Friday, April 6, 2018
Recent Sale / Buy April and Other Developments, 2018
PGH was sold at a big loss, though proceeds + dividends received + tax harvesting makes up for some of that - but not enough. It was a dead weight in my portfolio, and every dollar that cash can earn back is appreciated. It is at a point where waiting and watching continual failure was just not worth it. WVVI, on the other hand, was sold for a very handsome profit. I liked owning them, it felt cool. I would like to own a vineyard or a brewery in real life, and I am sure one day I will get there. However, at this point I want that cash onboard driving this FI ship faster and faster. So enough of this sad selling news, what did the proceeds buy?
Today, I added a new position by purchasing shares of the Royal Bank of Canada (RY) in my taxable account. I bought 15 shares, with a total cost of $1,154.72 ($76.52 / share, plus commission). The current yield is 3.90%. The P/E ratio for RY sits today at approximately 12.99, trailing. The yield is slightly below the 5 year average of about 4.01%, and P/E is slightly above the average of the past 5 years (12.18). RY has a trailing payout ratio of approximately 51%. RY is a member of the Canadian Dividend All-Star list, with 7 years of growth. They, along with the other major Canadian banks froze payouts during the 2008 Financial Crisis, only to resume them with two years. RY has been paying dividends since 1870, and has never once missed a payment. I am comfortable with the current and historical ratios, this is a solid stock and will serve me well for a long time.
RY, along with my other Canadian bank holdings of Bank of Nova Scotia (BNS), Bank of Montreal (BMO), and Canadian Imperial Bank of Commerce (CM) make up four out of the five big Canadian Banks. I intend to add the other, Toronto Dominion (TD), too. Their collective history and the regulations that bind them make them, as a whole, the juiciest banking group in the world to me. Indeed, just look at their general Wiki entry if you don't believe me. That history says it all - during the Great Depression no banks closed, during the 1980s only 2 closed. By contrast, 9000+ banks failed during the Great Depression in the USA. The USA has a banking industry that seems to waver between stable and made out of spaghetti; so for my investments in banking I favor the stability of the Great White North.
In other news I am aiming to start a secondary portfolio using M1 Finance. M1 is a fee-free brokerage of sorts in the vein of old Loyal 3. However, it allows access to the whole market and investments are triggered in a batch style when the necessary amount of funding is reached. For a much better review of the site please read Retire Before Dad's take.
My goal with this account is to make a team of also-rans. What I mean by this is choosing stocks that I routinely want to buy, but when the time comes I always pass over them for a better deal at the time. So this will be a team of number 2s. To that end I have titled the fund, The 2nd Bananas. This is a tribute to an old article on the website Grantland, describing the best 'side kicks' of all time.
By the time this account is getting to where I want it to be it is likely fees will be introduced. At that point I will close the account moving all the assets back into my standard brokerage. So it goes, so it goes.
Finally, I will be doing some work travel in the next few weeks. Hopefully I will be able to put up a brewery review, as its been a while since I have done that.
What do you think of RY and M1 finance?
I will update my portfolio page at the end of the month.
- Long all stocks mentioned minus TD, PGH, and WVVI