Published Fri, 18 Oct 2019 09:40:08 -0400 on Seeking Alpha
Lately, I have emphasized improving the quality of the stocks in the portfolio and that can be seen primarily in the Taxable account where Dividend Kings and Aristocrats have grown to be a larger part of the portfolio. Finding quality companies has become more challenging since the goal is to purchase them at (or below) fair value since this decreases the downside potential, increases the dividend yield and improves the chance of upside in the future.
Vermilion Energy (VET) is an interesting play when we think about quality because the stock price has plummeted which has subsequently increased the dividend yield beyond a reasonable level. Historically speaking (even during volatile times), VET has seen its dividend yield push 6% and today it stands at more than double that level.
Data by YCharts
At first glance, this stock looks like a sucker-yield, which is a term that SA author Brad Thomas commonly uses to describe stocks that have an unsustainable dividend based on earnings or other factors that would make an investor want to avoid purchasing shares. When it comes to the oil market we have seen increased volatility over the last three-plus years which has pushed the price of crude to record-low prices on a number of occasions.
When looking at VET it is important to remember that cash-flow is king which means that FFO is a better indicator of how VET is performing. Please note that the FastGraphs image shown below is denominated in Canadian dollars.
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|Stock name||Last trade||P/E||Earnings/Share||Dividend/Share||Dividend yield|
|BRITISH AMERICAN TOBACCO||37.99||0.0||0.00||2.68||6.64|
|PHILIP MORRIS INTERNATIONAL||74.90||14.9||5.03||4.68||6.12|
|MAIN STREET CAPITAL||43.18||16.8||2.57||2.46||5.69|
|CANADIAN IMPERIAL BANK OF COMMERCE||81.35||9.5||8.59||4.33||5.17|
|BANK OF NOVA SCOTIA||56.20||11.2||5.02||2.70||4.79|
|WP CAREY & CO||88.72||31.4||2.83||4.14||4.73|
|ROYAL BANK OF CANADA||78.79||11.9||6.61||3.16||4.00|
|ILLINOIS TOOL WORKS||159.85||21.5||7.45||4.28||2.54|
|BANK OF AMERICA||29.67||10.6||2.80||0.72||2.45|
|JOHNSON CONTROLS INTERNATIONAL||44.30||6.7||6.57||1.04||2.42|
|EAST WEST BANCORP||45.79||10.2||4.50||1.10||2.39|
|BERKSHIRE HATHAWAY A||324010.00||28.5||11356.59||0.00||0.00|
|BERKSHIRE HATHAWAY B||214.20||0.0||0.00||0.00||0.00|
|LAURENTIAN BANK OF CANADA||34.05||0.0||0.00||0.00||0.00|
Older articles featuring Vermilion Energy (VET):Canadian Dividend Cuts And Suspensions List - What To Do
Dividend Cut And Suspension List - What To Do
Ovintiv: Anticipating A Dividend Cut
93 Monthly Pay Dividend Dogs And 80 Top Yield Funds For March
The Retiree's Dividend Portfolio - Jane's January Update: 4 Reasons Why You Find It Difficult Saving Money
This 6% Yield Is Not Fat, It Is Just A Little Husky
73 Dividend Boosts Declared January 20 And 27, 2020
89 Monthly Pay Dividend Dogs And 80 Top Yield Funds For February
The Retiree's Dividend Portfolio - Jane's December Update: The Year-End Review
How To Boost Your Yields Using The 'Income Method'