. If you are not a cocktail person a classic Manhattan is Rye, Sweet Vermouth & Bitters. It’s a very boozy drink, but absolutely delicious. I love a classic Manhattan, but I have to say, lately I’ve definitely been preferring a Black Manhattan.
So what’s the difference between a regular classic Manhattan & the Black Manhattan?
As you can see, the only difference is swapping the vermouth for Averna. As far as ingredients go, these drinks are VERY similar. That said, don’t let it fool you, the flavour profile is completely different. Aside from the dark complexion, the Averna gives the drink a more herbal/medicinal feel – but in a good way. I like to make mine with a hint of sweetness ( I add a spoonful of Maraschino syrup).
2 oz Rye Whiskey (You can substitute with Bourbon but traditionally a Rye).
1 oz Averna Amaro
2-3 Dashes Angostura Bitters
1 barspoon Luxardo Cherry Maraschino Syrup
*Garnish with 3 Luxardo Cherries.
Add all ingredients into a mixing glass with ice. Stir for 20 seconds. Strain into coupe glass. Garnish with 3 cherries. Enjoy.
This drink will go down fast and smooth. Don’t let that fool you. It is a boozy one. Take your time, enjoy it. That said, if it goes down too fast – no worries, make yourself another one…after all it’s only a few ingredients!
Okay, seriously. If you ACTUALLY clicked this headline – this is for you.
Stop chasing penny stocks.
Stop chasing unsustainable high yields.
If you think you will find your next great stock on a blog, facebook group, reddit thread or from a friends “hot tip” – you probably shouldn’t be buying individual stocks. I cannot count the number of people I’ve had message me over the last couple of weeks asking about penny stocks, oil stocks, etc. People who have never invested a penny in their lifetime, messaging me telling me they are going to easily double their money in the next few months….
Are there some penny stocks that will double this year? Of course. Do I (or anybody else) know which ones? Of course not. If we did, we’d be billionaires. The amount of people searching for “good penny stocks” or “best monthly paying stocks” or “dividend stocks yielding over 10%” is astounding…and it’s dangerous.
We’ve all been there, starting out trying to figure out what stocks to buy, how to make a quick buck. Almost every experienced investor will tell you they got got burned early on, either chasing yield, listening to a hot tip or speculating/gambling.
Almost everyone agrees getting a dividend payment from their stock is great. It feels good, you can reinvest that money or use the cash – so why wouldn’t you want to find stocks that pay out the biggest dividends? The answer is simple:
Sustainability & Future Dividend Growth
Owning shares in a company that pay a dividend feels great. You know what feels even better though? Having confidence that the dividend will not only be around for years to come, but that it will continue to increase. What good is a 10% dividend yield if it gets cut next month – or if the stock price declines 15%?
Here are some metrics that can help give you confidence in the sustainability of a dividend:
Payout Ratio: This one is pretty straightforward. What percent of earnings is the company paying out to its shareholders as dividends. For an extremely simplistic example, assume company ABC makes $100 this year, and pays an annual dividend of $50. The company would have a payout ratio of 50%. Look for companies that have a conservative payout ratio. Payout ratios will vary between industries, but typically you want to find a company that is paying out less than 40-50% of annual earnings. The big exception here would be REITS – but that is a discussion for another day.
Earnings History & Projections
Another important metric to focus on is earnings per share. Are earnings increasing? A super conservative payout ratio is great, but if earnings are falling each year, that payout ratio, by default will start to increase. If a company is not able to increase its earnings, eventually the dividend is going to get cut. Look for companies that have a history of growing their earnings per share, in good times and bad.
Strong Balance Sheet
Always look at the financial statements for a company before pressing the “buy” button. A lot of metrics could look great, but if a company is over leveraged, it means they could be at risk in the future. Always ensure a company has no problem meeting its debt obligations. If they can’t this means they may need to raise equity (issue more shares/dilute your stake in the company), cut back on costs (cut dividends), or worst case face a possible bankruptcy.
