Recent Stock Purchase – February 2015

It’s been a long time since I wrote a post about a recent stock purchase. In fact, my last post discussing this topic dates back to January 8. No matter. As long as I can make a purchase at least once a month I’ll be following my personal goal of building up my portfolio. For me, no matter the market condition, the key word is consistency. I must make a buy once a month.

 

Here we go again. With the market at all time highs and valuations of many companies in the stratosphere we have to pick and choose our investments a little more carefully these days. Still, there are two sectors that present decent, if not good, bargains throughout, namely energy and finance. With that being said I decided to stick with my February stock considerations list and look into the finance sector, specifically the large Canadian banks. It seems that continued weakness in oil prices along with a depressed local currency, Canadian banks are entering into a period of protracted headwinds. This, of course, simply offers us better buying opportunities.

 

For my portfolio, adding to my Canadian bank holdings allows me to average down my cost while buying at a more attractive PE and in the meantime collect a juicy current yield. With that being said I’d like to share my recent stock buys.

 

I have added to my ROTH account 18.7926 shares at $42.57 for a total investment of $800.00 in The Toronto-Dominion Bank (TD). With this recent purchase my ROTH account holdings in TD now totals 86.7187 shares for a value of $3,672.54.

 

I also have added to my ROTH account 26.6876 shares at $59.81 for a total investment of $1,596.05 in Royal Bank of Canada (RY). With this recent purchase my ROTH account holdings in RY now totals 38.7950 shares for a value of $2,311.79.

 

What do you think about my most recent purchases? Is TD, RY or any other Canadian bank stock in your dividend income portfolio? Please let me know below.

 

Disclosure: Long TD, RY

40 thoughts on “Recent Stock Purchase – February 2015

  1. Like these purchases, DivHut. The Canadian economy is facing some headwinds and the banks are going to take a beating over the coming months. This morning BMO reported with an EPS miss by $0.10 citing commodity market turmoil, loonie issues etc. I wont be surprised if TD, RY will come out with similar statements….and this is the perfect opportunity to load up on the shares for the long run. I will be doing the same 🙂

    cheers
    R2R
    Roadmap2Retire recently posted…The Richest Man In Babylon – Book ReviewMy Profile

    • Hi R2R,

      Historically, these large banks have weathered some pretty serious headwinds and came out shining on the other end. These are the moments, when things look shakiest, that one must consider investing and potentially pick up some very high quality names at discount prices. I commend many of the dividend bloggers for doing the same when energy took a tumble towards the end of 2014 and loaded up on many solid and newly high yielding names in that sector. I hope to achieve the same end and will hopefully look back in coming years be glad I did. Thank you for stopping by and commenting.

  2. Keith,
    I like your picks even though I don’t have any bank stocks in my portfolio. I did make a switch in one of the financials that I hold this month; I swapped TROW for AFL. I like the long term growth prospects for T. Rowe Price while at the same time I have lost faith in the Japanese economy, and therefore, Aflac. It all comes down to investing so that I can sleep at night and I feel better with TROW. AFL is probably still a good long term investment, but not for me.

    Like R2R wrote, we may have some real opportunities to buy Canadian banks. I have been leaning towards RY. I like the purchase of City National and the expansion into the States. Maybe with a bit more research it will be my next purchase.
    Thanks,
    KeithX

    • Hi KeithX,

      Your comment hits the nail on the head when you state that comfort in any investment you make is paramount. I too value my sleep and we all have our own tolerance levels. AFL is actually my largest holding in my portfolio and while I don’t plan to sell it anytime soon I also don’t plan to add more to it for a while longer (barring any new Mr. Market opportunities). For now my portfolio is full with bank stocks and insurance names as I own WFC, TD, BNS, RY, AFL and CB. With continued weakness in the Canadian economy, dollar and oil I still may add to my Canadian banks next month too. As always, I appreciate your comment.

      • I have noticed that your portfolio is complementary to mine. Funny how two people can analyze data and then act differently on it. I think you should do well with your picks, and I hope to do the same. Or, as the duck says, “AFLAC!”

        • Hi KeithX,

          That’s part of the fun of sharing our portfolios online. We all have a very similar goal in mind but are seemingly taking different paths to get there as each of our dividend portfolios are slightly, or in some cases, vastly different. Keep on rocking!

    • Hi DH,

      Thank you for your continued support. There’s no question that the large Canadian banks are presenting some pretty good opportunities with all the headwinds they are currently facing. Current prices and valuations are much more attractive than a year ago not to mention the larger current yields which look sustainable at present. Thank you for stopping by and for your comment.

