Recent Stock Purchase – November 2014

With the stock market on a tear, closing up five straight weeks in a row, many dividend bloggers have begun to echo the sentiment about finding relative bargains again. To be certain, despite these fantastic runs we have experienced in the Dow and S&P, there are still a lot of high quality names in the energy sector that remain good bargains for those willing to wait. Besides the energy sector many financial names are also continuing to present relative good buying opportunities when compared to many other sectors such as consumer staples and industrial names. Some of those names include, Wells Fargo & Company (WFC), U.S. Bancorp (USB), The Toronto-Dominion Bank (TD), Royal Bank of Canada (RY), The Travelers Companies, Inc. (TRV), The Chubb Corporation (CB) and AFLAC Inc. (AFL).

 

Of course, exceptions lay even within those categories but as a whole energy and financial stocks continue to offer seemingly better buys.

 

Looking at my November stock considerations, I mentioned how I was still partial to the Canadian banking sector and several other high quality dividend names such as V.F. Corporation (VFC), W.W. Grainger, Inc. (GWW), Bemis Company, Inc. (BMS), CR Bard Inc. (BCR) (I’d like the yield to be a bit higher on that one) and Becton, Dickinson and Company (BDX). Of course, many of those names have continued to run up in recent weeks and I’m not willing to add to those positions at current prices/valuations. With that being said, and owning a position that is slightly down from my original cost I decided to average down my position in The Bank of Nova Scotia (BNS).

 

I have added to my ROTH account 25.4919 shares at $62.61 for a total investment of $1,596.05 in The Bank of Nova Scotia (BNS).

 

Between the relatively high yield of 3.80% and relatively low PE of 11.99, which is slightly lower than its five year average, coupled with the fact that I wanted a stock to average down my current holding all factored in to my decision to buy BNS. With this recent purchase my holdings in BNS now totals 52.6699 shares for a value of $3,298.72.

 

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

 

Disclosure: Long BNS, TD, RY, VFC, GWW, BMS, BDX, WFC, CB, AFL

45 thoughts on “Recent Stock Purchase – November 2014

  1. Looks like we added at the same time. I just re-initiated my position in BNS after completing my transfer from a DRIP plan. A took a minor tax hit, but going forward, I dont have to worry about taxes anymore.

    cheers
    R2R
    Roadmap2Retire recently posted…Recent BuyMy Profile

    • Hi R2R,

      One of the key reasons I hold BNS in my ROTH account, taxes. Happy to hear you are on board the large Canadian bank dividend train. I still have my eye on BMO and CM but might not make that leap for a while longer as I already own in total three Canadian banks. Thanks for sharing your BNS addition and commenting.

  2. I like the purchase of BNS. It’s a stock that has been on my watchlist and I’ve strongly considered initiating a position in the past few weeks. I don’t have a holding in the financial sector, so it’s at my top of my list, with energy sector names. I’m leaning towards adding to my small position in BBL but still thinking of BNS as a possibility this week.
    Special Agent Dividend recently posted…Weekly Dividend Investing ActivityMy Profile

    • Hi SAD,

      There are many great financial names to get your feet wet especially since you do not have any exposure to the sector. As far as my financial holdings I have WFC, TD, BNS and RY in the banking sector and AFL and CB in the insurance space. I know energy names have stolen the show in the last few weeks as oil continues its slide but it seems that many of the DGI bloggers are getting to heavily weighted in that space. Financial names might be a good alternative. Thank you for stopping by and commenting.

      • Just want to respond to your comment about folks getting too heavy into energy over the last few weeks. Given that most bloggers are early on in the accumulation phase of their journey, buying where the value is shouldn’t be viewed as a negative, even if it sways their sector weighting. Last year, REITs were priced well with interest rate concerns, right now is oil. Everything is cyclical. Ultimately, people should buy where they see value, and over time as their portfolio grows, things should level out or purchases become more targeted.