Dividend Growth History
Lastly, look for companies that have a history of increasing their dividend each year. This typically shows they have confidence in the business, and they like to reward shareholders. It is important to do your own research, and just because a company has increased their dividend for 10+ years in a row, doesn’t mean it can’t or won’t get cut in the future. That said, if a company has strong and growing earnings, increasing revenue, a strong balance sheet and a history of paying a growing dividend, you are probably on the right track.
Finally, since you may have been lured here with the click baity headline, and the hopes of finding 3 great stocks to buy, out of pure guilt I will post 3 Canadian stocks below I believe meet the following criteria:
3 Canadian stocks to consider:
As always, do your own due diligence. Happy Hunting.
Spoiler Alert – I decided to write this review because I was craving a sip of Blanton’s bourbon, but I didn’t have an open bottle. As a general rule I only open a new bottle once I finish one of my open bottles. I had about 1.5 ounces left of Jefferson’s, noticed I hadn’t reviewed it yet, and needed to clear some space on the bar shelf…so here it goes.
This is a bottle my sister got me for Christmas 2 years ago. I had never had it previously, and I’ve been nursing this bottle for a while. Jefferson’s seems to sell for quite a premium here in Manitoba (i’m not sure why). The bottle retails for $97.00 Canadian at the Manitoba Liquor Mart.
Date Reviewed: April 07, 2020
Atmosphere: In a Glencairn glass, neat at home during the covid 19 pandemic
Distillery: McLain & Kyne
Age: No Age Statement
Price I Paid: Zero – but it retails for $97.00 Canadian
Appearance: Classic Amber colour, but more watered down than most.
Nose: I found this bourbon to be extremely muted. It lacks the typical sweet vanilla/brown sugar scents that most are accustomed to with a bourbon. The only thing that stands out is some oak/wood but even that is pretty tame. After a few swirls, some VERY subtle hints of cherry cola come out, but again very faint. This might be the least expressive nose of a bourbon on any bottle I’ve had over $20.
Palate: The taste follows the nose. The oak from the barrels is the dominant flavour profile. It is very smooth, with no burn, but leaves a lot to be desired. The second sip is a little better, some sweeter notes slightly poke through, but it’s not enough to capture my interest.
Finish: The smooth finish is definitely the best part of this bourbon. No heat, no burn, just a nice easy finish.
Conclusions: It’s a tame, easy to drink bourbon, but it lacks any real depth. If this was a $40 bourbon, I’d say keep a bottle for the finish alone – but at almost $100 it’s a hard pass for me. When you can get Bookers or Blanton’s for the same price it’s a no brainer. That said I’ve heard some of the other Jefferson’s expressions are real good (Oceans for example) which I will definitely try.
Overall Score: 73/100
Passive Income Update For March 2020.
Diversified Royalty: $17.69(dripped 5 shares)
Artis Reit: $27.99 (dripped 2 shares)
Western Forest: $45.02 (dripped 48 shares)
Interrent Reit: $4.29
Canadian Western Bank: $0.29
Plaza Reit: $29.28 (dripped 7 shares)
Power Corp: $88.29 (dripped 3 shares)
Chorus Aviation: $19.48 (dripped 4 share)
Intertape Polymer Group: $58.27
TFSA’s Total: $90.77
Canadian Equity Income Distribution: $349.09 (dripped 14.74 new units)
CAE: $26.84 (dripped 1 share)
Total Passive Income March 2020: $666.53
My portfolio currently sits at: $286,610.61. This represents a drop of 19% from last month. I’m not going to harp too much on this massive loss. These are crazy times. Everyone is down. My long term plan hasn’t changed. Everything sucks right now, but we will find a way to get through this.
Passive income in March was $666.53. Of course with the way things are right now my passive income for March was 666….hail satan?
With a couple dividend cuts my forward income dropped below my $12,000 goal. Currently my forward dividend income is sitting at: $11936.99
I hope everyone is staying safe, and sane out there.