    • Hi w2r,

      With the continued weakness in some of these solid long term dividend payers I have to admit that I am partial to the sector. The reality is that I did want to increase my banking sector exposure as prior to buying into the Canadian space I only owned WFC. Even with these recent additions the finance sector is still not my largest between my brokerage and ROTH accounts. My largest holdings still fall in the consumer staples and industrial names. I am comfortable owning this growing portion of my portfolio in the Canadian banks and will probably be adding more to it if circumstances stay the same. After all, my AFL holding is larger than all three of my Canadian banks together.

      To be fair I also have added to other names besides the Canadian banks in the last six months including, EMR, CAT, BMS, GE, KRFT, UL, AFL, GIS and DEO. I will say that going forward I also want to increase my health sector holdings but still on the sidelines for now. I appreciate you stopping by and sharing your thoughts.

    • Hi FV,

      The large five Canadian banks are pretty popular among many of the dividend bloggers. Some own one or two names while others own all five. BMO and CM have also made my radar but are currently not in my portfolio. With four bank stocks already in my portfolio I feel more than sufficiently diversified in the sector. Thank you for stopping by.

  3. DH,

    Congrats on 2 nice pickups! I’m personally not into market timing but if one were so inclined, this would be a good time as many are running for the exits until the commodity/currency headwinds dissipate. Both stocks will likely pay great dividends to your portfolio for the long run.

    FD

    • Hi FD,

      Like you I wouldn’t call myself a market timer as I make sure to invest at least once a month no matter what levels or situations the markets are in. What I do look for is an opportunity to exploit some potentially undervalued stocks that I think are great long term investments which is what I have done with this recent purchase. As you noted, depressed commodity prices and currencies all make for some strong near term headwinds for these companies that simply show up as good values along with high yield. Thank you for sharing your thoughts.

    • Hi Tawcan,

      Thanks for the words of encouragement. I agree that near term the stock prices for the Canadian banks will feel pressure but the metrics behind the dividend payments seem solid enough to continue with room for raises too. Thank you for stopping by and commenting.

  4. Nice job DivHut! To be honest with you I havent looked at the Canadian banking situation at all and I will be making a stock purchase at the start of next week here so these may something I will look into for sure. keep up the good and stay disciplined with your with once a month stock purchases it will reward you in the long run I am trying to do the same thing myself.
    FI Investor recently posted…My Wealth Building StrategyMy Profile

    • Hi FIV,

      Your support is much appreciated. I think a disciplined and consistent approach to investing helps remove some of the question/hesitation we feel about buying stocks. By mentally forcing myself to buy stocks every month no matter the situation I am able to tune out whatever current noise is in the media. Whether it’s chat about Ebola, interest rates, terror, inflation, deflation, oil, currencies, fiscal cliff, commodities, bond bubbles, real estate bubbles, PIIGS defaulting, Ukraine or whatever I know I just need to make my monthly buy and not get swayed by the talking heads or media outlets. This holds true for my Canadian bank buys. They have been hammered since the summer of 2014 and I simply see great yield at much better prices/valuations than seven months ago. Thank you for stopping by and commenting.

    • Hi Ryan,

      Thank you for the kind words. The Canadian financial names are definitely reminding me, to some extent, the hammering of the energy stocks in late 2014. As many jumped on board to load up on those names as prices declined I see a very similar occurrence unfolding here. I’ll still be biting or at least nibbling on these names if conditions remain the same. As always I appreciate your comments.

    • Hi AFFJ,

      Always nice to hear concurring opinions about a recent buy I have made. The last six months or so have really dragged down all the large Canadian banks and with oil prices still depressed along with the Canadian dollar I expect weakness to continue for a while longer. You’ll most likely still get your opportunity to pick up some TD or other large Canadian bank at a discounted price. Thanks for stopping by and sharing. I’ll be taking a look at your ‘Ask the Readers’ post.

  5. DivHut,

    Seems like a solid time to load up on Canadian banks, as you’ve been doing over the last few months. I see some headwinds up there that reminds me a bit of the US situation back in 2007-2008, especially as it relates to housing. But, long-term, they should be fine. Enjoy those big dividends!

    Best regards.
    Dividend Mantra recently posted…Keep It SimpleMy Profile

    • Hi DM,

      As you know we are always looking out for dividend stocks that offer a decent to great valuation along with a history of paying and raising dividends long term. These days with all the headwinds the Canadian banks are facing some pretty compelling buying opportunities are flashing before our eyes. Share price may fluctuate dramatically going forward but I am confident in the long term ability of these banks to keep paying a dividend as well as increase them long term. Of course, averaging down doesn’t hurt either. Thanks for stopping by and commenting.

    • Hi DG,

      The large Canadian banks have all been paying dividends for well over 100 years and have proven their resilience during the financial meltdown of 2008/09. I intend to make these holdings long term and hope these near term headwinds the banks are facing will translate into increased share price and higher dividends down the road. I have looked at NA in the past but it never made my watch list. The other Canadian banks I would potentially invest in would be BMO and/or CM. For now, I am more than content with three Canadian banks in my portfolio. As always, I appreciate your comment.

