Recent buys – shopping spreed style

buy

After reading personal finance books like The Wealthy Barber, and Flipping Burgers to Flipping Millions, the idea of buying assets rather than buying depreciation things was imprinted in my brain. This is why I get more excited about buying dividend stocks than buying things like electronic gadgets. It’s also probably the reason why it would take me months to provide my birthday or Christmas wishlist to Mrs. T. 🙂

The recent market volatility has made me wanting to buy as many dividend stocks as we can. Whenever I don’t pull the buy trigger for a while, I get this weird feeling inside. A part of me don’t believe in market timing, but a part of me always want to wait for a market down day before pulling the buy trigger. I suppose, it is more satisfying to buy dividend stocks on a day when the market is down; buying things on sale is always better than buying things not on sale.

The last few weeks we saw a few huge one day drops in the worldwide stock markets and a few big rallies the very next day. Mr. Market just can’t make up his mind and is being very irrational lately. This is just fine for dividend growth investors like us, because we will receive dividends nonetheless. Furthermore, a drop in the market provides great buying opportunities. We are still accumulating shares for our portfolio, so it’s always excellent to be able to squeeze in an extra share or two with the same amount of cash due to the stock price drop.

With that in mind we recently purchased the following stocks:

13 shares of Chevron (CVX)
55 shares of Canadian Natural Resources (CNQ.TO)
67 shares of Enbridge (ENB.TO)
20 shares of Canadian National Railway (CNR.TO)
25 shares of Procter & Gamble (PG)

The theme of these purchases is to take advantage of the recent market drops. The oil & energy sector has taken a large beating the last half year due to the price of crude oil. It’s shocking to see CVX at mid $70 and having dividend yield of more than 5%. There are many discussions among dividend investors on whether Chevron has sufficient cash from earnings to continue paying dividends and whether Chevron can continue raising dividend payout while facing headwinds caused by the low crude oil price. Considering the long dividend history, I believe Chevron will continue paying dividends to reward its investors. It will simply be very detrimental for Chevron to cut its dividends since investors will take this move very poorly, resulting them selling their Chevron shares and causing the stock price to drop further. If challenged by the low crude oil price, the Chevron board may decide to hold dividend payout at the same amount for a few quarters without raising it. Considering a high dividend yield to begin with in our latest purchase, we can afford to wait for the oil price to recover. This purchase also allowed us to average down our cost basis.

Similar to Chevron, Canadian Natural Resources, Enbridge, and Canadian National Railway all have seen their price drops in recent months. All three of these companies have very solid dividend histories and have consistently raised dividend payout for a number of years. Purchasing additional shares in CNQ and ENB will allow us to enroll in synthetic dividend reinvestment plans (DRIP) with our discount broker, Questrade. As we DRIP more shares over time, this will allow us to average our cost basis. We added more CNR shares as a way to bring down our cost average. Although CNR’s dividend yield is less than 2%, it has a 10 year annualized dividend growth rate of 17.8%. This kind of impressive growth rate means the yield on cost can be quite significant in a few years. We will probably continue adding more CNR shares to allow us to enroll in DRIP one day.

I struggled a little bit trying to decide whether to purchase Procter & Gamble or Johnson & Johnson with our remaining US cash. Ideally I’d love to purchase both PG and JNJ as I think both are slightly undervalued right now. I ended up going with PG because I wanted to allocate more money within our dividend portfolio to the consumer staple sector. PG is fighting a bit of headwind lately and there are worries about its future earnings growth. Despite all these concerns, I believe PG is a very solid long term holding. Like the rest of the world population, we use PG products on a daily basis and will continue spending money day in and day out to purchase more PG products. We don’t have enough PG shares to enroll in DRIP but we’re getting very close.

As you can probably have guessed by now, our goal is to eventually DRIP most of our positions in our dividend portfolio. Reinvesting dividends will allow us to take full advantage of the power of compound interest. DRIP will also allow us to take advantage of dollar cost averaging. Once we’re DRIPing positions, we could simple leave them on auto-pilot and keep buying additional shares each quarter (or month if dividend is paid out monthly). When we eventually need the dividend to cover our monthly expenses, we will stop DRIPing and use the money. It’s a straight forward strategy.

These purchases add $323 in our annual dividend income.

What do you think about our recent shopping spreed?

Get update via email:

You Might Also Like

38 Comments

  • Reply
    Vivianne
    September 22, 2015 at 8:46 am

    $325 is just icing on the cake for you guys. We are entering the bear market so dividend stocks rule!! I’m looking to improve my yields so I’m eyeing on some oil stocks in the near future. Thanks for sharing your buys.

