Monday, 10 November 2014

Next Buy Watchlist: Nov. 2014

    This month I may have some extra capital to add alongside of my dividends for a smaller purchase. Depending on just how much cash I have to spare, I may end up only adding a bit to my exchange traded fund ZDV; which is still trading a fair bit below my current cost basis. Other than I am looking to adding to my current positions of my 'core' companies in the portfolio; particularly positions which haven't bounced back as much from the pullback in October and/or represent smaller holdings within the portfolio. Most likely the purchase would be of BNS, RY or NA.

    So my current watchlist is:
These three Canadian banks are all solid dividend payers and growers and also represent the 3 smaller financial sector holdings in my portfolio. I'v a general aim of adding to them all over time, including TD, and more or less I want to add to them evenly as opportunities present themselves.

The Bank of Nova Scotia (BNS): Has been going through some growing/learning pains recently with its international branches suffering losses. Also under going some restructuring where 1500 jobs have been cut. Overall though BNS has reported record profits and I doubt any long-term issues. The stock is trading at roughly where it was a year ago even though its dividend has been increased 4 times since then.

The National Bank of Canada (NA): Is a smaller bank in Canada compared to the likes of RY and TD, with a market capitalization of 17.7B. NA has both a lower P/E ratio than TD, and a higher dividend yield. As I mentioned in my recent Portfolio Update NA is my first four time consecutive dividend paying company, and in that time not only have I gotten some nice, increasing dividends but the stock has also appreciated 21.28%.

The Royal Bank of Canada (RY): Is still Canada's largest bank, but represents only less than 5% of my current portfolio. RY has a nice dividend yield of 3.68% and represents a stable source of dividend income.

Since I  am happy to invest in either of these three it will probably come down just how much capital I have to buy shares with, which means playing around with how many shares I can exactly buy with available cash(made easy using Excel or Google Spreadsheets). Along with comparing dividend yields, P/E, EPS and going through their quarterly results. Basically research and comparison.

I am looking at some alternative options, under current consideration are:

Rio-Can REIT (REI.UN): At some point I would like to add a second REIT within my TFSA, as they are very efficient to hold within a TFSA from an income seeking perspective. Since I already hold D.UN, which at its current pricing I would be tempted to get more of but I want to diversify more first. REI is Canada's largest REIT and has a range of properties under its management. It focuses on retail properties within Canada and the US. Currently REI is trading with a P/E of 10.84, a dividend yield of 5.38%. Its growing the business through new accusations and has a solid cash flow to covers its dividends. I also really like the consistency of monthly dividends and more so that REI has been able, albeit slowly grow its dividend over time.

Suncor (SU): I initially bought SU back in September and since then oil prices went down and the stock is still recovering from the pullback. It is currently down about 9% from where I bought it. The company itself is still financially sound, and is able to turn a profit at the current price of oil as management continues to find cost savings and efficiencies within the business. It's pretty tempting to cost average down on this investment a bit as I am still confident in the company itself.

    So that pretty much sums up my current watchlist and reasons for their additions to my portfolio. In part I like making these posts to keep myself in check and to create investing discipline with thought-out plans. In particular due to the TFSA's contribution limit I'v realized that this particular portfolio will not be my full one, it will just be one part of my total portfolio and so I need to focus on core holdings of probably no more than 15 different stocks.

    Which stocks have caught your eye this month? Anything similar or steps you go through when planning out your purchases?


  1. Great watchlist. Cant argue with any of those names. I own BNS and REI.UN from that list. Both look very attractive right now and wouldnt mind adding at these levels. I would also like to add another bank - and either RY or TD looks great as well.


    1. Its a pretty simple watchlist as well I'd say :) And I agree, BNS is looking pretty attractive for sure and I would guess that it will rebound nicely in the new year as the new CEO makes his mark and straightens out the banks international divisions. REI is also like I said one of the income generators I'd like to start a position in and add to over time. It would be pretty great if I could get it to the point where both D.UN and REI.UN were able to DRIP themselves a share every month.

      Thanks for popping in :)

  2. From a dividend perspective what's not to like about BNS. I happen to have BNS and RY in my ROTH account and plan to add to those positions going forward. I also have TD and was looking into BMO and CM as well though that might make me a little too diverse among the Canadian banks. Happy to see others thinking along the same lines as I do regarding future purchases. Thanks for sharing.

    1. Agreed! Pretty much all the big Canadian banks are great for their dividends, all with solid yields of 3.5%+ and growing those dividends slowly over time as well. I think for the time being at least/within this brokerage account I'll be limiting myself to the 4 banks.

      Happy to share and see you drop by :)

    2. I just added to my BNS a few days ago. I'm still liking the Canadian banks.

    3. Nice! I certainly am going to be continuing to be building up my positions with them for the foreseeable future.

  3. DW,

    Like the list here, especially BNS and SU. I don't own SU yet, but I've been looking at it on and off. Might be one of the last energy stocks I pick up. I like the low exploration risks, but the heavy oil is apparently more expensive to procure and worth less on the open market. Although, if that pipeline ever gets approved SU will really be moving some product.

    Best regards!

    1. Yup, BNS is looking pretty good, and compared to the rest of the big Canadian Banks its price hasn't gone up much in the last year even though its generating good profits. SU is IMO nicely situated in that it is a very big and well diversified company. They recently released some info on their future guidance and it is more of the same if I recall. Although they didn't plan for any new big development, but aren't cutting any current ones even with lower oil prices. As I think I mentioned on your recent buy, I think I'd wait for OPECs release before getting into more oil personally. If they don't cut production I'm curious which way the markets will go. Might make for a nice buying opportunity :)

      Thanks for stopping by.