After our recent purchases where we deployed around $7,500, I have been looking for buying opportunities to deploy more cash in our TFSA accounts. Although I typically have some cash sitting around, I don’t like having a large amount of cash in our portfolio as this is an opportunity cost that I’m taking on. I believe it’s better off to deploy cash when the right opportunity occurs and getting our money working hard for us rather than having money idling and doing absolutely nothing.
Luckily we saw some volatility in the stock market the last few weeks. This allowed the purchases the following stocks:
- 110 shares of H&R REIT (HR.UN)
- 80 shares of High Liner Foods (HLF.TO)
- 37 shares of BCE Inc (BCE.TO)
Around $6,200 was deployed with these purchases. Since beginning of 2017 we have added around $13,700 worth of dividend stocks to our dividend portfolio.
All three of these buys gadded to our existing positions.
Reasons for Purchasing
Below are my reasons for purchasing these dividend paying stocks.
In January, I mentioned H&R REIT as one of the stocks that I’m monitoring. Instead of owning rental properties and having to manage them on our spare time, we like the idea of investing in REITs and still collecting rental income. We have owned H&R REIT for a while now and enjoyed collecting the rental income distribution each month. We particular like H&R REIT because it is very diversified. It is both geographically diversified and industry diversified.
Just recently H&R REIT increases the monthly distribution. It has a solid occupancy rate of ~96% with a 68.2% payout ratio as percentage of FFO in Q3 2016. With top 15 tenants being large corporations, including Encana, Bell, Hess Corporation, New York City Department of Health, Canadian Tire, and Telus, accounting 51% of H&R REIT’s rental income, I believe the H&R REIT’s profitability will remain quite stable. Why? Because these large corporations are very unlikely to move their offices.
High Liner Foods
We purchased High Liner Foods back in April 2016. The stock saw a price jump in 2016 and since then the price has pulled back slightly. I see the price pull back as a buying opportunity. Upon further research, High Liner Foods is one the largest frozen seafood producers and distributors in Canada, the US, and Mexico. I believe there is further growth potential for High Liner Foods as it expands outside of North America. High Liner Foods has a 5 year dividend growth rate of 14.1% and recently raised its dividend by 7.7% from $0.13 per share to $0.14 per share. This is the second time that High Liner Foods has increased dividend payout in a year. At a payout ratio of 40.5%, I believe High Liner Foods will continue growing its dividend.
Due to the modern busy lifestyle, many people simply don’t have much time to prepare meal from scratch. High Liner Foods’ sustainable sourced seafood products allow people to enjoy seafood without having to spend too much prep time. Furthermore, more and more people are cutting back their meat consumption and increasing their consumption of seafood. With a company mission of providing healthy, easy to prepare, delicious seafood options, I think there are a lot of future growth for High Liner Foods.
I decided to purchase some shares of BCE for the primary reason to increase our exposure in the telecom sector. With the popularity of cellphones and people’s addiction to data and media, I see telecom as a stable sector. How many people do you know that don’t own a cellphone, don’t own a landline, don’t own a TV, or don’t listen to the radio? Probably not many, unless they live in a cave! BCE is one of the three major communication companies in Canada with a large market share. We purchased BCE rather than Rogers and Telus because BCE stock price has retrieved quite a bit in the last few months. You can see this purchase as yet another opportunistic buy. I like to add to existing long term positions when there’s a share price pullback.
The three purchases added $303.16 to our annual dividend income.
Dear readers, what do you think about our purchases?