Safe Dividend Investing
Safe Dividend Investing
PODCAST209 - IS THIS THE ULTIMATE FINANCIALLY STRONG STOCK?
Welcome to this week's Safe Dividend Investing's podcast. You may want to go to the printed transcript, provided with this podcast, to review additional information.
The first 190 Safe Dividend Investing podcasts answered hundreds of questions from my podcast listeners and readers of my publications. Since then the weekly podcasts have usually dealt with identifying the week's 10 dividend stocks whose recent exceptional share price growth on the New York and Toronto stock exchanges may worth have made them worth considering as possible portfolio acquisitions.
This week we analyze what I believe is the financially strongest stock, out of thousands, that I have scored in the last 10 years.
Visit www.informus.ca for information and reviews on my six investment guide books and stock scoring software.
IAN
imacd@informus.ca
Ian Duncan MacDonald
Author, Artist, Commercial Risk Consultant,
President of Informus Inc
2 Vista Humber Drive
Toronto, Ontario
Canada, M9P 3R7
Toronto Telephone - 416-245-4994
New York Telephone - 929-800-2397
imacd@informus.ca
PODCAST 209 – 22 FEBRUARY 2025
SAFE DIVIDEND INVESTING
IS THIS THE ULTIMATE FINANCIALLY STRONG DIVIDEND STOCK?
Greetings to listeners all around the world. Welcome to Safe Dividend Investing’s Podcast # 209, on February 22nd of 2025. My name is Ian Duncan MacDonald.
In the first 190 Podcasts of Safe Dividend Investing, you can find answers to hundreds of investment questions. Starting with Podcast 191 the podcast format was changed to bring to your attention the five U.S. and the five Canadian high dividend stocks whose share prices gained the most in the last week.
The joy of being financially independent is that I can write about whatever I think you should be aware of. Today is a departure from the last 17 podcasts because my research for Podcasts 203 and 208 brought to my attention a stock that was the highest scoring stock I have ever encountered. I think it is a stock that should be used by investors to compare their stock choices. Following you will find an analysis of this stock’s strength as illustrated by its score.
The weekly identity of the 10 high-dividend stocks with the greatest share price this week will appear after this analysis.
I first started scoring stocks ten years ago. For my various books, podcasts and correspondence I have scored thousands of stocks traded on the New York and Toronto stock exchanges. During this time, I have learned that out of the 12,000 or more stocks traded on North American exchanges there are very few stocks that attain a score greater than 70 out of 100. The highest score I had previously ever encountered was a bank with a score of 78. It surprised me that today’s unusual stock is not a financial institution but a Denver, Colorado oil and natural gas exploration and production company by the name of Civitas Resources, Inc . It scored an incredible 86 out of 100.
Now is a good time to mention that for tax reasons I have no US investments, nor do I tell readers and listeners what stocks to buy. I do objectively score stocks for my readers, but I consider my readers and listeners to be quite capable of making their own decisions on what they choose to invest in. While I will never own shares in Civitas Resources (stock symbol CIVI) that does not mean the stock did not intrigue me or make me want to look at it more closely at it and write about it.
Why had I never heard of Civitas? How is it possible for it to have obtained a score of 86 in a world where I have scored stocks that only scored 3 out of 100?
All day long, like me you are probably bombarded by promoters pushing questionable investments. They supplying no hard facts that would allow me to judge the strength and potential of the stock they are promoting. These promoters seem to see investing as an exciting adventure rather than the logical, reasoned approach that I use. They try to capture your attention emotionally with the same dreams of sure riches that are used to sell you a weekly lottery ticket. These are some actual headlines in today’s email from promoters:
“WHY BUFFETT AND 100 MEMBERS OF CONGRESS ARE PILING INTO THIS ONE INVESTMENT”
“BUYBACKS GALORE. 3 MEGA-CAPS JUST APPROVED BILLIONS IN BUYBACKS”
“AFTER EARNINGS, IS THIS STOCK THE BEST ENERGY PLAY"
“THIS CRYPTO IS SET TO EXPLODE IN FEBRUARY”
There is a mountain of facts available on any stock listed on any stock exchange. Public companies must submit quarterly financial reports to the Securities Commission. This factual information is freely and easily available to any investor. Why do most investors seem to only listen to the promotional hype on a popular stock instead of consulting the facts available on any stock?
It is possible to determine the strength and potential of a company within a few minutes, not hours. There are only a few key facts that need to be considered. If you are investing tens or even hundreds of thousands of dollars in a stock, is it not worth more of your time than what you might spend selecting salad dressing in a grocery store?