Well, it’s Thursday night, I’m sipping on some Wild Turkey 101, I Just polished off some mini eggs, and I got to thinking about the future – post Covid19 (assuming there is a future after this mess).
Come on now – let’s keep this positive!
I started thinking the other night – perhaps this pandemic will change the way we as humans think about life, how we live, how we treat each other, and what we value. The pessimist in me – tells me nothing will change – but I hope I’m wrong! With that said, here are my top 5 things I HOPE, we as a society decide to change when this is all over!
This is usually a hot topic whenever it is brought up. Most conservatives, older folk, and even myself when I was younger would argue that a UBI will reduce productivity, create a generation of lazy video game playing bums, and cost WAY too much. As I’ve gotten older my opinion on a Universal Basic Income has definitely shifted. First of all – who cares if “productivity” takes a dip. The human race is more productive than at any time in history, life is short – we should spend it doing what we enjoy, helping people, not trying to spend every possible minute earning and hoarding as much cash as possible. So we may not produce as many useless items we no longer need – but perhaps we now spend time doing things that are truly beneficial to society. I can only speak for myself, but if I had a “safety net” or UBI to fall back on, and no worry about making mortgage payments, I would 100% take a paycut to switch careers and do something that I truly feel good about. Perhaps I’d be a financial planner (who doesn’t make money selling his clients high cost mutual funds), or work for a non profit, a homeless shelter, etc.
Will everyone become a lazy video game playing slob? Obviously not. Sure some people may take advantage of the system, but that happens now. Who cares. A universal basic income would also reduce stress levels across the board, saving our health care and police services a TON of money. Poverty rates would plummet, crime would go down, and most importantly we’d get to spend the very limited amount of time we have on this planet doing something we are truly passionate about, without having to worry about a roof over our heads, or feeding our kids.
The cost would be high. Yea…it would. Nobody is denying that. It’s not about a lack of money though, it’s about priorities. We could cut military costs (the USA especially), healthcare budgets could come way down, less poverty, less stress, less strain on the system. Police budgets are already way too high – less poverty/crime would be an easy argument to reduce these. With a UBI, you could scrap: EI, OAS, CPP, Welfare and a myriad of other programs, plus all the administration costs associated with these programs. At the very least we need to test a UBI on a large enough sample, for a long enough period of time and measure the results. Come on!
Hopefully a lot of companies realise that employees are more than capable and mature enough to work from home. Working from home has a ton of benefits for both employee and employer:
I’m Canadian, most of my readers are as well…but if Covid 19 teaches the world ONE thing for the future, I hope it’s that illness, viruses, cancer, etc are NOT YOUR FAULT. You should never have to stress about paying for something like this, and NOBODY should ever go broke for getting sick. Covid 19 is showing the world just how ridiculous it is having health insurance tied to employment.
I saw some people posting about how senators may be able to vote on bills remotely due to Covid 19. Here is an idea…how about give EVERYONE the option to vote online in elections. Voter turnout in North America is pathetic (partly due to certain parties making it difficult for certain people to vote). That said, it’s 2020, you can seriously do EVERYTHING online. Just let us fuckin vote online*.
*Regular voting would still be open, for those without access to internet, computers, etc.
Wash Your Fuckin’ Hands
I cannot believe this made the list…but hopefully this whole washing your hands thing catches on. I cannot believe how many people didn’t do this before (people in the washroom at Jets games I’m looking at you). Hopefully everyone now realizes that washing your hands is actually super easy, and kills those pesky germs!
Lastly, hopefully we learn electing a senile, narcissistic, petty reality TV star which controls the world’s largest economy, military, and has the biggest global influence is a terrible fuckin’ idea. Unfortunately, based on the fact Joe Fuckin’ Biden is going to be the person running against Trump….i’d say we are fucked regardless.
On that positive note – I’m going to pour myself one more bourbon, jump in a vanilla scented bubble bath and get some sleep.