Tuesday, 19 August 2014

New Purchase - Suncor


On August 18th, I bought 100 shares of Suncor @ $42.50 + $9.95 commission ($42.60). My initial dividend yield is 2.62%.

These shares will add $112.00 to my forward 12-month dividends, which now stand at $6,681.29.

Below is my analysis of SU’s stock price.

Average Dividend Yield Analysis*

SU
Year
High Price
Low Price
1Q
div.
2Q
div.
3Q
div.
4Q
div.
Annual Dividend
High Yield
Low Yield
2003
$16.43
$11.66
$0.02125
$0.025
$0.025
$0.025
$0.0963
0.83%
0.59%
2004
$22.25
$15.48
$0.025
$0.03
$0.03
$0.03
$0.1150
0.74%
0.52%
2005
$33.29
$19.38
$0.03
$0.03
$0.03
$0.03
$0.1200
0.62%
0.36%
2006
$51.09
$35.59
$0.03
$0.04
$0.04
$0.04
$0.15
0.42%
0.29%
2007
$54.74
$39.83
$0.04
$0.05
$0.05
$0.05
$0.19
0.48%
0.35%
2008
$73.10
$18.80
$0.05
$0.05
$0.05
$0.05
$0.20
1.06%
0.27%
2009
$40.79
$21.15
$0.05
$0.05
$0.10
$0.10
$0.30
1.42%
0.74%
2010
$39.45
$29.91
$0.10
$0.10
$0.10
$0.10
$0.40
1.34%
1.01%
2011
$47.27
$23.97
$0.10
$0.11
$0.11
$0.11
$0.43
1.79%
0.91%
2012
$37.28
$26.97
$0.11
$0.13
$0.13
$0.13
$0.50
1.85%
1.34%
2013
$38.56
$27.50
$0.13
$0.20
$0.20
$0.20
$0.73
2.65%
1.89%
2014


$0.23
$0.23
$0.28
$0.28
$1.02


2015


$0.28
$0.28
$0.28
$0.28










11y ave
1.20%
0.75%







5y ave
1.81%
1.18%







3y ave
2.10%
1.38%







5y
$56.30
$86.54







3y
$48.55
$73.84






Super Cheap
$38.42




The table shows the 3 year average dividend yield to be 2.10% ((1.79% + 1.85% + 2.65%)/3). I use the numbers in the “High Yield” column for obvious reasons.

Using the current annual dividend of $1.12, one would have to pay $48.55 for a 2.10% dividend yield.

Buying the stock at its low in 2013 would have earned you an initial yield of 2.65%. Using the current annual dividend, that corresponds to a stock price of $38.42 today (see “super cheap” price in the table above).

Graham Price

SU’s 2011, 2012 and 2013 EPS were $2.74, $1.77 and $2.61. 3Y Ave EPS = $2.37.
SU’s BV is $28.58.
Graham Price = SQRT (3Y Ave EPS * BV * 22.5) = $39.07

Cyclically Adjusted Price to Earnings Ratio

SU’s 10Y Ave EPS = $2.19
CAPE = Stock Price / 9Y Ave EPS = $43.25 / $2.19 = 19.8
A CAPE below 20 is good.

6 comments:

  1. Hi there, Average Dividend Yield

    I've been working on expanding my blogroll recently, and stumbled onto your site. I find the idea of using average dividend yield as a selection criterium very interesting. I'll have to study it more!

    Great site and and visit again!

    Cheers
    FerdiS

    PS. Checkout http://divgro.blogspot.com/p/blogroll.html

    ReplyDelete
    Replies
    1. It's a metric I was introduced to by Tom Connolly (dividendgrowth.ca). Investment quality trends (a news letter) also uses it to evaluate share prices. So far, it's been pretty good to me. I like it because it's simple to understand and use.

      Thanks for dropping by. I'll definately check out your blog.

      Delete
  2. Suncor is definitely a name I want to own for the long haul, but I'm a little uncomfortable at this price level. I really should have scooped this up earlier in the year when it was in the low 30's, as I really felt it was a compelling value then.

    ReplyDelete
    Replies
    1. When it comes to compelling value, I cannot find much. If I didn't already own a lot of TGT, ESV and RCI.b, I would have bought more of them instead of SU. Nonetheless, I feel comfortable with SU's long term prospects.

      Thanks for stopping by.

      Delete
  3. I bought some SU 4-5 years ago. It took a while before it took off. But now I am happy to own it. And they have already increased their dividend twice not long ago. For the long haul. Congrats!

    ReplyDelete
    Replies
    1. I was looking for a Canadian stocks for my margin account (to benefit from the dividend tax credit), and SU came up as fairly valued. Let's hope that keystone XL and/or Northern Gateway get built. That would be a nice catalyst!

      Delete