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Short List of Stocks for June 2011

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June is going to be an investing month for me. I have some capital coming in and I will be funding my TFSA and adding to my RRSP. I have been compiling a short list of stocks for each of the account to consider and research further. Looking into the Dividend Yield versus the Dividend Growth was a really good reminder to keep tomorrow in mind and not just focus on today’s yield. I do like a nice yield though but the markets have recovered since early 2009.

TFSA – Tax Free Saving Account

My short list of stocks for my tax free savings account need the meet the following criteria:

  • Ability to DRIP shares from dividends
  • Good price point for value growth
  • Good yield – above 4%

PWF – Power Financial

Power Financial Corporation (PWF) Dividend AnalysisIt owns Great West-LifeCo and insurance companies were beaten harder than the financial sector in my opinion during the financial crisis. GWO is holding back PWF a little and I feel it can be a great moment to get into it. I have been debating between Power Corporation (POW), the parent company of PWF, but I would like to be just a little closer to the holdings PWF has in GWO and IGM.

COS – Canadian Oil Sands

COS - Canadian Oil SandsCanadian Oil Sands is on my list to review to get a deeper look. Like some of my other holding in my TFSA, it used to be an income trust. It does have a good yield, payout ratio and is positioned in the mid-range of its 52-week high and lows. I want to look at some historical trends and where its going. At 14B$ in market capitalization, it is a good size oil producer for Canada.

PWF vs COS

Canadian Oil Sands is a very new listing as of January 1st, 2011. It previously was an income trust as COS.UN. From a movement perspective, COS was following the oil price roller coster while PWF with its life insurance, mutual funds and wealth management holdings was staying put due to lack of economic confidence.

TickerCompanyQuote52 Week RatioP/EDividendYieldPayout Ratio$ to DRIP 1 Share
PWF.TOPower Financial$30.0561.24%14.33$0.354.66%66.67%$2,580.01
COS.TOCanadian Oil Sand$29.9558.87%13.91$0.304.01%55.81%$2,990.01

Short List of Stocks

RRSP – Registered Retirement Saving Plan

With the current value of the Canadian dollars, I am going to be focusing on getting some US holdings. From a tax perspective, it is best to hold my US dividend payers into my RRSP. I have been interested in taking a position in Coca-Cola (KO) and Johnson & Johnson (JNJ) for a while now but I ended up holding Kimberley-Clark (KMB) and AT&T (T) instead.

I can’t really follow the same rules as my Canadian investments here in terms of criteria. First of all, the price of the 2 stocks below requires a relatively large investment to DRIP a share per quarter. I’ll have to settle for cash :)

KO – Coca-Cola

KO - Coca Cola DividendsThe darling of many. It is a global conglomerate with a strong brand presence around the world. Dividend Monk just released a timely review of Coca-Cola highlighting the strong growth history, the global diversification, the potential currency exchange risk, as well as showing that its current P/E is not accurately reflecting its true value due to one time earnings. As mentioned in his review, finding a good entry point is the challenge. Patience and fund availability is required.

JNJ – Johnson & Johnson

JNJ - Johnson & Johnson DividendsJNJ is another conglomerate in the healthcare industry. Their products are part of our daily life and used regularly. It’s a healthy business to provide products needed on a regular basis. The closest investment near this segment I hold is Kimberley-Clark and there are very little options to invest in healthcare/drugs north of the 49th parallel.

KO vs JNJ

The 5 year track record seem to indicate that KO has more volatility than JNJ but also more growth it would seem. JNJ still has not gotten pass the high of its pre financial crisis time and it could highlight that investors have been conservative around it. Time to buy?

TickerCompanyQuote52 Week RatioP/EDividendYieldPayout Ratio$ to DRIP 1 Share
KOCoca-Cola$65.2081.50%12.61$0.472.88%36.36%$9044.76
JNJJohnson & Johnson$65.5082.21%14.85$0.573.48%51.70%$7526.75

Short List of Stocks

Thoughts

I am currently leaning towards Power Financial (PWF) and Johnson & Johnson (JNJ). Both of them have yields that are attractive at the current prices and they have shown healthy dividend growth historically. Aside from the dividends, the current price level leaves room for growth and appreciation.

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8 Responses to "Short List of Stocks for June 2011"

  1. Mihou says:

    Hi PIE,
    You probably meant june 2011.
    You can’t go wrong with JnJ when it comes to dividends.
    Since I own some share of POW.TO ,i own in someway a little part of PWF.TO
    I also own COS.TO which gives decent dividends.
    Cheers
    Mihou

  2. In hindsight, June is starting well for you with the market pullback but given all the negativity, take your time to wade in as July might even provide better buying opps!

  3. I like your list, and I’m a fan of both Coke and J&J, as I hold both. I think J&J is the better buy of the two, from a valuation standpoint. I don’t think you could go wrong buying either one, but obviously finding a good entry point on KO is difficult, as you mentioned. I recently entered in to a position with Intel (this morning), so my buying is done for June. Good luck with your decision!

  4. moneycone says:

    JNJ’s being hit by one setback after another. Hopefully they’ll get their act together. Good time to get in if in it for the long haul!

  5. DLH says:

    JNJ is fantastic – one of the best dividend stocks in general and definitely the best healthcare (along with maybe ABT). I established a position in’ 09 when it was down in the 40s and then added to it late last year when it was down around $56. Just shy of enough to drip 1 share at the current price!

    I also recently picked up a healthy chunk of PWF on a dip around $30 a few months ago. Since it’s dipped back down again I am considering adding to my position but SLF also seems to be a bargain right now so might diversify a bit…

  6. Go for PWF and JNJ when you feel the timing is right, I love those stocks, but I’m biased, I them both ;)

    Best of luck in your decision, please let me/us know what you select my friend.

    Cheers,
    Mark

  7. I used to own JNJ and I’m interested in picking it up again, though am waiting for a good entry point.

    I think that JNJ would be better than Coke for the long term, baby boomers will be using JNJ more, rather than drinking Coke (unless they want diabetes, in which case, JNJ would profit even more haha)

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