So far 2016 has been a rough couple weeks for stock markets and so I used my first buy of 2016 to build up my newest position in Manulife Financial. MFC was also one of the stocks that I was watching closely with my last Watchlist.As mentioned in my Watchlist post, I generally consider MFC to be at an attractive price when it is priced at under $21. Generally the stock will fluctuate between the $20-24 range.
So I bought 46 shares of MFC at $20.24 during the first week of January. The stock boasted a 3.36% dividend yield, which means an additional $7.82 per quarter and $31.28 in annual dividend income. I have also lowered my average cost basis for this position from $20.38 from my first purchase to $20.31. With this purchase I now have a total of 88 shares of MFC.
A few quick reasons why I went with MFC over my other Watchlist picks:
- While I do like Pembina's strategy and constant growth, the market has been pushing down its share price due to its connection to plunging oil prices. I am also unsure of how I feel about its fairly recent equity offering.
- As for RioCan REIT, REIT's in general have been having a very tough year and a half with a lot of pressure being put on them from the potential of rising interest rates. As well as in particular RioCan's need to continue to search for more tenants of its unused Target Corp. properties. Additionally at this point I want to keep my portfolio weighting in REITs a bit lower than it is. Although the current valuations and yield are very tempting from an income perspective.
- The big banks that I look to hold in my portfolio; Toronto Dominion, Royal Bank of Canada and the Bank of Nova Scotia are all attractively priced right now, and I would love to buy more of all of them at below my current cost basis for them. However, I choose MFC instead because I believe it should hold out better in a volatile market. Generally speaking, insurance companies need to have very sound and prudent portfolio management requirements in order to guarantee funds are available to pay out when customers need to use their insurance.
Nice purchase, DW. I was looking at MFC last year and like that they are looking towards Asia for growth. Plus they have a pretty good exposure to US to give them some growth.
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Thanks. I definitely agree with their continued growth in Asia for additional revenue. I think even with the apparent 'slow down' in China there are still many opportunities to grow the business as more and more of the population needs insurance and retirement options. And they do operate a lot in the US and have many large corporate accounts which they provide benefits for.
DeleteNice to see that all the DGI bloggers aren't phased by all this market volatility and decline as we are all posting new buy posts seemingly everyday. Have to say that MFC is a name that doesn't come up often among our blogs. I never looked into this name before. I am liking the Canadian banks as you mentioned, TD, BNS and RY and just added to my BNS a few days ago. No doubt they are all looking very compelling at current levels. Thanks for sharing.
ReplyDeleteWell, when companies still appear solid, and the prices just go down, might as well buy. I'v no idea when prices will suddenly start to rebound or not, so when a good enough opportunity appears I go for it when I have the cash, always sucks when the next day that same stock goes down another 1-2%, but it could easily have gone the other way. And not like I have any intentions of selling my position in MFC any time soon anyways.
DeleteI do not generally see many insurance companies on DGI sites in general, perhaps the div yields are generally too low for many? They tend to have solid div growth though, and stable/safe portfolios due to regulations and best practices. And yeah, the banks are looking extremely tempting now! BNS is down an easy 15% in the past few months, div yield of 5%+!!! Crazy times.
Great buy, I have been a long term MFC shareholder. Solid company and well diversified.
ReplyDeleteYeah, MFC under $21 seems like a good buy to me :)
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