CanWel Building Materials Group Ltd. offers a generous yield of 9.76%

Jun 10th, 2015 – 1 Comment

The next challenge for CWX is to see if it can break above the 200-day moving average and start a new leg up.

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My question is on CanWel building materials I have held it for about 3 years mainly because of the dividend and in the hope of a jump in share price.

I am now wondering if I would be better served with another dividend stock?





Hey Peter,

Thanks for the assignment. This will be the second time that I probe the details associated with CanWel Building Materials Group Ltd. (CWX TSX). The first time was on April 6, 2015 on a request from Ross. The shares were trading for $6.00 with a dividend yield of 9.33% and Ross requested my opinion. The research conducted on his behalf indicated that CWX was meeting resistance near $6.25, a level which had held back the stock since September of 2014.

The shares were testing support along the 50 and 200-day moving averages and it was evident that sellers were in control of the market. From the details at hand it was advised that we could expect a retest of support near $5.50. Retrospectively that is what transpired.

Another inspection of the charts will add some depth to your consideration.



The three-year chart depicts the slide to $5.30 by late May of 2015 and the subsequent bounce to the current trading level near $5.80. The MACD and the RSI signalled that sellers were in control of the market in late March when the shares traded near $6.25. By late April a death cross surfaced indicating that investors could expect more selling pressure.








The six-month chart provides an enhanced focus on the sell signals generated by the MACD and the RSI in March and the buy signals that surfaced in late May as the shares came off the low near $5.30. The next challenge for CWX is to see if it can break above the 200-day moving average and start a new leg up.

Regarding your investment period of three years and the thesis of capturing a capital gain it would appear that you are in the money on your target plus the dividends you would have collected. The current market environment is somewhat unsettled with the bond market selloff pointing to investors demanding higher yields.  In general higher yields will put pressure on dividend paying stocks.

Next time I will run the charts for Pengrowth Energy Corp. (PGF TSX) for CJ.


Make it a profitable day and happy capitalism!



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