  6. DivHut,

    I love the Canadian Banks, sadly I don’t have those just CM (I would like them all though). Their rates are excellent (in terms of both total and current yield), and industry wide the CAN Banks are all on a nice dip right now.

    One quick question, how do you feel about the foreign tax in a Roth account? Is there more potential for those stocks to sit in a standard account to realize the foreign tax benefits?

    Keep up the FI,
    Gremlin
    Dividend Gremlin recently posted…Recent Buy, Feb. 2015My Profile

    • Hi DG,

      I have added CM and BMO to my watch list but am quite content owning three other Canadian banks for now. Regarding your question, I hold the Canadian banks in my ROTH account because there are no withholding taxes placed on dividends there. A tax treaty between the U.S. and Canada states that you may own Canadian domiciled companies in U.S. retirement accounts such as a ROTH or IRA and not be subjected to any withholding taxes. Hope this answers your question as to why I have these stocks in my ROTH and not my taxable account. Thank you for stopping by and commenting.

  7. I loaded bmo about a month ago. I’m bullish on banks for now, unless there is some crazy geographic changes. For now, I think the people of the world still want peace. Banks will continue to make money regardless of the earning miss they are making money they get to borrow at a near 0% and loan at 4-7%, 21% for credit card sometimes, so I don’t see how they don’t or can’t make money.
    Vivianne recently posted…Relax! It’s just normal day of landlording!My Profile

    • Hi Vivianne,

      I like your recent BMO buy. It has been on my watch list along with CM. I agree with you that while the near term prospects for the banks seem a little shaky, longer term they do look bullish and now seems like a great time to load up on some high quality banking names. Thank you for stopping by and sharing your thoughts.

    • Hi BSR,

      I know the Canadian banks are in many dividend portfolios as I have seen anywhere from one to five names included among the blogger community. The headwinds you and I speak of seems to be offering us some better buying opportunities which is why I have been loading up in this sector the last several months. Happy to be a fellow shareholder with you in BNS too. Thank you for stopping by and commenting.

  8. DH,
    Very nice purchases. Your RY buy is awesome as they just had an 8.45% dividend hike, Im jealous! (in a good way 🙂

    I am having a second thought now with the Canadian banks, as a I just discovered that US residents have to pay a 15% foreign tax thus lowering my yield (if held in a taxable account). Sucks, I was planning to buy more BNS and TD and I was planning to add RY. Oh well you can’t have it all. Thanks for sharing your recent purchases!
    FFF
    FrugalitytoFinancialFreedom recently posted…The Tale of “O”My Profile

    • Hi FtFF,

      You can imagine I was pretty excited to read about that jump in dividends for RY. Well over an 8% increase is a pretty solid testament to the resilience these banks have despite all the headwinds they are currently facing.

      I keep all my Canadian banks in my ROTH account and therefore do not have any withholding taken from the dividends received. You can still enjoy the full benefit of owning a Canadian bank if you place your stock in a retirement account. Even if you don’t they still have a very generous yield. As always, I appreciate your comment.

    • Hi DFG,

      It seems that many are looking into the Canadian bank names these days and I’m no exception. The market is marching higher and many great consumer staple names that I like are just too expensive which is why I continue to look at finance and specifically the Canadian banks with all their current headwinds they are facing. I still like the sector long term and may continue buying into it next month as well. Thank you for stopping by and commenting.

  9. I already had 100 shares of TD in my Roth, so I decided to add 100 shares of RY to my 401k to get a little separation with multiple companies vs. putting all the chips in one company.

    I think one of the Canadian banks might be the next purchase for my son’s portfolio

    • Hi DH,

      Happy to be a fellow shareholder with you in those Canadian names. Clearly you feel comfortable owning those stocks in your own ROTH as well as 401k. I like you diversifying among TD and RY too. I know history is no indication of future results but one cannot dismiss the stability and conservative nature of the large Canadian banks going back well over 100 years. I think now is as good a time as any to buy into the weakness of this sector. We all know commodity prices rise and fall as does currency value and it’s clearly affecting the Canadian economy as well as its large banks. Thank you for sharing your Canadian buys with us.

    • Hi DD,

      Thanks for the kind words. I’m still sticking with my three Canadian banks, TD, BNS and RY and perhaps one day will add CM and BMO to my mix as well. For now those two are on my watch list. I still think the large Canadian banks are cheap as oil remains depressed as does the Canadian dollar. We all know everything in business is a cycle and it’s just a matter of time before both head higher and bring the Canadian banks along for the ride. Thank you for stopping by and commenting.

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