Call this the Revenge of the Consumer!

Canadian MoneySaver

 Fed up with those persistent, unending, nickel-and-diming charges on your bank’s monthly savings-account statement? Had it up to here with your buck-30-per-litre price at the pump? Can’t take any more of those outrageous $200-a-month, all-in fees for your home phone, Internet and premium high-def TV? And what about you, your kids and your friendly mobile carrier on your smart phones – now, we’re talking serious money!!!

Of course, you’ve had enough! You want that consumers’ revenge – and you want it now! Here’s the easy, smart way: Quit your whining and just buy the doggone stocks of the companies you love to hate.

Think about it: Canadian oils, banks and telcos — along with energy and resources generally – form the lifeblood and much of the heart and soul of the Canadian investment environment. We’re a small nation, and we investors have limited large-cap investment choices if we choose to keep our money within the country.

Run down this short list as an example: Royal Bank. TD. Scotia. BCE. Rogers. Telus. Canadian Oil Sands. All big caps, all major players – and all coming to your door complete with the measure of safety and stability that well-run big caps might typically offer. And all of them, at the very same time, are annoying the devil out of you because they’ve got their hands so deeply into your household’s pockets. (Well, in Canadian Oil Sands’ case, which posts a dividend yield approaching 7%, the hands aren’t directly into your pockets; that’s a more roundabout route that ultimately leads downstream to the refiners and gasoline retailers!)
 
Here’s the deal: You hate these guys for what they do to you personally; you should love them for what they can do for you financially. They all pay dividends, decent divvys in the 3-5% range, double (or much better) than what you can get with a bank GIC. With inflation running around 2%, the dividends from these companies do their part to help keep your portfolio – and your sanity – afloat. And that’s not even considering the prospect for improved corporate earnings performance, the prospect for stock-price capital gains – and the long-term prospect for dividend increases, which would enhance your buy-in yield.

Let’s take just one example, RBC, to make the point: RBC just announced record annual earnings, coming in for fiscal 2012 with earnings well ahead of those achieved in fiscal 2011. RBC pays a dividend of 60 cents per quarter ($2.40 annualized), generating a dividend yield north of 4%. Now, let’s say you had the presence of mind to buy RBC back in the year 2000, when it paid four quarterly dividends totalling 57 cents annualized. Had you bought back then, and simply held the stock, your yield in 2012 would have more than quadrupled over your RBC stock buy-in price. And that’s not even considering that RBC stock is DRIP-able, which means that, if you chose to roll over your quarterly dividends into new stock at presumably discounted prices, your effective yield today would have been even greater. And all of this doesn’t fully consider the degree of RBC’s stock-price appreciation – in 2000 and again in 2006, the bank rewarded its investors with new stock dividends that had the same, salutary effect as a two-for-one stock split. 

We use RBC here only as an example – and not necessarily as a suggestion to run out and buy RBC stock. You could run down the list of the few examples posted here and find a similar pattern of stock-price and dividend-growth appreciation.

The takeaway? As consumers, hate these guys as you inevitably will because they are annoying. As investors, hold them close to your heart, be patient with them, and chances are, over time, they will return your love many times over.

Canadian MoneySaver