Yield isn’t the only value metric that looks enticing for IBM, its P/E is currently 10.2 according to MorningStar. Not to mention Warren Buffet is an investor having purchased shares a few years ago around $170. It feels good to buy in
… Continue reading Portfolio Update: IBM Purchased
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.
On October 8, 2014 I purchased Rogers Communications [Rogers Communications: Dividend Stock Analysis
I found out the hard way that you shouldn’t send money from your personal bank account to your wife’s margin account. Apparently they don’t like it. I forgot that
… Continue reading Portfolio Update: Rogers Communications Purchased
McDonald’s [McDonald’s stock may yet regain its sizzle” by John Heinzl that sparked my interest. When I read his article it reminded me that McDonald’s is due for a dividend increase in about 2-3 weeks time, so it might be time to increase my target buy price and have another look at McDonald’s.
My target buy prices are based on a number of different factors, but I usually use dividend yield to tweak them to a reasonably conservative target. McDonald’s has been increasing its dividend for 38 years in a row, and in the past decade they’ve declared annual dividend increases in mid to late September. I’d wager this trend will continue. Here’s a look at the past 6 dividend increases:
McDonald’s is an internationally known restaurant chain that sells fast food across the world. This wide
… Continue reading Portfolio Update: Why I purchased McDonald’s
I wrote in July that I planned to sell all of my shares in order to come up with a large down payment for the Condo I recently purchased, so this post will be an update on that process. In the last portfolio update I talked about the shares I sold on June 20, 2014. These shares were held in my Questrade account, but I was still left with some traditional DRIPs that I needed to either sell through the transfer agent, or transfer to my TD Direct Investing account and sell them there. One of the cons of traditional DRIPs is that it can take a while to sell certain shares because of the added transfer times. I thought this could take up to 2 months between my busy schedule and transfer times and it turns out this was about right.
Related articles: Portfolio Update: I’m Selling Everything! & I Bought A Condo – Excitement & Worries
On June 23rd, and in July and August I sold the following shares and was left with a cash only portfolio:
As a way of tracking my progress towards financial freedom I total up the dividends I receive each month. The end goal is to have my dividends cover my expenses. This is a long term goal, so I have a lot of years to go, but I find it encouraging to see my dividend income steadily rise over time. This reminds me that I’m on the right track and to stick with it. Here are the results for May, June, July and August.
My dividend income for May 2014:
May Canadian Dividend Income
I have never been a big supporter of the idea that buying a house is a good investment. What people often forget is the hidden costs that they pay in addition to the purchase price. When you start factoring the house insurance, property tax, maintenance costs and other ongoing ownership costs the returns aren’t that great. There are also significant one time buying and selling costs for things like appraisals, bank fees, property transfer tax, legal fees and real estate commission.
I’m going on memory, but I read an article a while ago that said on average a person will buy and sell a property about 5 or 6 times in their life. This works out to over $100,000 in closing costs for the average person over the span of their life. When you start factoring in these expenses you soon find out that a house isn’t that great of an investment.
I’m not saying no one should buy a home, but from a financial standpoint there are better investments out there. I think buying a house can force people into better saving habits through their mortgage payments, but I don’t have problems when it comes to saving money,
… Continue reading I Bought A Condo – Excitement & Worries
I’ve been very busy over the past few weeks. Since my last post I’ve bought a condo and sold off a large portion of my portfolio. I plan to utilize the Smith Maneuver (Million Dollar Journey has some good articles on the topic here). Part of this process means selling all of my investments and using the proceeds to come up with a large down payment. I expect the whole process to take around 2 months as I have some DRIPs that have to be transferred and make selling quickly difficult. I started this process by selling the following shares on June 20, 2014.
As you know from my past few posts I’ve been reading Lowell Miller’s The Single Best Investment: Creating Wealth with Dividend Growth. One thing that surprised me a bit was his comments about inflation. The author pointed out that the 60 year average inflation rate in the United States is 4.1%. The book was written 8 years ago in 2006 and has a US focus, so I decided to do some of my own research to see if this figure was still accurate.
What is inflation?
Before I dive into the results, I want to explain what inflation is. Investopedia defines inflation as
“The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling.” […] “As inflation rises, every dollar will buy a smaller percentage of a good. For example, if the inflation rate is 2%, then a $1 pack of gum will cost $1.02 in a year.”
The Bank of Canada website has an inflation calculator that you can play around with to get an idea of how inflation affects your purchasing power. Here are a few of my results:
… Continue reading How To Combat Inflation With Dividend Growth And Protect Your Purchasing Power
Finding the right dividend growth candidates to invest in can be very time consuming. There is so much information out there that it can become overwhelming. Today I’m going to talk about how I use Value Line’s Investment Survey reports to quickly see if a stock I’m interested in, warrants further research and potentially my money.
Most public libraries will have free access to these Value Line reports, but the Value Line website also provides free copies of these reports for companies in the the Dow 30. Coca-Cola [download the PDF file here to follow along. In this download, I’ve highlighted the areas on the report that I focus on.
You’ll find dividend yield in the top right hand corner of the report.
I typically like to see a dividend yield of at least 2.5%,
… Continue reading How I Use Value Line Reports to Quickly Assess A Dividend Growth Stock
“Financial strength is the key requirement of a high-quality stock. [...] Remember, you’re buying a piece of a business here, one that you want to live with for a long, long time.” (Miller, 2006)1
I recently read Lowell Miller’s The Single Best Investment: Creating Wealth with Dividend Growth. I would make this book required reading if I were teaching a course on dividend growth investing. What I like about this book is that it gives specific criteria to look for when trying to find a good dividend growth candidate. While the version I read was written in 2006, a lot still applies today.
The concept of the book is that high quality + high current dividends + high growth of the dividend = high total returns. A key element of a high quality company is financial strength. Today I’ll be sharing a few of the author’s different ways to identify financial strength.
As a long term investor it is important to me that the company still exists in 10 years, 20 years, 30 years … well you get the idea. For a company to stand the test of time they have to be able
… Continue reading Financial Strength: A Key Element in High Quality Dividend Growth Stocks