Dividend Investing Dividend Stock Transactions

Recent buys

Wow, what happened to the stock market so far in 2016? The market seems to be very emotional lately and we’re seeing a very strong push towards the red side. Lots of the stocks are at their 52 week lows or are very close to the 52 week lows. Is the sky falling? Am I worried? Not really. I sleep like a rock at night (I don’t use the term sleep like a baby because from experience babies typically wake up regularly at night :p).

Why am I not worried at all?

Since we’re not planning to sell anything right now, all the losses we’re seeing are unrealized losses, or paper loss. We can simply continue collecting dividends and let the stocks ride.

The second reason, and most important reason, is because we’re still building our dividend portfolio. We don’t plan to touch the principle of our dividend portfolio until perhaps in our late 70’s or later. That gives us more than 40 years of timeline, so it really doesn’t matter to us whether we have an unrealized loss or an unrealized gain right now. Our 5-10 year “short term” goal is to have enough dividend income to cover our expenses. I’ve said this many times. A downward market during our accumulating phase is a very welcomed event. This will allow us to buy stocks at a lower cost basis. With the same amount of cash, that means we can buy more shares. What’s not to like?

Given that the Canadian dollar is so weak right now (need $1.44 Canadian to get $1 US), we probably will be focusing mostly on the Canadian stock market to avoid converting currently. With that in mind, we recently went on a shopping spreed and purchased the following stocks:
30 shares of Bank of Nova Scotia (BNS.TO)
71 shares of Inter Pipeline (IPL.TO)
38 shares of Magna International (MG.TO)
87 shares of RioCan REIT (REI.UN) 
115 shares of Vanguard Canada All Cap Index ETF (VCN.TO)
51 shares of Telus (T.TO)
20 shares of Canadian Imperial Bank of Commerce (CM.TO) 
46 shares of Saputo (SAP.TO) 

Most of these stocks we already own except for Magna International and Vanguard Canada All Cap Index ETF. The rationale behind purchasing more shares of what we already own is to be able to eventually enroll in dividend reinvestment plan (DRIP) or allow DRIP to purchase additional shares. I like to keep things simple. Once we are enrolled in DRIP, the dividends received are used to purchase more shares, allowing us to cost average through time. These stocks would essentially be on auto-pilot for us, making it easier when it comes to portfolio management.

Magna International

Magna International Inc. (Magna) is an automotive supplier with approximately 313 manufacturing operations and over 84 product development, engineering and sales centers in approximately 28 countries. Its product capabilities include producing body, chassis, interior, exterior, seating, powertrain, electronic, vision, closure and roof systems and modules, as well as vehicle engineering and contract manufacturing. Its customers include General Motors, Fiat-Chrysler, Ford, BMW, Daimler and Volkswagen.

MG currently has a PE ratio of 7.46 and a 5 year PEG ratio of 0.72 and a return of equity of 21.58%. All these numbers are very attractive. The company has raised its dividends for 6 straight years and has a 5 year annualized dividend growth rate of 33.2% and a 1 year dividend growth rate of 15.8%. At roughly 17% payout ratio, the company should be able to continue to grow its dividends. At 2.3% starting yield, that’s a very solid number given the huge dividend growth potential. I like Magna International because it is well diversified within the auto industry. Rather than buying one particular auto company like Ford or GM, we have purchased a company that provides components to multiple auto makers.

Vanguard Canada All Cap Index ETF (VCN.TO)
One of our goals for the last couple of years is to further diversify our dividend portfolio. This is where index ETF’s come into place. VCN.TO consists of 231 Canadian stocks with Royal Bank, TD, Bank of Nova Scotia, Canadian National Railway, Suncor, Bank of Montreal, Manulife Financial, Brookfield Asset Management, Enbridge, and CIBC as its top 10 holdings (about 38.2% of the net assets). Although we hold a large number of stocks in our dividend portfolio, there’s no way for us to hold and manage 231 stocks. VCN.TO is a passively managed fund with very low MER. The stock currently has a yield of 2.81%.

These purchases increased out annual dividend income by $577.84, making us one step closer to our 2016 dividend goal of $13,000.

On a side note, I guess I didn’t exactly followed my early 2016 stock considerations. With Canadian banks going lower, it’s hard not to ignore. Who knows, I may decide to pull a few more buys on Canadian banking stocks to take advantage of the low price.

What do you think about these purchases? Have you made any purchases recently?

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40 Comments

  • Reply
    FI Fighter
    January 14, 2016 at 4:59 pm

    Glad to see you sticking to Canadian stocks. I see so many Canadians buying US equities and it just leaves me scratching my head… The exchange rate is only favorable in the other direction right now.

    In fact, I bought some shares on the TSX myself today.

    I think this year is going to be rocky, but like you said, you don’t have plans to touch the principal anytime soon. I can certainly appreciate that strategy and that’s my own take with rental properties.

