Sunday, 13 July 2014

Next Buy Watchlist

    So I'v been able to save up a bit more money to buy a few more shares of a high quality company. I have narrowed down the list of companies but I'm still undecided. Currently based on my portfolio sector weightings of the type of companies I want to be invested in at the moment, I am looking for either Financial or Telecommunication companies.

    For Financial companies I am currently looking into Manulife Financial Corp. (MFC), Sunlife (SLF), or perhaps adding to an existing bank position. Of these two insurance companies I am leaning towards Manulife due to its consistent dividend raises over the past few years, compared to Sunlife having not raised its dividends in the last 5 years. Sunlife is tempting however with its 3.62% dividend yield compared to Manulife's 2.42% dividend yield. Both companies have fairly comparably strong balance sheets and will see higher profits once interest rates begin to rise again in the future. I like that interest rate feature to help offset Dream Office REIT, which as a real estate investment trust which stock prices tend to fair poorly as interest rates rise again.

   For Telecommunication companies, I am looking primarily looking into Bell's (BCE) three main competitors in the Canadian market: Telus (T), Rogers (RCI.B) and Shaw (SJR.B). I am tempted to buy additional shares of BCE for a third time, but at this point prefer to diversify my holdings a bit more. Roger's is tempting with its current stock price of $42.06 which has pushed its dividend yield closer to BCE's. Telus also had a nice dividend yield at 3.9%, which is just shy of Roger's 4.34%. Both of these companies have a good history of raising dividends in the past few years, although Roger's most recent dividend gain was less than analysts had expected. Shaw also pays a out a very nice dividend of 4% and does so on a monthly basis compared to the others quarterly dividend. That feature is quite tempting to me as I prefer to keep monthly dividend income stable and consistent. The main barrier holding me back at the moment is that Shaw is a smaller company when compared to the other 'big three' communication companies in Canada; its operations are more geographically focused in the West and Telus is a major competitor if it there. Additionally, it has started to restructure its business away from television services.

    All in all, I'll be continuing to monitor these five companies and the banks to see which I'll be adding to. If one of them dips down to a more attractive valuation without a specific major event happening to the company then I'll go for it. Personally, I'd be happy to buy into all of them as is, but just don't have the capital to do so! I'll be looking to put in approximately $600-700 into the new position, plus the dividends I'm expecting this upcoming week from my monthly distributions.

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