●HCP, Inc. (HCP)
HCP stock looks cheap right now. The company expects to report 2013 FFO per share of $2.97 to $3.03. Using the middle of that range, the P/FFO is smidgeon over 12 at the moment. It has a very respectable dividend growth history of 28 years. In addition, the next dividend increase should be announced in January which would push the streak to 29. FFO per share grew approximately 8% this year leading me to believe stock holders might enjoy a 5-10% dividend boost. Did I mention stock in this company currently yields 5.8% and is part of the growing healthcare REIT industry? Quite a lot to like with HCP.
Two factors seem to have pushed share price lower recently: higher interest rates and a CEO change. Interest rates are going up. A 10 year US treasury bond currently yields 3.01%. On 12/31/2012 bonds with the same duration yielded 1.76%. Holy crap!
|One year chart of the 10 year T-Note|
Anyways HCP is a bit too diversified for my tastes (I don't want to invest in medical office/hospitals/life science buildings) a fact I can over look because rent is rent, the value is there, and its income generation capacity is strong. If the current prices holds, odds are I grab some shares of this business next month.
----Canadian Equities----●Toronto Dominion Bank (TD) still appears undervalued and I'd be willing to pay up to $95 per share. The share price is currently attractive in part because of exchange rates. As the US dollar strengthens, it makes shares of foreign companies cheaper. Great for new purchases, but also makes dividends smaller on the shares I already own. I also like Bank of Nova Scotia here and think it might be even more undervalued than TD. I'd be more inclined to go with TD simply because of portfolio weightings. BNS is a higher % of my portfolio, plus I recently turned the BNS DRIP on so it will grow automatically. Both have performed well as income stocks. TD has the edge in dividend growth, BNS has the edge in current yield. In fact TD announced three(!) dividend boosts this year. TD currently yields 3.5%, BNS 3.8%.
●Telus (TU) would be a nice addition because I haven't purchased a telecom since 2011. I already own more than enough AT&T. Verizon appears expensive plus there seems to be a lot of moving parts with the Vodafone deal. I may be looking north to our good friends in Canada for my next move in the sector. First of all TU yields about 3.9%. That's nice and all, but I expect decent yields from telecoms. What sets Telus apart from its dividend growth peers is that it plans to increase dividends twice per year through 2016 for a combined total around 10%. This company is very open about it, refreshing! It's difficult to find decent dividend growth in the telecom sector, TU indeed delivers. It has good EPS growth prospects and a reasonable payout ratio to support it. Telus isn't particularly levered and sports a solid capital structure compared to BCE, RCI, and VZ. Pretty similar to AT&T is that regard. Rogers Communications and Telus appear equivalent for dividend growth potential until balance sheets are compared. TU is much more secure.
It appears Telus has a 9 year dividend growth streak in its native currency, yet it does not appear on the CCC lists. Perhaps it slipped through the cracks due to exchange rates? Anyways I'm open to starting a position around $33 so I'd need a small dip.
I hope everyone is enjoying the holidays! Merry Christmas!