Being a guy, shopping isn’t exactly at the top of my priority list. But with a few thousand left from selling my index funds last week, shopping for dividend stocks was just what I needed to get in the buying mood. In fact the last time I saw a grown group of men get excited over shopping, was last August when markets took a nose dive, and investors were backing up the truck on their favourite stocks on sale! Unfortunately last week, stocks were certainly not on sale, with seven days of continuous gains. That was good news for my RRSP holdings, but not for the stocks I was eagerly awaiting to invest in. I’m not sure how the universal laws of money really work. All I do know is I had been watching these stocks for a few weeks, and then when I decided to make a move, it just happened to coincide with a nice market gain. Why do markets always rise when you want to buy stocks?
Manulife Financial (MFC-T) was one stock on my watch list, and I felt at $12 it was a good value play, and spent a couple of months deliberating to buy it. Over the last week however, MFC soared up to $13.71 per share just as I was about to buy. The reason of course was an increase in bond yields, which helps companies like Manulife to increase their earnings. But with two days of wide-gaps on a rising price, I’m hoping for a small pull-back and a lower price-point in the next few weeks to buy 100 or 200 shares.
The other company on my watch list Husky Energy (HSE-T) also rose from my $24 buy point to close on Friday at $25.99 per share. Husky Energy is a stock I’ve been watching for a long time now. I picked it back in 2011 as one of my stock picks, chose it for the Dividend Growth Index, and again recommended it in my 2012 Stock Picks. Husky is a company I want to have in my portfolio as a core holding with its 4.6% dividend yield. I am currently waiting to buy 100 shares at $25.50 per share.
While I’d like to have Husky and Manulife in my portfolio, I’m looking at Bank of Montreal (BMO-T), Fortis (FTS-T), and Corby Distilleries (CDL.A-T) as other companies I’m interested to invest in. Corby Distilleries was also part of my 2012 Stock Picks. Although it is a small-cap company with only 456 million in market cap, and has virtually flat growth in share price, the sweet spot is the 3.8% dividend yield and special dividends. Every two years or so, Corby pays shareholders a special dividend with its surplus cash. Last year that special dividend was an extra $1.85 per share!
Other Posts around the Web
My Own Advisor (not really my advisor) took exception with Larry Swedroe in buying what you know makes sense. Dividend investors buy many of their holdings based on companies around them or products from companies they use. Index Investors generally consider buying what you know as a faulty investment strategy. You can read MOA’s post to learn more!
The Dividend Guy wrote an interesting post on why he feels a 100% dividend stock portfolio, is a safe portfolio. (I think I saw Dividend Mantra cheering in the comments :)). There’s two facets to the argument. The premise is that bonds are unsafe because of record low interest rates, and that they don’t keep up with the rate of inflation. Secondly, the premise he puts forth is that dividend stocks are safer than bonds. Only problem here is you have to be willing to stomach the volatility that occurs with any portfolio that is 100% stocks (dividends or otherwise). While bonds will lose value with increasing interest rates, they do give you a parachute during market crisis, and do indeed spin-off a nice monthly income.
The Canadian Couch Potato wrote about investing with multiple accounts. As CCP points in terms of trading costs and complexity, in most cases, you should think of your assets as one large portfolio and manage it accordingly.
As with most Canadian Investors you have probably invested in the Canadian Banks. This recent article on Yahoo Finance explains the impact of the Volcker Rule on our banks, and how it will impact their profits in Canadian banks under fire. Ultimately the results of the Volcker Ruling will impact the bottom line for Canadian Banks.
While I was busy selling my index equity funds last week, Vicky at Vix Money explained the three EEE’s in her portfolio, in EEE! Equity ETFs Explained.
The Ninja was also featured In…
The Dividend Ninja was also featured in the following websites and finance carnivals. Thank you!
- Yakezie Carnival at 20 and Engaged
- Carnival of Retirement at Money Q & A
- Carnival of MoneyPros at Sweating The Big Stuff
- Canadian Finance Carnival at Canadian Finance Blog
- Best of Money Carnival at Retire By 40
- Totally Money Blog Carnival at Skint In The City
- Financial Carnival for Young Adults at 20’s Finances
- Carnival of Financial Planning at Skilled Investor
Have a nice weekend everyone!