Since our last round of purchases where we added $415 into our annual dividend income, the markets have continued to be volatile. Due to the recent decline in crude oil price, Bank of Canada even announced that the overnight interest rate between commercial banks will be cut from 1% to 0.75%. This major announcement sent shock waves across Canada. What does this mean exactly? Does it mean the economy is slowing down? Does it mean the housing market will crash? Does it mean that we will see another recession? There are many questions but it’s rather difficult to have convincing answers and predict the future (if we can we’d be all rich!). Interesting enough, since the interest rate announcement, stocks have been rallying. Perhaps it’s a coincidence as crude oil price has also rebounded the last few weeks. Whether this is recent pop is a dead cat bounce or not remains to be seen.
What does a Canadian like me do when the markets are down? As I’ve learned from my experience in dividend investing, we took advantage of this opportunity and invested in some solid Canadian dividend paying stocks.
Recently we invested roughly $2,500 of capital and purchased the following stocks.
24 shares of Bank of Nova Scotia (BNS.TO)
30 shares of Canadian Natural Resources (CNQ.TO)
I wrote some brief analysis of BNS and CNQ back in Nov. Since then, the price of both stocks have taken a hit. Purchasing more shares of BNS and CNQ allows us to average down our cost basis. Looking at the fundamentals of both BNS and CNQ, I still believe both companies have great future growths and will continue raising their dividends moving forward.
These purchases will add $89.76 into our annual dividend income.
Looking ahead, our plan is to deposit some cash into our RRSP before the March 2nd deadline to maximize our 2014 RRSP contribution limit. Right now we have little cash in the RRSP so we are unable to purchase US dividend stocks (we avoid 15% US withhold fee by investing US stocks in our RRSP). Once the March 2nd deadline passes, we plan to deposit some more cash to start our 2015 RRSP contribution. Some of the US stocks we’re interested in include:
CVX – hopefully the crude price will remain volatile
COP – same as CVX
XOM – same as CVX.
JNJ – we want to add to our existing position. Recent price drop provides an excellent opportunity.
PG – same as JNJ
AT&T – Excellent dividend yield, the telecom sector is not going away anytime soon as we move toward Internet of Things.
UL – consumer stable. Would like to add to our existing position.
COST – Costco is simply a beast. Dividend yield is quite low but the dividend growth has been pretty solid. Every time I go to Costco, I’m amazed how packed the store is.
BBL – this stock has taken a beating the last few months. The stock price has recovered a little bit but the stock outlook remains weak. The fundamentals look solid so this may be a good long term hold.
MMM – another consumer stable giant. We would love to hold this stock in our dividend portfolio.
MSFT – Microsoft has certainly floundered with their Windows 8 and 8.1 releases. Windows 10 looks promising so far. The recent price drop has provided a good entry point. Adding MSFT will also further diversify our technology holdings.
DIS – I love Disney theme parks and the Disney empire just continues to grow as Disney owns a wide selection of assets. Hard to say no to a well diversified company (or should I say empire?).
V – as long as credit card is around, revenue will continue to flow. This is a high dividend growth stock that we hope to own in our dividend portfolio. Visa is something that Baby T already owns in his dividend portfolio.
While we continue adding positions in our RRSP using the added cash, we will also continue allocating capital in our regular accounts and TFSA, focusing on Canadian dividend paying stocks. Some of the Canadian stocks we’re interested in include:
TD/RY/BNS/BMO/CM/NA – The Canadian bank stocks all look very appealing right now. The price has recovered a bit since a few weeks ago but with the low interest rates, banking stocks may continue going south. CM remains to be the only big 5 Canadian banking stocks that we do not own right now.
DRG.UN – Liquid wrote a good article on DRG.UN a few days ago. Dream Global REIT invests in properties in Germany. We would like to add a bit more REIT’s in our portfolio and adding a non-Canadian REIT might be a good idea when it comes to geographical diversification.
AGU – Agrium has seen a tremendous growth. Adding AGU would allow for further diversification in our portfolio. AGU also has a very solid dividend growth history.
ESI – Ensign Energy Services might be an interesting one to monitor. The company has been able to increase its dividend for 19 straight years. However the recent drop in crude oil price has taken a huge toll on the company. It will be interesting to go over ESI’s earning reports and determine whether it makes sense investing in ESI or not.
CNR – We already own Canadian Nation Railway but would like to add to our existing position if possible.
TCL.A – Transcontinental Inc. popped up in my dividend filter. The company has solid fundamentals and has been increasing dividend for 12 years straight. The 10 year dividend growth rate has been pretty solid as well.
ADW.A/CSW.B – People will continue drinking alcohol. Both Andrew Peller and Corby Spirit and Wine look quite interesting to me.
Since Questrade offers free ETF purchase, we plan to add VXC (Vanguard All-World Ex Canada Index ETF) with the DRIP left over dividend in Mrs. T’s regular account. This is our method of having some more international diversification. We may also look at ZDI (BMO International Dividend ETF) in Mrs. T’s TFSA as well.
What do you think about our recent purchases? What do you think about the stocks that were mentioned above?