One Solid Reason to Invest in European Dividend Stocks

Posted by David Hunkar on 27 January 2015, 3:11 am

European firms generally tend to pay a higher portion of their earnings as dividends to shareholders. Unlike US firms they do not target a specific dividend amount or an yield but rather target to payout a specific payout ratio. One reason to invest in European dividend paying stocks is that their average payout ratios are higher than the world, US and Asia stocks as shown in the chart below:

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Source: The Truth About Europe, Franklin Templeton Investments

Though most European companies dividends only twice a year the amounts paid out can be substantial compared to their peers in USA and Asia.

Five European dividend stocks are listed below for consideration:

1.Company: British American Tobacco PLC (BTI)
Current Dividend Yield: 4.27%
Sector:Tobacco
Country: UK

2.Company: Novartis AG (NVS)
Current Dividend Yield: 2.85%
Sector: Pharmaceuticals
Country: Switzerland

3.Company: Total SA (TOT)
Current Dividend Yield: 6.17%
Sector: Oil, Gas & Consumable Fuels
Country: France

4.Company: Siemens AG (SIEGY)
Current Dividend Yield: 3.71%
Sector:Industrial Conglomerates
Country: Germany

5.Company: Nestle SA (NSRGY)
Current Dividend Yield: 3.11%
Sector: Food Products
Country: Switzerland

Note: Dividend yields noted above are as of Jan 23, 2015. Data is known to be accurate from sources used.Please use your own due diligence before making any investment decisions.

Disclosure: No Positions

What is the Impact of Lower Crude Oil Prices on Canada

Posted by David Hunkar on 26 January 2015, 3:17 am

The Canadian economy will underperform the US economy over the next few years due to the impacts of lower crude oil prices according to a special report by Thomas Julien of Natixis. Here is the summary of the report:

The fall in oil prices is likely to result in mixed effects for Canada. On the one hand, the fall in petrol prices and the depreciation of the exchange rate against the US dollar in a context of accelerating US growth ought to stimulate household spending and give a boost to industries that are not exposed to the energy sector. The mining sector, on the other hand, which accounts for a significant share of the Canadian economy, will suffer from a persistently low level of crude prices. We therefore expect the continuation of the cyclical recovery in the short term, which is likely to be dampened in the medium term by a weakening in investment in the mining sector and probably a softening of the internal demand due to some deleveraging in the household sector. This configuration reinforces our expectations in terms of monetary tightening, which we expect will start at the end of 2015 (i.e. after the Fed). Based on this view and as oil prices can dip lower in Q1,we believe there is room for the exchange rate to depreciate further in the short term.

The three key points noted by Mr.Julien are:

Canadian consumers will benefit from the lower gas prices.
The mining sector will be hurt if the current oil price trend stays for sometime.
The depreciation of the Canadian dollar against the US dollar will give a boost to non-oil industries that export to the US.

Though the favorable exchange rate would benefit non-oil industries labor costs are high in Canada compared to the U.S. especially in the manufacturing sector as shown in the chart below:

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Canadian exports to the U.S. have been flat in the past few years:

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Source: Should we be worried about Canada in 2015?, Jan 15, 2015, Natixis

Five Canadian stocks trading on the NYSE are listed below:

1.Company: TELUS Corp (TU)
Current Dividend Yield: 3.93%
Sector: Telecom

2.Company: BCE Inc (BCE)
Current Dividend Yield: 4.55%
Sector: Telecom

3.Company: TransCanada Corp (TRP)
Current Dividend Yield: 3.68%
Sector: Oil & Gas Transportation

4.Company: Enbridge Inc (ENB)
Current Dividend Yield: 3.01%
Sector: Oil & Gas Transportation

5.Company: Magna International Inc(MGA)
Current Dividend Yield: 1.58%
Sector: Auto Components

Note: Dividend yields noted above are as of Jan 23, 2015. Data is known to be accurate from sources used.Please use your own due diligence before making any investment decisions.

Disclosure: No Positions

Related:

Hey Canadian investors: Buy America, Jan 27, 2015, Financial Post

IHS Energy 50: The World’s Largest Listed Energy Firms Lists

Posted by David Hunkar on 25 January 2015, 8:19 am

IHS acquired the prestigious energy and oil consultancy PFC Energy in 2013. Since then, the popular PFC annual ranking of the world’s largest energy and related-industry firms have been renamed as IHS Enery 50. This year’s ranking using 2014 data will be published next month. For now lets take a look at the 2014 rankings.

NOTE: All the data shown below including are based on 2013 data.

1. The Global Top 15 Oilfield & Drill Services Firms:

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Even after falling nearly 50% with the crash in oil prices in the past few months, Schlumberger(SLB) has a market capitalization of over $104 billion.Competitor Halliburton’s (HAL) stock price has declined from $74 to $41 now. In November of last year Norwegian oil services company Seadrill(SDRL) suspended its dividend payments causing a major crash in its stock price. Today the stock goes for about $10 a piece.France-based CGG SA (CGG) may have a rough ride for some time since Technip(TKPPY) ended its takeover plan.

2. The Global Top 15 Equipment, Engineering and Construction Firms:

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The above companies provide all the equipment and build the facilities and infrastructure needed by the big oil majors. Their share prices have also declined sharply in recent months. However investors can nibble at some of these companies at current levels.

3. The Global Top 15 Midstream & Infrastructure Firms:

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4. The Global Top 15 Refining & Marketing Firms:

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5. The Global Top 15 Exploration & Production Firms:

6. The IHS Energy 50:

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Note:
IOC – Integrated Oil Companies
NOC – National Oil Companies

Source: IHS Energy 50, IHS

Most of these IOCs and NOCs have major declines in their market caps since last year. It would be interesting to see how this year’s ranking turns out. The Russian oil firms Gazprom and Lukoil trade on the OTC with the tickers OGZPY and LUKOY respectively.

Download: IHS Energy 50 Full Report for 2014 (in pdf)

Disclosure: Long TKPPY