The Globe and Mail attempts to identify dividend-paying companies
with low variability in
earnings and low historical beta in its Friday, May 21, edition. The Globe's Ian Tam writes in the Number Cruncher column that he looked for companies that have reasonable
valuations, provide a sustainable
yield and have low variability in
earnings. Earnings variability is a key factor
in Mr. Tam's strategy. Lower
variability is desired for conservative
stockpickers.
Beta measures the historical
sensitivity of a stock's price
movement to the S&P/TSX composite
index. Conservative stockpickers tend to like lower beta
stocks since they will move less
than the index when markets
trend downward.
Mr. Tam considered historical five-year price beta. He looked at the expected dividend yield. His picks had to have three-month positive estimate revisions. Variability of historical earnings was also a consideration.
Qualifying companies have a
dividend greater than 1 per cent
and a dividend payout ratio less
than 80 per cent.
Mr. Tam recommends buying Emera, BCE, Bank of Nova Scotia, National Bank of Canada, Brookfield Asset Management, Shaw Communications, Keyera, Imperial Oil, Empire and Loblaw.
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