Perhaps it is just a matter of showing investors where to find the few facts they need to gather. With these facts and the IDM stock scoring software that is freely distributed to my book buyers, they can almost instantly have an objective measure to compare the stocks they are considering buying.
It all starts with the free stock information available at https://finance.yahoo.com. Using Civitas Resources as our example lets walk through the process of simple easy analysis scoring.
When you go to Yahoo Finance. The first thing you enter is the name of the stock. Immediately hundreds of key facts are displayed. We are only interested in 9 key facts.
The most prominent fact in big bold print is the share price, on the February 20 of 2025 it was $50.69. The share price is the first of eleven items the software uses to score a stock out of a possible 100. Each of the sub score items is measured out of 10. A $50.69 stock price scores 9 out of a possible 10. In my books you can see the detailed charts that the software is using to fit a share price into a slot that will generate a sub score.
Another scoring item is the dividend yield percent the stock pays. Dividends are paid out of profits and are good indicators of a stock’s financial strength. For Civitas the dividend yield is 4.97% which slots it into a score of 8 out of 10.
The third item is the book value of the stock. Book value is what accountants calculate is the “tangible” value of the company divided by the number of shares held. You find the book value figure under Yahoo’s “Statistics” heading. Civitas’ book value of $68.68 slots it into a sub score of 9 out of 10. Book value is also used to calculate a second sub score where the $68.68 is compared to the share price of $50.69. This comparison’s percentage slots it into a further sub score 8 out of 10.
The next item is the operating margin of the Civitas. This is the percentage of the amount left over after the operating expenses have been subtracted from the revenue figures. In this case the operating margin is 39.13%. This slots it into a sub score of 6 out of 10.
The price-to-earnings ratio is the next important factor. How much do you have to sell of a product to generate a dollar in profit. To earn one dollar for every 4 dollars sold is a much healthier return than earning one dollar for every $300 sold. In this case the price-to-earnings ratio for Civitas is 4.84x and results in a sub score of 10 out of 10.
It is difficult to buy and sell shares in a company whose shares are of little interest to investors. Some stocks sell only a few hundred shares on a typical day. In Civitas’ case the average daily volume of shares traded is 1,293,566. This slots Civitas into a sub score of 9 out of 10.
Investors feel much more comfortable with a stock whose share price has gained over the last few years than one that has declined. When we go back 4 years in the Yahoo Historical data and look at the price of a Civitas share on . March 1st of 2021 we can see that it was $32.72. This slots Civitas into a sub score of 8. When we next compare this historical price to the current price of $50.72 this results in a further sub score of 9 out of a possible 10. “
The final sub score originates from the number of “buy” and “strong buy” recommendations that Yahoo Finance has received from analysts on Civitas. Nine analysts rated it a “buy” which slots it into a sub score of 5 out of 5. Six other analysts rated the stock a “strong buy” which also slots it into a further sub score of 5 out of 5. While analyst recommendations are only opinions, they do influence share prices and cannot be ignored.
When you add up all these sub scores the result is a total score for the stock of 86.
It takes me about 3 minutes to calculate a stock’s score. It is not difficult using the IDM stock scoring software that I supply freely with my books. In these books I provide a chapter which details exactly how the score works so readers can work out a score manually if they choose. If you wish to get a copy of this scoring chapter, send an email request to me at imacd@informus.ca and will email it back to you.
The two remaining steps in assessing the purchase of a stock are to check share prices and dividend payouts going back to 1999. Ideally you want to see steady increases in both. Often dividend payouts rise faster, as a percentage, than the share prices. In Civitas’ case you will see that dividend payments and share prices only go back to 2011 and they are not consistently rising
The final check is a Google search using the wording “Civitas Resources legals and complaints”. Skimming through dozens of reported items that are returned there were no indications of fraud, misuse of funds or executive malpractice. You learn that the company was formerly known as Bonanza Creek Energy, Inc. and that Civitas Resources, Inc. was founded in 1999.
Civitas Resources is not a spectacular company, but its executives are obviously making good decisions which have resulted in a better show of financial strength than I have ever seen in another stock.
Are there stocks scoring between 50 and 60 out of 100 that would pay a much higher dividend yield percent and show faster, quicker share price gains? Absolutely. However, you are not investing all your money in one stock. Hopefully you are spreading it equally among 20 different stocks. Often stocks with higher scores pay lower dividend yields but you need some higher scoring stocks to provide stability to your portfolio. The strength and revenue dependability of the total portfolio is more important than any one stock in it. Let us now look at this week’s highest share price gainers.
