Wednesday, 30 September 2015

Next Buy Watchlist: September 2015

    It has been awhile since my last post, as I have been rather busy, as have the markets! It also been quite some time since my previous Watchlist in June. While I have been busy, I made sure to keep an eye on the markets and keeping abreast of recent news and important events like the Bank of Canada and Fed's decisions to hold interest rate steady, as well as results and comments on China's economy.

    There have been a few companies that I have been looking to build up my positions on. Especially with the continuing volatility that markets have been experiencing, some stocks are getting into  compelling valuations. In particular at the moment I am looking at adding to my existing bank positions, or initiating a new position in an insurance company.

    Of my existing three larger bank positions. Bank of Nova Scotia (BNS), Royal Bank of Canada (RY) and Toronto Dominion Bank (TD).

The two of those I am primarily considering are:

Bank of Nova Scotia

    Currently due to having lost over 10% in stock value in the past 3 months, BNS boasts an impressive dividend yield 4.83%. That's almost a 5% yield on a stalwart of Canadian banking, which has reliably increased its dividend for over a century! BNS also offers the most international exposure of the Canadian big 6 banks. Current price to earnings ratio is also sitting at a low 10.9%, a solid EPS of $5.32. The only drawbacks here are that if growth abroad continues to slow down, BNS will be disproportionately affected by it compared to TD and RY, which have a stronger Canadian presence, as well as fairly extensive American interests. BNS is also currently my largest bank holding, sitting at 12% of my portfolio.

Royal Bank of Canada

    Has many similar, and great qualities as BNS, with a greater presence in the States. RY is also currently the largest of the Big 6 banks in Canada by market capitalization, at C$105.17billion! In the past 3 months RY's stock valuation has held out a bit better, having shed 5.85%. Putting its current dividend yield at a still high 4.39% Not bad for a very reliable dividend growth company! Current P/E is at 10.98%, with EPS of C$6.56. Additionally, I am in favour that RY's dividend falls in months where the majority of my quarterly dividend payers do not. Which helps in smoothing out my dividend income, to create a consistent income flow.

    The two Insurance based financial companies I have my eye on are Manulife Finacial (MFC)and Sunlife Financial (SLF). These two have cropped up a few times on and off of my previous watchlists. They both within multiple service segments: insurance, wealth management,asset management, to both individual and corporations.

Manulife Financial

    Is the larger of these two insurance companies, based in Canada MFC offers a wide range of products. Personally I am enrolled in a health & dental plan with them through my work. So far they've been very easy to work with, reimbursing directly in my account. Often before the credit card bill even shows up! Before the 2008 financial crisis where MFC was forced to prudently cut its dividend in half, they had been consistently increasing their dividend, and have begun to do so again in the past couple years, and will hopefully continue to do so. MFC has been aggressively gaining ground and clients, continuing to grow strongly within the Asian-Pacific region. Including the completion of purchasing a new office building in Hong Kong to support growth in that area of the world.

    As I mentioned, MFC has often been on my radar, and its always done so when it has been priced at under $21, as it currently is. Its dividend at this price level is 3.35%, with a P/E of 13.24% and EPS of $1.53. Unfortunately, I have missed their dividend that was paid out this September, however I do like that for next time it will align with my historically lowest month for dividends of each quarter.

SunLife Financial

    SLF operates similarly to MFC, with a diverse footprint of operations, managed under separate business segments and uses a variety of distribution channel to sell its products. Overall it seems that SLF is quite similar to MFC, but with a lower market capitalization of $26.43billion, P/E of 12.47%, EPS $3.41 and a slightly higher dividend yield of 3.57%.

    All in all these are the four main companies that I am looking more closely at purchasing in the next short while. I do have an interest in the very, very lowered prices of the REITs of Dream and RioCan, however with those two already holding a fairly large portion of my current portfolio and with the general uncertainty of interest rates in both Canada and the United States I will be holding off on adding to those two currently.


  1. I still like the Canadian banks too. TD, BNS and RY. I have room for one more 2015 buy in my ROTH so it may be a Canadian bank or a beaten industrial like CAT or EMR. Thanks for sharing.

    1. Yeah, there is a lot to like about them as far as financial stocks with a fairly safe revenue stream goes. I am sure there must be stocks out there that will perform better, its more of a certainty issue picking the right one. So far within my TFSA I am keeping it more to blue chip and income producing stocks. Will certainly be branching out further down the road into industrials and other sectors eventually!

  2. Liking financials myself too. I would tend to prefer the two banks before the other two.



    1. Certainly hard to go wrong with those banks, steady revenue, growth and dividends! As for the insurers, I like that they are delving into the wealth management aspect that banks and boutiques have generally dominated. As well as their enforced risk management methods due to the nature of their underline business as insurers.

      Thanks for stopping by!