So first let me apologize … this article is over 4,000 words. I could have split this analysis into multiple articles, but when I read other blogs I like it when all the information is in one place so I kept this as one big article. Feel free to jump around to the areas you are interested in as there are four general topics:
Overall dividend stock analysis of Home Capital Group Inc.
Financial strength & stress testing of the company.
Why I’d consider investing in the company when I think the housing market is over-valued.
Home Capital Group Inc. valuation metrics.
Home Capital Group Inc. [TSE:HCG Trend] is a Canadian holding company that operates primarily through its federally regulated subsidiary Home Trust Company, a non-traditional mortgage lender. They are Canada’s largest alternative mortgage lender. Home Capital Group Inc.’s main source of income is from residential mortgage lending, but they also offer non-residential mortgage lending, consumer lending and credit card products. Their mortgages are a mix of uninsured mortgages and securitized mortgages that are insured by Canada Mortgage Housing Corp. or other mortgage insurers. The uninsured mortgages are made with
… Continue reading Home Capital Group Dividend Stock Analysis
Apparently I’m a lucky man, but I’m not entirely convinced yet. I recently returned from a vacation in Europe where a good deal of time was spent in Italy. It was there that I learned about a superstition about bird poop … yep, you heard right. Apparently if a bird poops on you, it will bring you good luck. I did some Googling and found some more info on the topic from this website:
“Many people the world over believe that if a bird lets loose on you, then good things are coming your way. One idea is that it’s a sign of major wealth coming from heaven, based on the belief that when you suffer an inconvenience (albeit a pretty gross one), you’ll have good fortune in return.”
The part about major wealth coming from heaven sounds alright to me, but you’ll understand why I’m still a bit skeptical that a bird shitting on you is “lucky”.
Anyways, so here I am doing my zombie walk to work, when I stop at the intersection and wait to cross the street. I’m standing there, minding my own business, when PLOP … a
… Continue reading Bird Poop & Portfolio Update: Home Capital Group Inc. Purchased
Part of the reason I started this blog was to become a better investor. I’ve found that having to justify my investing decisions publicly has made me a better investor as it encourages me to think and justify my actions. It also provides a platform where I can hear and learn from readers.
I’m always curious to hear opposing views so that I can hopefully defend my strategy or make necessary adjustments. Part of my retirement strategy involves utilizing a growing stream of dividends to help pay for retirement. Naturally, when I read a National Post article by Jason Heath titled “Why living off your dividends in retirement may be a mistake“ it got me thinking about my retirement plan. One quote stuck with me particularly.
Retirement planning is a personal decision, but you might be making a big mistake if you go out of your way to ensure you can live off your dividends, since you will be leaving a great deal of money when you die. In the process, you may have worked too hard at the expense of family time or spent too little at the expense of treating yourself.
I thought the
… Continue reading Is Living Off Of Your Dividends A Mistake?
Dividends Tell the Truth
Dividends and dividend growth are the real-life signal that a company has the wherewithal to pay you dividends, that it has your interests at heart in the fact that it pays you dividends, and that it is experiencing real growth as proven by the real growth in its real dividends.
Lowell Miller (2006). The Single Best Investment: Creating Wealth with Dividend Growth
My retirement plans involve collecting an increasing stream of dividend income to help pay for retirement expenses and inflation. While I am a ways off from reaching my long term financial goals, I find it encouraging to track and witness my monthly dividends grow over time. As indicated in the quote above, this also acts as a good barometer for my portfolio. If the dividends in my portfolio continue to increase it is a good sign that the companies I have invested in are continuing to perform well. These are just a few reasons I track my dividend income monthly.
Since my last dividend income update things have changed a bit. I liquidated my entire portfolio to help come up with a large down payment for the condo I moved into
… Continue reading September 2014 to April 2015 Dividend Income Update
For those new to the blog, I like to keep my readers up to date on portfolio changes. One of the reasons I started this blog was to educate others, but also to improve my own investing. By keeping an open book of my portfolio and changes to it, I hope to generate discussion so others can see how I put my investing philosophy into practice. For the most up to date portfolio changes follow my twitter account as I will usually tweet first and then follow-up with a blog post.
On February 23, 2015 I decided to buy Canadian Western Bank (TSE:CWB Trend) again as it had dropped another 10% from my target buy price of $30 to around $27. I picked up shares for an average price of $26.93. I first bought shares in the company on December 16, 2014 at $29.33. With my latest purchase I was able to average down bringing my cost base to $28.45.
