Sunday, 8 May 2011

Newest Step

Heyo Folks -

I have had a bit of a "Doh!" moment this week. I realized that I cannot DRIP part units of most of my stocks - I simply do not have enough dividends coming in to get new shares for the dividends earned.

This now seems like an obvious thought - but like I said I am still learning.

This week I picked up some payments from my REITs - every little bit adds up.

I have spent a good portion of the week reading and learning from a couple of blogs out there notably:

The Passive Income Earner
Dividend Money
and of course
The Dividend Guy Blog
and many others that I visit on a regular basis.

I had some money moved over from an RRSP I had with an old employer - and more to move as I get clearance to move over the profit sharing portion.

With that money just sitting there and not paying it's way; I have been looking for somewhere to put it. That in mind and applying what I have learned from the blogosphere I created a screener and tried to locate a stock to put to work for me.

My screener looked for the following:
  • Yield > 4.5%
  • EPS growth over previous year > 10%
  • Dividend 5 year growth average > 8%
  • Dividend Coverage (EPS/Dividend*100) of at least 115%
This screener returned three possibles
  • Emera Inc  (TSX:EMA) witha a 57.7% 5 year annualized return
  • Wisconsin Energy Corp (NYSE:WEC) with a 48.1% annualized return
  • Altria Group Inc (NYSE:MO) with a 142.6% 5 year annualized return
I ruled out Altria right away as it is a tobacco company - as it turns out that matters to me.

That left me with Emera and Wisconsin Energy

Both are in the utilities world. Emera has the much higher yield and the better dividend growth rate. Wisconsin Energy has the better EPS growth and better dividend coverage.

NameEPS Growth (Projected This Year vs. Last Year)Dividend YieldDividend Growth Rate 5 Year AverageDividend Coverage
Emera Inc16%11%70%145%
Wisconsin Energy Corp30%5.10%36%244%

Ultimately I decided on 100 shares of WEC for a couple of reasons

  • A chance to leverage the strength of the Canadian dollar
  • WEC looks to have better long term prospects to grow the dividend

Now with both Algonquin and WEC in my portfolio I am a little utility heavy so now need to find my next target. I found a couple of articles which may help one about Microsoft, Dell and Cisco at Frank Voisin and another at The Dividend Pig about Intel.

Let me know what you think!


  1. Welcome to the blogger community!

  2. Beware stock mkt. P/e ratios too high. Americans can't buy, govts in US & Europe pulling back, Japn in crisis , China growth slowing.--Robert Reich