    • Reply
      Tawcan
      September 24, 2015 at 6:13 am

      Hi vivianne,

      While oil stocks are providing good yield right now, definitely need to keep an eye on the payout ratio to make sure the dividends won’t get cut.

  • Reply
    Roadmap2Retire
    September 22, 2015 at 9:18 am

    Nice list of purchases, T. Congrats on adding another $235 to your income!

    R2R

    • Reply
      Tawcan
      September 24, 2015 at 6:13 am

      Thanks R2R.

  • Reply
    Dividend Gremlin
    September 22, 2015 at 9:39 am

    Tawcan,
    Nice set of buys there! I’m not as familiar with ENB or CNQ, but considering your other moves I bet they are awesome. Sale or not, any addition to a portfolio pushing up your passive income stream is great. Though, why not grab a few more shares in the sale right?!
    Keep it up, its always great to see people pushing the FI boundaries.
    – Gremlin

    • Reply
      Tawcan
      September 24, 2015 at 6:14 am

      Hi Gremlin,

      Exactly, when things are on sale I wish that we can buy more things. Too bad not enough cash.

  • Reply
    JC
    September 22, 2015 at 3:12 pm

    Nice buys. I’m staying away from O&G for the time being but that’s because I’m overweight the sector and I work in the sector. That’s a recipe for disaster if low oil prices persist for a couple years. Great job adding over $320 to your forward dividends. I can’t wait to build up my cash buffer a bit and then get back to investing again. I’ve been having to sit on the sidelines with all this volatility and it’s been killing me.

    • Reply
      Tawcan
      September 24, 2015 at 6:27 am

      Hi JC,

      A good idea staying away from O&G specially if you’re overweight that sector and you happen to work in the same sector. Certainly don’t want to get a double whamming during a low crude oil price cycle.

  • Reply
    My Own Advisor
    September 22, 2015 at 5:37 pm

    Wow, those are some big buys! I can’t afford to buy anything until 2016 (TFSA room).

    • Reply
      Tawcan
      September 24, 2015 at 6:28 am

      Hi Mark,

      We are trying to save for the 2016 TFSA room too. So hard to just save and not pulling any triggers.

      • Reply
        Sampson
        October 25, 2015 at 12:41 pm

        Why do you have to wait? Just transfer the assets in-kind when more room opens up.

        • Reply
          Tawcan
          October 28, 2015 at 11:06 am

          Hi Sampson,

          Have to wait because we do not have any more contribution room left in our TSFA and RRSP for this year.

          • Tintin
            October 29, 2015 at 9:12 am

            I think what he meant was, if you have cash allocated for next year’s TFSA and RRSP available right now, then buy the stocks on sale now in your taxable accounts and then transfer them over to your registered accounts without selling them (in-kind) next year when your room opens up.

          • Tawcan
            October 29, 2015 at 11:10 am

            Right, that makes sense. We’ve done something similar. The minor problem with this kind of transfer is that you need to calculate the profit/loss from the transfer. Not a big deal, just requires some time. 🙂

  • Reply
    Dividend Hustler
    September 22, 2015 at 10:01 pm

    Awesome purchases Tawcan. Nice to see you collecting some awesome ASSETS. 🙂 Cheers to those buys bud. LOVE IT!!

    • Reply
      Tawcan
      September 24, 2015 at 6:28 am

      Hi Dividend Hustler,

      Buying assets is way better than buying depreciating things.

  • Reply
    FIbrarian
    September 23, 2015 at 1:03 am

    Looks like some solid choices. Already showing a great return with plenty of room to grow in the future. I know what you mean about waiting to see the ticker in red before you pull the trigger but I try not to let it worry me too much. Like DG above me said, any addition to a portfolio is good news.

    • Reply
      Tawcan
      September 24, 2015 at 6:29 am

      Hi FIbrarian,

      Any addition to a portfolio, as long as the company is solid, is good news. A solid company will continue growing in the future.

  • Reply
    Income Surfer
    September 23, 2015 at 4:06 am

    Great buys Tawcan. Buying assets, rather than depreciating toys, is the way to build wealth. Those look like some solid dividend stocks. I think/hope we will all get the chance to average down in the future!
    -Bryan

    • Reply
      Tawcan
      September 24, 2015 at 6:30 am

      Hi Bryan,

      Thanks, hoping that the market will stay volatile for a while so we can continue buying things on discount.