Canadian Western Bank is a regional Canadian bank in you guessed it Western Canada (mainly Alberta and BC). They have managed to increase
… Continue reading Portfolio Update: Canadian Western Bank Purchased … Again
Every year Warren Buffet, the famous investor who runs Berkshire Hathaway Inc. (NYSE:BRK.A Trend), issues a letter to their shareholders. These letters offer a unique opportunity to peer into the mind of arguably one of the best investors of all time. The 2014 letter, dated February 27, 2015 was of particular interest because it marked the 50 year anniversary of the company.
These letters are long, but worth the read as they offer a variety of valuable information that can make you a better investor. The 2014 letter can be read here, and you can see previous year’s letters here.
As I read the letter a lot jumped out, but of particular interest was Berkshire Hathaway Inc.’s acquisition criteria found on page 23. The company is known for its ability to buy great businesses that lead to market beating returns, so naturally I wanted to compare what they do to my own investment strategy. The following is a quote from the letter that shows their six criteria.
BERKSHIRE HATHAWAY INC.
We are eager to hear from principals or their representatives about businesses
… Continue reading Warren Buffet’s & Berkshire Hathaway Inc.’s Business Acquisition Criteria
I’m always on the lookout for dividend growth companies that have long growing dividend streaks, wide economic moats and strong financial strength. I plan to buy these companies at cheap valuations and utilize the growing dividend income to become financially independent. One characteristic of a good dividend growth company is the ability to pay increasing dividends because it is also increasing its earnings. Dividend growth without earnings growth is not a sustainable long term trend. As I plan to invest and hold on to these companies for a very long time, it is important to me that they are able to regularly make more money to support the increasing dividend. With that in mind I decided that I would try and identify companies in the Canadian Dividend All-Star List that have been able to increase their earnings per share (EPS) at a consistently high growth rate over the past decade.
Related: Canadian Dividend All-Star List Free Download Page
To start with I used Morningstar annual EPS data for a decade found in its Key Ratio tab for each company in the January 31, 2015 version of the Canadian
… Continue reading 14 Canadian Dividend Growth Companies with Consistently High Earnings Growth
I’ve been reading a lot of blogs about 2015 goals. Most of the blogs I read are personal finance goals, so their goals are usually financial. Goals like contribute an extra $100 per month to the mortgage, pay off all my debt, earn $5,000 in dividend income, etc. I think financial goals are important, but this represents only one aspect of life. I decided I would break down my goals into four sections: Financial, Career, Health, and Personal. I got the idea from Lululemon which has some good information on goal setting along with a worksheet which I used, but altered a bit.
Their worksheet says to visualize your life in 10 years. I chose to visualize my life when I reach financial independence which will likely be later than 10 years.
- What would you dare to do if you knew you could not fail?
- Describe what you see, hear, and feel in your ideal life.
- Who is there? How do you spend your time?
- Where do you spend your time?
Once you make your vision statement you are supposed to work backwards setting 10, 5 and 1 year goals
… Continue reading My Goals
When I tell people I bought a Canadian bank stock recently, they naturally assume it’s one of the big six: Royal Bank of Canada [RY Trend], Toronto Dominion Bank [TD Trend], Bank of Nova Scotia [BNS Trend], Canadian Imperial Bank of Commerce CIBC [CM Trend], Bank of Montreal [BMO Trend], or National Bank of Canada [NA Trend]. They’d be wrong… as I bought Canadian Western Bank [CWB Trend] which is a smaller lesser known bank stock. In this dividend stock analysis I’ll go over what I like about this company so you can find out why I bought shares.
Related Articles: The Great Canadian Banking Series: Bank of Nova Scotia Dividend Stock Analysis (Part 2 of 10), The Great Canadian Banking Series: Toronto-Dominion Bank Dividend Stock Analysis (Part 3 of 10), & Canadian Western Bank Dividend Stock Analysis & Portfolio Update
For those new to the blog, I like to keep my readers up to date on portfolio changes. One of the reasons I started this blog was to educate others, but also to improve my own investing. By keeping an open book of my portfolio and changes to it, I hope to generate discussion so others can see how I put my investing philosophy into practice.
The price of oil has been diving recently and yesterday (December 8, 2014) it hit a new 5 year low. A quick look at the one year chart for WTI Oil and you can see that over the past six months the price of oil has dropped about 40%.
Not surprising we have seen the price of stocks in the Oil & Gas industry come crashing down too. With these significant price drops I’m starting to see some value in the industry. Currently there is a lot of uncertainty and speculation about where oil prices will go from here and I’m not here to add to that speculation. Rather than try and guess on where a commodity price
… Continue reading Portfolio Update: Ensign Energy Services and Suncor Energy Purchased