Beating the TSX in 2013

Back in March 2012 I performed an analysis of the Beating the TSX portfolio. I thought it might be time to take another look.  Here is the methodology:

  • Begin with the TSX60 stocks.
  • Remove any stocks with a dividend of less than 3%. This minimizes the number of stocks I need to analyze.
  • Remove any stocks that might have an unsustainable dividend. For this I remove any stock with a payout ratio above 1.2 (equivalent to a coverage of less than 83%). I also remove any former trusts.
  • Finally, select the ten stocks with the highest dividends.

The analysis looks like this:

Screen Shot 2013-02-07 at 7.52.59 PM

The resulting list is as follows.

  1. BCE Inc.
  2. Bank of Montreal
  3. Canadian Imperial Bank Of Commerce
  4. Power Corporation of Canada
  5. National Bank of Canada
  6. Shaw Communications Inc.
  7. Bank of Nova Scotia (The)
  8. Husky Energy Inc.
  9. Royal Bank of Canada
  10. TELUS Corporation

Interestingly, four of the companies on the earlier list have fallen off as they no longer have a sustainable payout ratio.  These decliners are:

  • Manulife Financial Corporation
  • Sun Life Financial Inc.
  • TransAlta Corporation
  • Thomson Reuters Corporation
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6 thoughts on “Beating the TSX in 2013

  1. Rob says:

    Just wondering, how has BTSX done so far, think you almost a a year, I’m doing the same but slightly different picks. Home tomorrow so will lst you know.

    Rob

  2. Hi Rob. I did build a BTSX portfolio about a year ago but I have gradually moved away from it since then. The TSX itself has lagged so I have moved some money into an S&P fund. I also dropped troubled stocks like TransAlta (TA.TO). I only own three Canadian stocks now: POW.TO, COS.TO and T.TO. The inventor of BTSX, David Stanley, publishes an assessment of the BTSX portfolio each July in Canadian Moneysaver newsletter (https://www.canadianmoneysaver.ca). He also publishes his new picks for the following 12 months in the same article. It’s worth reading.

    I’m in the process of reassessing my portfolio. I recently parted ways with my financial adviser and I’m going to use this as an opportunity to consolidate what I have learned from the past 24 months of investing and writing about it at Dataclutter.com. I’m thinking of:

    – 25% fixed income fund (like XBB.TO)
    – 20% Canadian equities
    – 20% S&P fund (like XSP.TO)
    – 20% Europe/Asia fund (like XIN
    – 10% Speculative
    – 5% Gold fund (like PHY-U.TO)

    For the Canadian Equities portion I am thinking of either buying a TSX60 fund like XIU.TO or possibly adopting BTSX again. Theoretically BTSX will beat a TSX60 fund, but this year BSTX looks to be overweight in banks. Given recent downgrade of Canadian banks I’m a little worried that this might be a bad year for BTSX.

  3. Rob says:

    That doesn’t look like a bad portfolio mix, kind of thing that Andrew Hallam talks about. For CDN equities are you thinking ETF or stocks?

    Two questions I’m pondering is, US stocks, currently don’t have any, and whether doing BTSX plus a few individual stocks is, as you mentioned is too concentrated.

  4. Rob says:

    Also I just finished reading the Dividend Guy Blogs book and like your list up there re looking at my BTSX list to see if you should adjust it as you did to reflect a sustainable payout ratio or just remove former income trusts.

    BTW added in PGF a former income trust, mistake, down almost 30% on that one, but since it’s part of my BTSX I’ll hold it for a year.

  5. Rob says:

    Can’t edit comments but I just noticed the PGF isn’t on the list as it’s not part of the TSX60. Just realized when I did my list I was simply using the top yielding stocks not the TSX60 top yielding stocks

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