What are we looking for?
Prime stock picks for new buying – despite their appeal as candidates for tax-loss selling!
The screen
The lure of cutting taxes can spur investors to make costly mistakes. Chief among them – especially at this time of year – is the urge to dump high-quality stocks that have fallen. The goal is to declare a tax loss in order to offset a tax gain. Still, that often translates into a bargain for investors willing to buy stocks well positioned for a rebound in the new year.
In fact, as our analysts at The Successful Investor point out, some of the lowest-risk, highest-profit investments you’ll ever make come from buying a good stock when other investors are ignoring its value and selling it.
We started this search with an extensive list of dividend-paying stocks, before singling out those further battered by tax-loss selling. (Note: This year’s deadline is Tuesday, Dec. 30.) They otherwise have promising outlooks bolstered by leading market positions. Our system awards points to a stock based on key factors:
- two points if it has raised the payment in the past five years
- one point for management’s commitment to dividends
- one point for operating in non-cyclical industries
- 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 sufficient to cover dividend payments
- one point for being an industry leader
- one point for five years of continuous dividend payments
- two points for more than five
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; four to six points, average sustainability; and one to three points, below average sustainability.
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 and strong positioning for growth in 2025 despite significant share price declines this year.
Montreal-based Canadian National Railway Co. CNR-T operates Canada’s largest railway. The stock is down 10.2 per cent from its January high.
Telus Corp. T-T, based in Vancouver, is Canada’s largest wireless carrier. It also sells landline phone, internet, TV and security services in B.C., Alberta and Eastern Quebec. The shares are down 20 per cent from their March high.
Thomson Reuters Corp. TRI-T, based in Toronto, sells specialized information (mainly through electronic channels) to professionals in the legal and tax and accounting fields. It also owns the Reuters news service. The stock is down 13.4 per cent from its July high.
Chicago-based Conagra Brands Inc. CAG-N makes a variety of popular foods, including Chef Boyardee canned pasta, Hunt’s tomato sauce, Orville Redenbacher popcorn and Reddi-wip whipped cream. The shares are down 38.2 per cent from their January high.
Becton, Dickinson & Co. BDX-N, headquartered in New Jersey, is a medical device maker operating through three segments. The stock is down 22.3 per cent from its January high.
FirstService Corp. FSV-T, based in Toronto, has two main businesses: FirstService Residential, which provides an array of property management services, and FirstService Brands, which includes Paul Davis Restoration, CertaPro Painters and California Closets. The company’s shares are down 25.2 per cent from their September high.
Scott Clayton, MBA, is senior analyst for TSI Network and associate editor of TSI Dividend Advisor.