    With stocks though, I am most definitely trying to make a quick buck (a few years vs. many)

    • Reply
      Tawcan
      January 15, 2016 at 10:22 am

      Hi FI Fighter,

      Your strategy makes sense to me. Since we do not have rental properties, we’re deploying the buy & hold strategy for our core investment (i.e. dividend stocks). If we have extra cash then try to make a quick buck via timing of the market may make sense.

  • Reply
    Our Big Fat Wallet
    January 14, 2016 at 6:00 pm

    With prices going down this year it is definitely tempting to buy more especially bank stocks. I dont know why RioCan is going down but it’s a great time to buy right now. I’m also not concerned at all about the markets going down – if anything I wish I had more cash to keep buying. It’s pretty simple when your strategy is to buy and hold for the long term as it takes any emotion out of the equation and you dont have to worry about timing a sale

    • Reply
      Tawcan
      January 15, 2016 at 10:23 am

      Apparently ppl are worried about RioCan’s exposure to Target. Isn’t this old news? Buy and hold for the long term and let DRIP dollar cost average seems like a good strategy to me. 🙂

  • Reply
    DivHut
    January 14, 2016 at 9:04 pm

    Well I like the Canadian banks at these levels as they seemingly slide every week making new lows their value and yields look more and more compelling. I added to my BNS this week. Still have TD, BNS and RY on my radar going forward. Looks like we all started 2016 with some good buys.

    • Reply
      Tawcan
      January 15, 2016 at 10:23 am

      I would love to add more TD, BNS, and RY. I wish the currency exchange is more favour to us Canadians. There are so many US stocks I would love to hold…

  • Reply
    jd
    January 14, 2016 at 11:24 pm

    I also went on a small shopping spree this year–also added to my Telus position, topped up Computer Modelling Group, and started a new position in CN Rail. Watching a few others including TRP and BNS, although the latter already makes up quite a bit of my portfolio. Magna is an interesting purchase; it looks like it ran into some trouble in the 2008-9 crisis, but has done very well since. I will look into that company some more.

    I probably won’t be buying too many US stocks this year either–just a few smaller purchases with accumulated USD dividends. I am happy I converted most of my RSP to US stocks when our dollar was in the $0.90+ USD range.

    • Reply
      Tawcan
      January 15, 2016 at 10:24 am

      Hi jd,

      It make very little sense to convert to US currency right now. I suppose another way to gain US exposure is to buy US index funds in CAN currency.

  • Reply
    JC
    January 15, 2016 at 12:33 am

    Looks like you’ve been quite busy to start off 2016. I’d be making buys if I had some free capital but unfortunately I’m kind of tapped right now for my taxable account and am in the process of moving money around to restart our Roth IRA’s.

    I don’t blame you one bit for focusing on Canadian stocks. The USD strength would be very difficult to overcome assuming that the CDN to USD will normalize to its historical levels over the long term, which I think it will. I’m thinking of doing the opposite though and try to add to some CDN companies to benefit from the exchange rate. Specifically BNS and TD since I want to build up those positions and adding a few more CDN companies to the mix would be nice as well.

    • Reply
      FI Fighter
      January 15, 2016 at 8:49 am

      JC,

      USD strength is unbelievable right now… and it’s only getting stronger… Since I have no clue how to time these things perfectly, I’ve just been DCA from USD into CAD.

      I’m not gonna nitpick too much… That trade is a dream right now.

      I’ve been loading up big on my favorite Canadian stocks.

      • Reply
        Tawcan
        January 15, 2016 at 10:27 am

        It makes a lot of sense for Americans to convert money to CAD and buy some Canadian stocks. You guys will be laughing when the Canadian economy recovers.

    • Reply
      Tawcan
      January 15, 2016 at 10:26 am

      It’s hard to predict what CDN to USD will look like in a year. I’m glad I converted most of my RRSP cash to USD back when Canadian dollar was stronger. Essentially that gave me 40% return so far. I do see CDN to USD normalize to its historical levels which I guess is around 80 cents. For Americans, I think it makes a lot of sense right now to buy Canadian stocks.

  • Reply
    My Own Advisor
    January 15, 2016 at 12:26 pm

    Holy purchases Batman!!! Well done. I recently bought some BNS and T for the TFSA. I own a few hundred shares of REI.UN so I’m not buying any more units, only DRIPping them now.

    Smart call on the VCN for extra diversification. This way, you can be a hybrid investor and get the best of both worlds – dividends for income and capital gains (eventually) via ETFs 🙂

    That’s exactly my strategy.
    Mark

    • Reply
      Tawcan
      January 17, 2016 at 3:57 pm

      Hi Mark,

      I’m eying Canadian banks for more purchases. Banks seem to be on sale right now, better take advantage of this opportunity.

