Exchange Income (EIF.TO)

Payout ratio is 78%, pretty safe. Modelling 20% EPS growth. Recent acquisition is performing well. Pretty cheap. Have had higher labour costs. Two things to watch: 1) very whippy, as it’s a small cap, 2) balance sheet, if we’re going into a recession. If we don’t have a recession for a while, you can do quite well. (Analysts’ price target is around $34.)

It operates in the aerospace and manufacturing segments. It is dominant in rural parts of Canada. They make commercial and industrial tanks and pressure washing system. They were the target of short selling a while ago so the company bought back shares and increased the dividend. They have dealt with the issue quite well. The dividend is still a high payout ratio, however. Hang on to this one.

(A Top Pick Oct 25/17, Up 11%) High dividend paying company. An income play. It is osculating between $30-$35.

Collection of companies, aviation and others, where he thinks there’s huge value. In it for the long haul. It’s a hold at this level, but only because they already own a lot.

It ranks in the top 10% of his dividend model. It had an earnings surprise earlier this month, and is expected to grow 15% this year with a 13 P/E. He likes it. ROE is 15%.

This company has had a hard time with aggressive short sellers. They have responded with insider buying and by raising the dividend. This is a conglomerate. They have some good businesses, but he always gets nervous with companies that acquire other businesses. He’s not nervous about the short sellers, thinks they’ve been proven wrong. The yield is quite generous, over 7%, but this is a hard company to analyze because it has so many moving parts.

This name really moves around. This company has some issues with respects as to what is classified as maintenance and capex. Some short sellers have drawn attention to that. It is a small cap. The balance sheet is not perfect. But it has a P/E of 10. 57% payout ratio and a nice dividend yield. You can have this name for a taxable account.

It is a small cap. The balance sheet is not bad. There are a lot of dividends in Canada that are a lot higher than they should be (5-7%) but he feels we have an all clear on this one. He models 17% earnings growth. Last quarter they beat estimates by 10% and boosted the divided. It is a good buy here.

There is an aviation and manufacturing division within this company. As a conglomerate it usually trades at a discount. There was a short selling investor who had issues with some of their acquisitions in the past. Some lower margin leasing activity in the aviation division may also be creating some uncertainty with investors.

This company grows by acquisition with an aviation business in Northern Canada and in the manufacturing sector. A high yield with only a 34% payout ratio and an ROE of 14.9%. Yield 6.6%. (Analysts’ price target is $45.20 )

As a proud Manitoban, he likes this company. It has mostly government contracted aviation deals. It is trading at a discount to its historical multiple, but the problem is they keep spending their money. They need a couple years to consolidate capital. They could face future competition in their Northern Canadian market space. The yield is about 6%. It is not a bad buy here at the current price weakness.

Regional planes and aftermarket parts distribution. He likes the business. It’s been under pressure from a Short seller making comments about using debt to pay the dividend. He is not convinced. They’ve been fairly active doing acquisitions, and he looks at the debt as being for acquisitions. Trading at a reasonable valuation at about 16X, and pays a great dividend of almost 6%. He is buying for new clients.

(Market Call Minute.) There are Short reports out there, and he is trying to get his head around as to whether the Shorts have nailed this or not. There are some concerning signals. He would hold off on this.

This has gotten beaten up over the last 6-12 months. A short seller report came out questioning what they need to spend on some of the CapX on their airlines, as well as if dividends are sustainable. The company came out with good earnings which solidified their dividends. The stock rebounded up to around $34-$35, but has now come back down to around the $30 mark for no rhyme or reason. (Analysts’ price target is $42.)

A kind of illiquid stock that moves around a lot. There is a Short Seller piece out there that says they are not going to have enough free cash to meet their dividend. CapX has been elevated. Thinks the Short Sellers are wrong and that they are going to grow their earnings by 12% over the next couple of years compounded annually. He models a payout ratio of 96% for 2017 next year. Thinks you will get a good combination of dividend and upside from here. Dividend yield of 6%+.