A Case for Lower Yield Stocks

Things started to settle a little after all the research last week.  Still some residual activity but at least I’m getting some time to visit other blogs and do some comparison shopping – so to speak.  One garnering my attention was Passive Canadian Income’s doubling of his Alimentation Couche-Tard (better known in the US as Quik-Trip) stake.  I was intrigued as the same week I had doubled my Casey’s position on the news they were buying some Quik-Trip stores in Oklahoma.  The magnitude of his purchase was greater in that Casey’s is little more than a sideshow for me as I am still grappling with how it fits in the portfolio with the low yield – a question addressed in his piece.

I laid out the pertinent data he used to get a side-by-side picture:

Interesting to note the similarities.  Couche-Tard has better dividend growth while Casey’s is longer.  Couche-Tard is the second largest C-Store (behind Japan’s 7&I) while Casey’s is fourth.  Unmentioned – but one basis for my Casey’s investment are RINs (fuel blending) which are an added profit source when selling the surplus to refiners.  Overall, unless one has a country bias or other rationale (like RINs), Couche-Tard is a little better even when accounting for recovery of the Canadian tax on dividends.

Subsequent to last week’s post, I look an even closer look at Apex Clearing.  A rarity in the SPAC space, they are profitable and expanding their service offerings.  Then I noticed they were hovering just above the $10 line.  So I ‘un-paused’ my SPAC hiatus and placed an order to nibble on Northern Star (NSTB) which will become APX at $9.98.  With Friday’s close at $9.91, I may have to nibble come more next week.

One area where I’d been remiss was in proactively following up on dividend raises – or more specifically the lack therof.  This was brought to my attention with the Casey research.  Basically, I glanced down the sheet and Equifax (EFX) was staring right back at me.  I bought it in 2015 – prior to the data breach – got a raise in December 2016 and should have questioned the lack of raises thereafter, no later than January 2019. Their last raise was December 2016.

I do own stocks that pay no dividend or have a history of no raises – but they currently have a strategy in play.  The strategy in play with EFX ended in 2017 and I kept it on the basis of the housing and refinance boom, of which most is now in the rear view mirror (I think).  I have about a month before it goes ex-dividend after which it will be jettisoned unless I find a compelling reason otherwise.

This just proves I enjoy the hunt more than the maintenance.  Looking at my annual strategies that have now run their course appears to be an area ripe for pruning and a source of more dry powder! Food for thought – follow the money. I want to investigate a little deeper on how consumers are spending their stimulus checks now that the first report is out.

Hope your week is profitable and safe.