        All that being said, the BNS buy is a good one, and if I had any powder left in my IRA, they’d be on the short list for pickup.
        writing2reality recently posted…Trades – Chevron Corporation (CVX) and Baxter International (BAX) PurchasesMy Profile

        • Hi w2r,

          Don’t get me wrong, I never intended that it was a negative to buy where the value is as that is essentially what we are doing with every purchase we make. I just want to highlight that there are other “value” plays in the market besides the commodity plays such as oil and minerals. Sometimes as bloggers that are in the accumulation phase of their journey forget the notion of balance whether, as you mentioned, it’s getting REIT heavy or whatever the theme of the day is. It can be dangerous to go “all in” and concentrate on just one sector. As always, I appreciate your comment and you stopping by.

          • Totally understand both points. A new investor like me doesn’t necessarily have to worry as much with smaller and routine buys. But, it could be easy to get overweight quickly if you aren’t careful. I’ll be looking to add a financial sector name dojo to balance out my core holdings. Thank you both for the valuable insight, as always.
            Special Agent Dividend recently posted…Portfolio and Addition of Portfolio PageMy Profile

            • Hi SAD,

              Exactly my point. The keyword is ‘balance’ no matter if you are starting out or have a large portfolio. It’s easy to get heavy on a particular sector when great values are abound but usually this leaves a person with a very heavily weighted portfolio in a particular sector which nullifies the benefits of diversification.

  3. I like the purchase. I only have CM, and want to add more of the Canadian Banks when I get the chance. BNS and friends have been on my watchlist for sometime now for my taxable account.

    Those new shares should go a long way in terms of income and overall growth for years to come.

    – Gremlin

    • Hi DG,

      I am hoping on making these Canadian banks part of my long term dividend income portfolio. As of now, I have no intention of making these positions “trades” rather long term investments. I still find the Canadian banks to be solid buys in this high market and a good alternative to energy/commodity plays for the DGI blogger that is getting too heavy in that sector. Thank you for sharing your CM holding with us and commenting.

    • Hi Tawcan,

      Happy to have you on board the BNS dividend train. I would have liked to add my shares a little closer to the $60 mark but as you mentioned and I agree, I think the shares are still a little undervalued even at current prices so I jumped in. In ten or twenty years these minor price differences won’t matter much. I also really like RY but have decided to wait before adding more there. Thank you for commenting.

    • Hi Alexg,

      Well, for the longest time I always use the phrase, “relative bargains” as no true bargains have been in the market for quite a few years. With that being said I can understand your enthusiasm for the energy names. Energy and other depressed commodity names seem to be the go to sectors of the day. Thank you for stopping by and commenting.

    • Hi FtFF,

      Thanks for the encouraging words. I happen to still like many of the Canadian bank dividend stocks as many seem to trade at fairly low values compared to others out there. Keep watching BNS and the other names and let’s see if you do finally pull the trigger. Thanks for commenting.

  4. Keith,
    I like your choice; I personally doubled my position in WFC. Also started a position in BBL since the valuation seems to be such that the downside is limited, the book value is almost 60% of the current stock price, the dividend is approaching 5%, and Merrill Lynch, Morningstar, and S&P all have buy ratings. I don’t really have any other Materials exposure other than oil and gas stocks, so the iron ore, nickel, copper, and diamonds that BBL mines adds a bit of diversity.
    Happy Thanksgiving,
    KeithX

    • Hi KeithX,

      Good call with your two picks as well. WFC has been a long time holding of mine and the only U.S. bank in my portfolio. The only other U.S. bank I would consider is USB. BBL has also been very popular in recent days for the points you mention. It never really made my radar but I have started to look at it as its valuation and juicy dividend make it look very compelling. Thank you for commenting.

  5. Always nice to be able to average down, DH.

    BNS made an interesting announcement (I believe at the beginning of this month) that they are cutting around 1,500 positions companywide. BMO made a similar move largely with middle management jobs a year or two ago as well. With rates low and a difficult environment for banks to mint money as they have in the past, they’re looking to cut costs (jobs).