The Selectors used to select this week’s dividend stock with highest share price gain:
(1) Trading volume exceeding 638,500 in US shares and 170,150 in Canadian shares.
(2) US dividend yields exceeding 5% and Canadian yields exceeding 4%
(3) A weekly share price gain exceeding 4 % in the US stocks and 2% in Canadian stocks.
(4) US operating margins exceeding 20% and 3% in Canadian stocks
(5) A share price exceeding $18.95 for US stocks and $18.95 for Canadian stocks.
The 5 US common stocks identified using these 5 selectors were:
1 . Crown Castle Inc (CCI )
2 . Realty Income Corp (O)
3 . Verizon Communications (VZ )
4. W.P. Carey Inc (WPC )
5. The Kraft Heinz Co (KHC )
The 5 Canadian common stocks identified using these 5 selectors were:
1. Emera Inc (EMA )
2. Capital Power Corp (CPX )
3. Canadian National Railway (CNR )
4. Nutrien Ltd (NTR )
5. Tourmaline Oil Corp (TOU)
Unlike in previous weeks I am not scoring these 10 stocks. I am encouraging you to score them. Practice makes perfect. If you know how to score stocks, it will remove many of the doubts you may have always had in picking stocks.
If you do not already have the IDM stock scoring software that is available with my investment guides, you can request that I email you free of charge the Chapter from my last book that shows you how to calculate the scores manually.
Please visit my website www.informus.cawhere you can learn more about my system of safe investing. All my investment guidebooks with their reviews are available at Amazon.com. They are available in print and immediately available in an e-book format. For those who don’t read books that website will give you a further understanding of my approach to carefully selecting safe stocks with generous dividends.
My scoring system has helped many investors quickly measure, compare, and choose the best financially strong stocks for their portfolios.
In the written transcript of this podcast, you can learn about my background and what motivated me to start writing about safe investing.
Until next week’s podcast this is Ian Duncan MacDonald encouraging you to become a successful self-directed investor.
BACKGROUND
Investment companies work hard to convince the public that they could never invest profitably without allowing the financial industry to nibble away at a client’s life savings for the rest of their lives. The objective of advisors is to transfer as much money from your pocket to the pocket of the financial institution that employs them.
I knew 24 years ago that I had to find a better way to invest when I saw a $300,000 loss in the mutual funds an investment advisor had put my life savings into. Since then, I have learned if you are patient and disciplined you can easily grow your portfolio as a self-directed investor without paying hundreds of thousands of dollars in fees over your lifetime to the investment industry parasites.
My early research quickly showed me that most investors are speculators who see their wealth destroyed when their bet on a stock increasing in price falls below their purchase price. With such speculative churning encouraged by the investment industry, it seemed obvious to me that no one can accurately predict future share prices.
I became a successful self-directed investor by carefully selecting and buying 20 strong, high dividend stocks through my bank’s online self-directed investment platform.
Why have I never been disappointed in my income or my capital gain from my 20 stocks? Because my financially strong stocks have paid ever increasing dividend payments out of their company profits.
While share prices are determined by impulsive speculators making guesses, my dividend payouts are the result of the wise revenue and expense decisions of the experienced managers of the companies whose shares I own.
By looking at free, accessible records that go back for decades, anyone can easily see before they buy a share how that stock’s fluctuating share price has had little or no impact on a stock’s rising dividend payouts.
What do I do when a market crash comes along, and the share price of my stocks, like all stocks, may drop by 50%? I relax and do nothing because I live off my dividends. Those dividends are paid throughout the crash as regularly as they have always been paid by these strong stocks. I know from experiencing the last three market crashes that the share prices of my 20 financially strong stocks w, high values. During the crash I pay my monthly bills with my dividend income just as I have always done.
The idea the investment industry promotes that your portfolio must shrink in value after you retire is meant to scare you into buying more of their investment products. The value of my portfolio has grown by several multiples into the 7 figures and is still growing.
I go for years without selling any of the stocks in my portfolio while realizing a dividend income of 6 to 8 percent each year of the value of my portfolio. Most years the share prices of my 20 strong companies can also increase by about 12%. These rising share prices often cause the company’s managers to proudly increase their dividend payouts to maintain their stock’s historically high dividend yield percentages. That has kept my dividend income well ahead of inflation. You too can also build a strong dividend portfolio just like I did.
END