Canadian Dividend Watch List: September 26, 2014

Performance Review

Below is the 1-year performance of the Canadian dividend stocks from our September 2013 watch list.

The performance of the September 2013 Watch List severely underperformed the Toronto Stock Exchange which gained +16.99%. A fascination of ours is the performance of a stock that we have covered here at NLO for a short period of time, Just Energy (JE.TO).  On February 18, 2013, we said the following of Just Energy:

“On the technical front, Just Energy is fast approaching the 2009 low of $6.60 after breaking below the November 2012 low of $8.00.  There appears to be tremendous technical support at the $6.00 level going all the way back to 2003.  If you’re interested in this stock, consideration of purchases of Just Energy should be entered into in three phases, once at $6.60, $6.00 and $4.00.  Naturally,  breaking below $6.00 on the downside suggests that the floor’s the limit.”

Since February 18, 2013, JE.TO fell slightly below our $6.00 target and then took off to the $7.90 level.  We recommended that investors consider selling the principal in JE.TO on July 31, 2013.  In that July 2013 posting we also said:

“We are resigned to the possibility that $8.00 could be a technical resistance level.  Additionally, the $6 support level has moved down to the March low of $5.89.  No use getting fancy about exceptional gains as the dividend has already been cut -32% since our February posting (found here).”

As soon as JE.TO fell to the $6.00 level on August 17, 2013, we suggested that JE.TO was worth considering with the following commentary:

“Because JE.TO is trending lower, we recommend reassessing the stock when and if it declines to the $6.15 level.  The dividend for JE.TO should not be a consideration for this stock as there are continued risks to the dividend going forward.”

As Just Energy has managed to achieve almost all of our upside and downside targets, we can only refer back to our comments from February 2013 regarding the support level at $4.00.  Anyone still interested in this stock should be willing to accept the considerable downside risk.  Additionally, the $6.00 level is the new resistance for the stock.  If JE.TO were to fall well below the $4.00 level then that would become the new upside resistance.  It would take exceptional news to propel the stock above the $6.00 level.

The top five stocks from our watch list last year had the following performance:

For all of our concern about REITs, they managed to do better than we expected.

Canadian Dividend Watch List

Below is the Canadian Dividend Watch List for September 26, 2014:

Watch List Summary

When we’re looking at a stock, downside consideration is of primary importance.  The first stock on our list was reviewed on June 24, 2014 with an assessment of downside risk.  At that time we said that the next downside target was $21.17 and $18.56.  After making a stab at the $25.00 level on the upside, NWC.TO finally broken down to the current price of $22.26.  This decline is significant because it exceeds the prior lows that were set on July 8, 2014 at $23.51.

From a technical standpoint, NWC.TO looks like it will decline to the $21.68 level at minimum and potentially fall to the first downside target of $21.17.  Based on the previous performance of NWC.TO using Dow Theory applied to the Altimeter, we’d consider a two-part purchase of the stock at $18.56 and $14.50.