  • Reply
    RICARDO
    January 15, 2016 at 2:29 pm

    Hi TC;
    Personally I prefer BCE over T. Just this last week that T is above BCE on yield. When I first bought BCE just about everyone was saying buy T as there was more growth potential in T than in BCE. Back then there was a $8 – $10 differential between the stock price of the two. Now we are getting to an interesting scenario where T is a higher yield. I am still happy with my purchase of BCE as now the spread between the two stocks has widened to just over $18 today. Maybe once the stock volitilty clears up there will be more potential in T as it has dropped furhter than BCE.

    IPL I have owned for a long time. My largest purchase was back in 2003 at $6.90. It has fully paid for itself and continues paying for now. The caveat is how low do you go? Both in oil and stock price.

    Used to own CM but got out several years ago when it was climbing missed the high but made a nice profit.
    I do also own some FIE.A for financial play. Own RY and BMO as well.

    Last year I managed to make my 10% increase in dividends over 2014. Too many dividend cuts to maintain that this year in my opinion. Might be lucky to maintain last years figures ($55K of divs)

    I have been selling a few dead beats in my non-registered account to get those cap loses for when i eventually sell the winners.

    I like CHE.UN right now and have been picking it up of late.

    Feeling for the market?? It has not hit the 2008 / 2009 lows but it is slowly creaping its way there. I think we would be lucky to maintain our position for the year. More likely to go lower IMHO. Keep your powder dry. If you have enough reserves it may be time to nit-pick the stocks you like.

    RICARDO

    • Reply
      Tawcan
      January 17, 2016 at 3:59 pm

      Hi Ricardo,

      We own quite a bit of BCE already so trying to diversify by buying Telus. Good job on picking up IPL a long time ago, I wish I had picked up IPL back in 2003 but it’s better than never. Awesome in making 10% increase in dividend last year, especially considering you received so in dividend income, very impressive.

      Selling the losers now and harvest tax loss for the future is a good idea. I hope we’ll continue seeing the down market so I can continue buying stocks on discount. Missed the 2008/2009 opportunity so this is a good opportunity for us. 🙂

  • Reply
    Team CF
    January 16, 2016 at 7:17 am

    Solid purchases for sure! Not sure about the timing through (only time will tell 😉 ), the pain is certainly not over in the near term for Canadian stocks, we think. Therefore we are still holding out a while longer to see if (or probably “when”) even better opportunities present themselves.

    In contrast with you guys (whom have been buying for many years), we have bought dividend stocks primary in Q3/Q4 last year, fortunately stocks were already down about 10-20% from their peaks in 2014, but still relatively expansive compared to the period 2009-2013. So we hope to benefit from a significant (further) correction to invest our remaining cash.

    Good luck with future purchases!

    • Reply
      Tawcan
      January 17, 2016 at 4:01 pm

      Hi Team CF,

      I don’t believe in market timing. We can never determine if the low now will be the lowest we’ve seen or not. I do believe that over the long term, stock price is go up. Continue investing your remaining cash, I think we’ll see the volatile market for a while.

  • Reply
    Tristan @ Dividendsdownunder
    January 16, 2016 at 4:29 pm

    Great purchases at great prices, Tawcan. I’d definitely back Canadian (and Australian) businesses to come through this uncertainty with flying colours when people realise it’s not all that bad. The amount of extra dividend income you have added to yourself is fantastic (you’ve added more than I’m aiming to get for 2016 lol).

    I think holding throughout this period is completely the right thing to do. If you hold throughout you haven’t lost a thing, just received a bunch of dividends.

    Tristan

    • Reply
      Tawcan
      January 17, 2016 at 4:01 pm

      Hi Tristan,

      Lots of uncertainties right now but if we’re not touching the principle, it’s a great time to invest for the long run. 🙂

  • Reply
    Dividend Beginner
    January 17, 2016 at 12:01 am

    Hey Tawcan,

    Good on you for not batting an eye and holding true to the DGI methodology in your accumulation phase.

    I’m a big fan of T but it’s been knocked down big time, offers great yield now and always gotta love that dividend growth plan. BNS yield has been pushed up really high too, good time to average down.

    I see you just opened your position in MG, I’ve been interested but haven’t yet gotten to it, it’s like everywhere you look there are giant clearance sales right now!

    Best regards,
    DB

    • Reply
      Tawcan
      January 17, 2016 at 4:03 pm

      Hi DB,

      Telus is a great company. It’ll be interesting to see how the Canadian telecom market shapes out with Shaw entering the market in the near future. Either way, considering Canadians are so hooked on cellphones and data, profits are here to be shared between companies. I’ve been looking at MG for a while now, figured this is a good opportunity to purchase some share. We’ll see if this is the right decision in the long run.