    – Ryan from GRB
    Get Rich Brothers recently posted…Two OptionsMy Profile

    • Hi GRB,

      While averaging up is a nice trend to follow as you are continually buying winners, averaging down is also nice as you are lowering your cost. I had read about the BNS cost cutting measures in recent weeks as well and noticed an overall trend in the entire North American banking sector. 2014 has shown dozens of American banks closing branches and cutting costs as well as more people take care of their banking needs online. I don’t perceive the closing of branches or layoffs of employees as a death knell for the banking sector. As always, thanks for stopping by and commenting.

  6. Divhut,

    Nice purchase! I am a huge backer of Nova Scotia – my aunt worked there for so many years and retired from there, and still lives in Canada. I do have a Canadian bank in my portfolio – Canadian Imperial, and I can’t decide if now is a good time to re-up in my position or not. They’ve performed fairly well and have increased their dividend more than once this year. Just need to re-rack my valuation approach and see where it sits in an evaluation by me.

    Nice purchase and great way to really pump up a position of yours, have a great Thanksgiving!

    -Lanny
    Dividend Diplomats recently posted…Share Buyback Programs are Big News for Dividend InvestorsMy Profile

    • Hi DD,

      If you have been following DivHut for the past several months you would know my affinity for the large Canadian banks. I have been watching CM for a while as well and would like to add it to my portfolio someday. Right now I am content owning four banks in my portfolio though. On the valuation side of things all the large Canadian banks seem to offer fair to good value considering where the market as a whole is standing today. Thanks for sharing your Canadian bank holding and for stopping by.

  7. Hi DivHut,

    Although I I’m currently investing outside the FTSE all share at this early stage of DGI, I will eventually broaden my horizons to the rest of the worlds individual stocks.

    I have seen several people blogging about BNS and when you read the financials it’s clear to see why. They will be on my overseas watchlist when the time comes.

    Thanks for sharing!
    Huw
    Huw recently posted…New Page – Freedom Fund / Net WorthMy Profile

    • Hi Huw,

      Like you, I started investing in only U.S. companies as I was most familiar with them. As my portfolio grew I began to look outside the U.S. and bought and received from spin offs several foreign companies such as IR, ALLE, DEO, BNS, TD and RY. It seems that BNS is one of the more popular banks among the DGI bloggers along with WFC in the U.S. In time you will expand your portfolio to include many other high quality foreign names. This is one of the reasons I like to read blogs from outside the U.S. as you learn about many companies you never have heard of. Thank you for stopping by and commenting.

    • Hi Seraph,

      I know energy and other commodity plays are hot among the DGI bloggers these days, and for good reason. I also think that there are quite a few financial names that are presenting good value as well with BNS being one of them. Of course, I also wanted to average down my cost in that position which influenced my decision to make this purchase. Thanks for stopping by.

    • Hi DGJ,

      For along time I was very light in financial too owning just WFC for many, many years. It was only in recent months that I started adding to my BNS, TD and RY holdings as I wanted more exposure in that sector. Keep watching the large banks in Canada as well as WFC and USB in the U.S. Some insurance companies are presenting good values too such as AFL, CB and TRV. Thanks for stopping by.

  8. Hi DivHut. I really have to start looking at these Canadian banks you write about. How does the taxation work out? If I understand it correctly, by having these in your Roth IRA, you avoid the dividend withholding tax. Is that correct? As for energy stocks, they are definitely more attractive these days than other sectors. I was looking at adding SU to the portfolio, but I’m already kind of heavy in that sector. We’ll see. Thanks for another thought provoking post. Have a great Thanksgiving!

    – HMB

    • Hi HMB,

      There is a tax treaty between the U.S. and Canada that allows for U.S. citizens to hold Canadian stocks in retirement accounts such as a ROTH or IRA without withholding taxes. This is why I have placed my three Canadian bank stocks in my ROTH. I have never looked at SU in earnest before. It’s a name that doesn’t really come up often among the DGI bloggers. Maybe it’s time I take a look? Happy you have stopped by and commented and have a nice holiday too.

