Saturday, 9 March 2013

SNC Lavalin Increases Dividend


On Friday, SNC Lavalin (SNC.TO) increased its dividend by 4.5%, from $0.88 to $0.92 per year. Given the stocks low yield, I was expecting an 8-10% increase. On the bright side, 4.5% probably covers real inflation. It would seem that management is being cautious given the Libyan, Canadian, and now Algerian scandals.

The new CEO, Robert Card, is cleaning house and I have faith the company will be back on track in a year.

In early 2012, I traded in and out of SNC Lavalin and made capital gains of $903.16 + $50.60 in dividends. Then in August and September 2012, I established a long-term position of 350 shares for $12,769.90 ($36.49/share).

My initial yield was 2.4% ($0.88/$36.49). With the recent increase, my yield on cost is 2.5% ($0.92/$36.49).

Remember:

                Total long-term return (CAGR) = Initial Yield + Dividend Growth


4 comments:

  1. ADY – was a bit disappointing. They only earned $0.63/share in Q4 2013, and analysts had been looking for a lot more. There was also grumblings about SNC expecting only a 10-15% profit increase for 2013, which again is way less than analysts had forecast. These days if you miss out on the analysts expectations you get hammered...

    ReplyDelete
    Replies
    1. DoD, You're bang on - These days if you miss out on analysts expectations you get hammered - and that is why I'm holding back on purchases. I find most valuations are based on forward P/E. So I'm just waiting till EPS don't materialize and stock prices get hammered. In the case of SNC, I'm not buying more because it's already a significant part of my portfolio.

      Delete
  2. SNC is a great buy. Buying it @ 36$ was a good move, because you've profited from the scandals and everything. It's textbook stock value hunting. I should not have sold my 50 shares. I regret it. SNC should do well in the future. Great portfolio ADY.

    ReplyDelete
    Replies
    1. Looks like you may get another opportunity to get in on SNC. I'm wondering just how far down the share price will go. I hope other good companies go throught scandals this year - I intend to keep profiting from the fear of others! Thanks for stopping by.

      Delete