What are we looking for?
Prime stock picks for buying now for the new year – despite their appeal as candidates for year-end tax-loss selling before the Dec. 30 deadline.
The screen
The lure of avoiding taxes can spur investors to make costly mistakes. Chief among those errors – especially at this time of year – is the urge to dump high-quality stocks that are down in order to realize a tax loss for 2024. Still, mistakes by others can offer you bargains, as the best of these stocks often rebound sharply in the new year.
In fact, some of the lowest-risk, highest-profit investments you’ll ever make come about because you bought a good stock when other investors were ignoring its value and selling it, particularly during tax-loss season.
We started this search with an extensive list of dividend-paying stocks that were down in 2024, before singling out those further battered by tax-loss selling. They otherwise have promising outlooks bolstered by leading market positions. Our system awards points to a stock based on key factors:
- One point for five years of continuous dividend payments. Two points for more than five years;
- One point for management’s commitment to dividends;
- One point for operating in a non-cyclical industry;
- One point for limited exposure to foreign currency rates and freedom from political interference;
- Two points for a strong balance sheet, including manageable debt and adequate cash;
- Two points for a long-term record of positive earnings and cash flow to cover dividends;
- One point if the company is an industry leader.
Companies with 10 to 12 points have the most secure dividends, or the highest sustainability. Those with seven to nine points have above-average sustainability; average sustainability, four to six points; and below-average sustainability, one to three points.
More about TSI Network
TSI Network is the online home of The Successful Investor Inc. – the group of widely followed Canadian investment newsletters by editor and publisher Pat McKeough. They include our award-winning flagship newsletter, The Successful Investor, and the TSI Dividend Advisor. TSI Network is also affiliated with Successful Investor Wealth Management.
What we found
Our TSI Dividend Sustainability Rating System generated six stocks with sustainable dividends despite significant share price declines during 2024.
Montreal-based Canadian National Railway Co. CNR-T operates Canada’s largest railway. The stock is down 14.9 per cent from its March, 2024, high.
Telus Corp. T-T, based in Vancouver, is Canada’s largest wireless carrier. It also sells landline phone, internet, television and security services in British Columbia, Alberta and eastern Quebec. The shares are down 11.5 per cent from their January, 2024, high.
Headquartered in Saskatoon, Nutrien Inc. NTR-T is the world’s largest producer of agricultural fertilizers. The stock is down 18.7 per cent from its May, 2024, high.
Stanley Black & Decker Inc. SWK-N, based in Connecticut, is one of the world’s largest makers of hand and power tools. The company’s shares are down 22.4 per cent from their recent September, 2024, high.
Headquartered in Idaho, Lamb Weston Holdings Inc. LW-N is a leading producer of frozen French fries, potatoes and other packaged vegetables. The stock is down 30.3 per cent from its January, 2024, high.
Genuine Parts Co. GPC-N, based in Atlanta, is a leading seller of replacement auto parts. It also distributes industrial parts such as bearings, seals, pumps and hoses. The shares are down 23.4 per cent from their April, 2024, high.
Scott Clayton, MBA, is senior analyst for TSI Network and associate editor of TSI Dividend Advisor.
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