  9. BNS scaling down some of their operations but I think it is good for them in the long run. If they slow their global growth it will make them profitable in their current markets. Canadian banks have come under pressure with a number of job cuts associated with aggressive growth outside of north america where their bread is buttered. A stumble no doubt but a great value play in a beaten up sector.
    Asset Grinder recently posted…6 month anniversary on the blog and adsense finally!My Profile

    • Hi AG,

      BNS along with many other North American banks are scaling back their physical operations. Bank closures are becoming the norm these days as online transactions are impacting operating costs by decreasing the need for physical locations. I don’t necessarily see it as a headwind for the industry, rather a shift in the way business is conducted. The Canadian banks have been on a great run the last five years and I feel that even with a pullback in the sector, via real estate bubble popping or some other financial calamity, the large Canadian banks remain good long term dividend investments. Thank you for stopping by and commenting.

    • Hi Jeff,

      Thanks for sharing your bank holdings with us. You aren’t the only DGI investor that holds a position in all five of the major Canadian banks. They seem to be very popular among many of the long term dividend investors out there. For now I am quite content owning three plus WFC. Thank you for stopping by and commenting.

  10. Nice buy DH,

    I only have a TSP so I can’t take advantage of the roth contribution. I bought 39 shares of BBL since i had no material exposure. I hope UL and GIS falls back down. I had no capital when it dropped the first time.
    The Broke Dividend Investor recently posted…BUYMy Profile

    • Hi TBDI,

      All three of the companies you mention are very solid indeed. I have GIS and added UL recently and plan to keep both as long term investments. I also started watching BBL in recent days as the price is floating around $50 with many commodity prices depressed. BBL has been very active among the DGI bloggers in recent days too as many have been adding or initiating positions in that stock. Why not? With that low PE and juicy yield it certainly looks like a great long term buy. Thanks for sharing your buys with us and commenting.

  11. All US and European banks seem to be being hit with almost weekly record fines for bad practice. Is this also the case in Canada? If so, could this be why this stock is “undervalued”?

    • Hi moneystepper,

      While I’m sure the fines and other reprimands the banks received contributed somewhat to their general weakness, by today’s standard that impact is minimal at best. There’s no question the large Canadian banks are sitting on much stronger footings than the American banks and while they are all up tremendously in the past five years they still offer good relative values in the high priced market of the day. Thank you for stopping by and commenting.

  12. I haven’t invested in the Canadian banking sector. From reading of the financial sector during the crisis, it is clear there is plenty of quality there. Is BNS the most diversified (geographically) of the Canadian banks? If I remember correctly, I thought they had some American operations.

    Take care!

    • Hi ILG,

      The large Canadian banks really swam through the great financial crisis quite well. None have cut their dividends during the crisis and all have remained quite well capitalized. BNS is one of the more diversified geographically when compared to my other holdings of TD, which has a large American presence as well and RY which is essentially a Canadian centric bank. BNS has a lot of exposure in the Caribbean as well as South American too. Thanks for commenting.

    • Hi CDM,

      Thank you for your input. This diversification of my portfolio came after many years of slowly adding companies to my core holdings. Thanks for stopping by.

  13. Being in my mid-50s and already retired I am heavily invested in various Bond and Stock funds but I have been trying to put together a portfolio on the side of individual Dividend stocks to invest in. I don’t have any Canadian stocks on my list so I will definitely take note here and add to my wish list. I hope to have the cash to start some targeted purchases soon. Thanks for your analysis and your insights.
    LeisureFreak Tommy recently posted…Over Pursuit of Money can enslaveMy Profile

    • Hi LFT,

      Being retired at your current age is a great achievement. Many can only dream of retiring at such a relatively young age. Congrats. I would suggest you look at my portfolio to see my core holdings if you are looking to build on some individual stocks. For many years I was very light in the financial sector and wanted to add some banks to my portfolio. At the time I only owned WFC and was considering adding USB too. But then, I was “turned on” to the impressive dividend track record of the large Canadian banks and started to add them to my portfolio. I appreciate you stopping by and commenting.

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