  • Reply
    Brian
    September 23, 2015 at 6:57 am

    Have been watching PG as well. Maybe time to pull the trigger but having trouble getting the exchange rate.

    BTW — I think the term is consumer “staple”, not “stable” and it should “yield on cost”.

    • Reply
      Tawcan
      September 24, 2015 at 6:31 am

      Hi Brian,

      The CAN dollar is getting killed due to the low oil price. Tough to buy US stocks at current exchange rate that’s for sure. Thanks for pointing out the spelling mistakes. Oops, need to proof read more closely before hitting the publish button.

  • Reply
    Steve Miller
    September 23, 2015 at 10:06 am

    Congrats on the extra dividend income. When you make purchases like this, do you normally keep them at least a year to avoid ST capital gains tax?

  • Reply
    NRG
    September 23, 2015 at 10:33 am

    Great companies with long term dividend increases. Also bought ECI, ENB, BPF.UN,
    HCG, CSH.UN. Took a chance and bought CRH also. Looking at GUD even though they both do not pay a div.

    • Reply
      Tawcan
      September 24, 2015 at 6:33 am

      Wow NRG, you’re certainly doing a lot of purchases. Some of these names we’re looking into as well.

  • Reply
    BeSmartRich
    September 23, 2015 at 3:27 pm

    Great purchases. I recently purchased CVX and CNQ. Also purchased some US railways. I am quite happy to see current volatile market as it keeps giving us good opportunities to buy. Thanks for sharing!

    Cheers!

    BSR

    • Reply
      Tawcan
      September 24, 2015 at 6:35 am

      Hi BSR,

      Would love to purchase some US railways, it’s just tough to pull the buy trigger for US stocks at current exchange rate.

  • Reply
    B
    September 24, 2015 at 6:08 am

    Shopping spree during market uncertainty adds great value over the long run. Who cares about short term fluctuations anyway?

    • Reply
      Tawcan
      September 24, 2015 at 6:35 am

      Hi B,

      Exactly my thought. We are investing for the long run.

  • Reply
    Jayson @ Monster Piggy Bank
    September 26, 2015 at 4:46 pm

    Another purchase and additional to your long list. Your list is now 5 items longer. Congrats Taw!

  • Reply
    Investment Hunting
    September 27, 2015 at 11:47 am

    You have been busy lately. Nice work, buying quality stocks at a discount.

  • Reply
    DivHut
    September 27, 2015 at 11:39 pm

    Well I always like to say it’s not about the idea of buying assets rather the idea of buying income producing assets which will set you apart. Nice to see a different rail being bought. The rails have all been beaten pretty bad in 2015. No doubt with slowing global economies and lower oil demand the rails are sporting much better value and yields. Have you seen Warren Buffett and Bill Gates like railroads, and you should too http://www.marketwatch.com/story/warren-buffett-and-bill-gates-like-railroads-and-you-should-too-2015-09-17 I share this every time I see a new rail buy. Great buys all around. Like PG too!

  • Reply
    Michelle
    September 28, 2015 at 2:10 am

    I am amazed with your dividend portfolio. Of all the portfolios I have seen, yours is one of the best, Taw. Go for the long run! Congrats.

  • Reply
    Janet Fazio
    September 30, 2015 at 10:30 am

    I’ve had dividend stocks for years. It’s an easy way to grow your portfolio (reinvest the dividends) or to take that special vacation.

  • Reply
    DivGuy
    October 1, 2015 at 12:19 pm

    Wow, I like all your purchases! Very good moves to me Tawcan! A lot of quality there and at discounted price too. How can it get better? Yes true, when the dividends come in bigger each time! 😉

    Cheers!

    Mike

  • Reply
    Geblin
    October 1, 2015 at 1:28 pm

    Hi Tawcan,

    I have the same problem. I also want to wait for a day or week when the stocks are going down before I start buying. Some nice buys. P&G is also on my watchlist.

    Take care!

    Cheers,
    Geblin

  • Reply
    Dividend Reads for the Weekend
    October 2, 2015 at 8:31 am

    […] bought a whole bunch of different stocks… it feels like […]

  • Reply
    othalafehu
    March 2, 2017 at 7:44 am

    I have my own shopping spree coming up here in a month or so, can’t wait. I have earmarked $19k across a dozen or so stocks to add to already held positions, feels like Christmas doesn’t it?

  • Leave a Reply