  • Reply
    A Frugal Family's Journey
    January 17, 2016 at 11:05 am

    Wow…way to put all that capital to work. Just halfway in the first month and you have already made a sizable dent into your goal of $13K in annual dividends! Cheers to $577 dollars added to the annual dividends.

    Hope you have a great holiday weekend. AFFJ

    • Reply
      Tawcan
      January 17, 2016 at 4:04 pm

      Hi AFFJ,

      Still lots more work to do to achieve the $13k annual dividend goal. Hope you had a great weekend too.

  • Reply
    Investment Hunting
    January 17, 2016 at 11:59 am

    Nice buys Tawcan. I’m happy to see that you bought MGA. I bought this stock a few weeks ago. Your entry price is better than mine though :-).

    • Reply
      Tawcan
      January 17, 2016 at 4:04 pm

      I wish I would have waited a few more days to buy the stock. Oh well, market timing isn’t my thing. 🙂

  • Reply
    FerdiS
    January 17, 2016 at 3:27 pm

    Stocks are on sale and its a great time to buy! Looks like you’re doing great and I wish you all the best in 2016. I’m looking into BNS for DivGro.

    Take care!
    FerdiS

    • Reply
      Tawcan
      January 17, 2016 at 4:05 pm

      BNS is a solid long term hold, wish we have more cash to buy more BNS. 🙂

  • Reply
    Mortimer
    January 17, 2016 at 11:47 pm

    Looks like you picked up some solid buys at sale prices. If there’s one thing I learned from the financial crisis in America, it’s that investing in undervalued banks at market bottom is a great idea—at least as long as you buy multiple banks. It would be an unprecedented catastrophe for multiple major banks to fail. (Knocks on wood.) If only I’d bought Citi at $1 . . . !

    • Reply
      Tawcan
      January 18, 2016 at 4:49 pm

      Hi Mortimer,

      Very good point, that’s one thing I learned in 2008/2009 as well. Investing in undervalued businesses with very long term potentials is always a great strategy.

  • Reply
    Vivianne
    January 18, 2016 at 5:25 pm

    I seriously consider to work a few extra years to take the full advantage of the stock pull back if the market drop 50% :P. The currycracker did just that and look at them now? partying in Thailand hahah LOL 🙂

    • Reply
      Tawcan
      January 18, 2016 at 10:06 pm

      It’s a great idea especially if you’re not in a hurry to retire. Jeremy and Winnie definitely did that and they certainly are having fun traveling around the world. Had the chance to meet them while we were in Japan. Great people.

  • Reply
    Dividend Wisp
    January 18, 2016 at 8:13 pm

    Some great buys there Tawcan! I’d love to add more to my REI.UN and BNS positions for sure! I’v also had SAP on my radar for awhile, I should have bought it two years ago(sigh). Telus is also definitely on my radar as a second Telcom for my portfolio.

    • Reply
      Tawcan
      January 18, 2016 at 10:07 pm

      Hi Dividend Wisp,

      Lots great buys on Canadian side of the market. I wish I have more cash I can invest.

  • Reply
    Riada
    January 21, 2016 at 9:57 am

    All great picks. I’m also looking to add to my positions in BNS and T. I currently have Magna and Linamar in my cross hairs for new positions. I’d be curious as to which account you are holding Magna for tax efficiency with regards to the US$ paid dividend?

    • Reply
      Tawcan
      January 22, 2016 at 4:59 pm

      We hold Magna in TFSA. Magna is a Canadian company so there’s no withholding tax. The dividend received in US just gets converted to CAN.

      • Reply
        Morg
        February 6, 2016 at 11:37 am

        Question about CDN companies that pay in USA $ like a BAM or POT if I have those in my TFSA are they considered USA $ dividends and am I taxed even thou its in my TFSA. Plus any thoughts on H&R reit for my TFSA. Thanks

        • Reply
          Tawcan
          February 6, 2016 at 12:56 pm

          Hi Morg,

          You don’t need to pay withholding tax when owning a Canadian company, even if they pay out dividends in US. We hold POT in our TFSA. It’s just the dividend amount gets converted to CAN so it’s slightly harder to predict what the dividend amount will be.

          We hold H&R REIT in our TFSA and continue to DRIP more shares. I think H&R REIT is cheap right now given the current evaluation. Hope this helps.

  • Reply
    BeSmartRich
    January 22, 2016 at 3:07 pm

    Love the purchases Tawcan. Can’t say no to any single stock that you purchased. My portfolio has been in red for a while but who really cares. I am not touching them for a long time. We will see this as a good opportunity to buy more. Thanks for sharing!

    BeSmartRich

    • Reply
      Tawcan
      January 22, 2016 at 5:01 pm

      Thanks to market volatile the daily portfolio value actually changes quite a bit for us. But really, I don’t pay attention to this kind of stuff. Just keep saving and investing. 🙂

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