Friday, April 6, 2018

Recent Sale / Buy April and Other Developments, 2018

Doing What I Have Done Gremlin here to talk about two recent sales and a buy.  Sales you say?  I rarely sell stuff, but recently I sold two of my positions, the only two that do not generate a dividend.  That was the entire reason for selling.  These two stocks, Pengrowth Energy (PGH) and Willamette Valley Vineyards (WVVI) have been in my portfolio since about 2010.  It was a tough move to sell both, however it was decided that all hands should be on deck working for me.

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?

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.

OTHER NEWS:
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.

- Gremlin
- Long all stocks mentioned minus TD, PGH, and WVVI

6 comments:

  1. Hi Dividend Gremlin - Looks like you are big into Canadian Banks - what one would be your recommendation for someone looking to dip in to that sub-sector.

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    1. Divs4J,

      The Canadian banks are all great, the best place to start is with the big 5 - BMO, BNS, CM, RY, and TD. Of them TD is the most conservative with the biggest raises; it is second largest to RY - those two are probably the gold standard of Canadian Banking. CM is the smallest of the 5, but it has the highest payout rate and I would describe it as the most aggressive pick at the moment. BMO on the other hand is more conservative and does not have the exposure to the overpriced Toronto and Vancouver housing markets that CM (especially) and the others have. BNS is the most middle of the road - great yield, great increases, and excellent history. If you want to start in the middle I say BNS, if you want to start aggressive CM, and if you crave safety start with TD. My 2¢.

      Thanks for the comment!
      - Gremlin

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  2. Good buys there, I hold banking stocks in my local country as well (Australia) for their consistent and strong dividends.
    Looking forward to the brewery review!

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    Replies
    1. Mr. IM,

      I have heard good things about one bank from Australia, specifically the Commonwealth Bank of Australia (I believe). I am almost maxed out on that sector, but down the road I might explore it. I am also looking forward to a brewery review, it will probably be one that is small and hard to get your hands on down there unfortunately. :)

      Thanks for the comment!
      - Gremlin

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  3. Those five Canadian banks are the extremely safe investments. I used to own BNS and TD but in process of paying off my house I sold out positions but in future I intend to own these banks again and this time around it will be forever. :)

    Good Luck,
    TDK.

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    Replies
    1. DK,

      Thanks for the comment. I totally understand that move, definitely seems appealing and one day I might come to that same crossroads. We'll see what I do when I get there!

      - Gremlin

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