Monday, 21 July 2014

Recent Buy!

    Today I added additional shares of Toronto Dominion Bank (TD) to my portfolio. I bought 10 shares @$55.50, TD currently has a dividend of $.47 so this purchase adds a total of $18.8 in dividends a year to my dividend income! Since I already have shares of TD my total number of stocks/ETFs remain at 12. The financial sector weight in my portfolio is now at 21%, so I am still looking to boost that number up in the future.

    TD was one of my stock considerations in my Watchlist post. I decided to go with TD instead of a Telecom or Insurance company for a few reasons:

1) Telecoms have recently had some bad news in the form of the Canadian government releasing their intentions to have another spectrum auction to entice foreign competitors into the Canadian market. Although this had been done in the past with the possible entrance of Verizon, who eventually backed out, so I decided to go with a safer long term buy.

2) Insurance Companies were a very tempting target and I was planning on buying shares of Manulife Financial(MFC), which has a good history of raising dividends and will perform better once interest rates rise. However, within the low interest rate environment we have today, insurance companies tend to under-perform as they must generate safe and consistent returns generally through the bond market in order to meet payouts from insurance claims.

3) Both the Canadian and American Central Banks reiterated recently that they would be holding interest rates steady for the near future.

    MFC has done a good job in the past few years in diversifying their revenue streams by building up their wealth management arm of the business, which attracted me to them over Sunlife(SLF). I would have gone with them however in the time I was researching my Watchlist companies and waiting on my cash transfer to my brokerage account MFC jumped up in price by nearly 3% to a near all time high which significantly cut down my buying power with them. Going forward I'll be keeping an eye on them and an ear to the Bank of Canada for interest rate announcements.

    All in all I am quite happy to add to my position of TD and am looking forward to many, many future dividend raises and capital appreciations from them. In just the few months I'v held them the shares have appreciated 15.1%, with a current total return of 16% once dividends are included!

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