Diplomats Weekly Purchase Summary

What another crazy week in the stock market.  The price of crude oil continues to slide, causing the price of many great dividend growth stocks to continue to slide.  Both Diplomats had extra capital to spend (one much more than the other) to take advantage of the discounts the market has provided us. Which stocks did we buy this week?  A few markets, outside of the market as a whole, took a little more of a “goodfellas” beating than others – Canadian Banks, Oil, Mineral/Resource realm.

Buying-Stock

Bert’s Purchase

This week I initiated a position in an industry that is not well represented in my portfolio, the financial sector.  In fact, I didn’t even have a presence in the industry until my purchases of Aflac earlier in the year.   As many of us know, oil has not been the only sector to have a major pullback over the last full weeks.  The Canadian banking industry has also declined, creating many great opportunity in the major, dividend paying Canadian bank sector.  There were enough pullbacks in the industry to prompt Lanny to analyze three of the six major Canadian bank stocks to help determine which stock is the best to purchase.   His analysis was instrumental in my eventual purchase of Canadian Imperial, CM, earlier this week.   In total, I initiated an entry level position of 5 shares of CM adding $18.05 to my projected annual dividend income.   So why did I purchase CM over BNS and TD, especially based on Lanny’s stock analysis?  I selected CM due to its high dividend growth over the last year and the fact it was the highest yielding of the bunch.  Since all three companies are strong, dividend growth stocks, with similar yields, payour ratios, and dividend growth rates, I was comfortable using yield as a final decision point since I would not be sacrificing the quality of a company to earn a higher yield.

Another interesting aspect of this purchase was that the purchase was made in my Roth IRA.  This is noteworthy because one of my goals for 2015 was to maximize my 2014 Roth contributions in the first few months of 2015 (And make sure I maximize my Roth before 12/31/15 going forward).   Making sure I accomplish this goal is so important to me because maximizing your Roth IRA during the early stages of your life builds such a solid foundation for your financial future.  Want proof?  See what happens if  you were to  maximize your Roth for 10 years and not contribute a single, extra penny.   This is why it aggravates me that I am playing catch-up with my Roth contributions.  However, after this purchase, I have now contributed $3,021 to my Roth IRA in 2014 and  I expect myself to contribute $2,479 before April 15th hits.   So while I am catching up in contributions, I will once again maximize my contributions for the second straight year.  Let’s keep the snowball rolling towards financial freedom!

While 5 shares is not a significant position by any stretch, this is an initial position that I plan on adding to in the near future.  Since the stock continued to slide after my purchase, I would expect that second purchase to come sooner rather than later!  This purchase added roughly $18 to my projected dividend income total, not a lot – but every dollar definitely helps, as that is money working for me and of course – us Diplomats will be reinvesting those proceeds, as we always talk about the power of DRIP-ing!  Let’s see what Lanny did further below..

 Lanny’s Purchases

As the market took a downspell this week, I couldn’t help but update my valuations across the oil, mineral resources and bank sectors – more specific to Canadian banks as Bert noted above.  CM, in particular, has been on my watch list in the past and Canadian banks have a soft spot for me since my Aunt worked in the industry for over 30 years in Canada.  I have enjoyed watching the impact on oil that it has on bank stocks, moreso that I evaluated the 3 earlier this week in my Canadian bank stock analysis.  Additionally, BBL, took another smack during this week from the pressures on oil and banks, which caused this stock to tumble quite a bit.  I am all about re-upping into my own/already initiated positions, so let’s get down to the actionable events:

  1. Purchased Canadian Imperial (CM) for $86.48 earlier this week for 8 shares (which they obviously took another $2+ hit on Friday!)
    1. Dividend Yield was at a point where I liked it – mid 4%
    2. Payout Ratio – below 60%
    3. P/E – was the most undervalued bank stock from my metrics
  2. Purchased BHP Billiton plc (BBL) for $43.43 with 17 shares.  This as well took another $2 smack to the face after I bought it – talk about timing!
    1. My initial purchase was $47.60; therefore the price decline into the $43’s prompted me to re-up my position
    2. Dividend yield is strong at 5.57% at time of purchase
    3. Payout ratio and P/E quite low in comparison
  3. Summary: Total cash outlay was $1,444.05 and this added roughly $48 to my projected dividend income going forward!

This gave me the opportunity to average down on my position within BBL, as well as gain more of the banking market within my portfolio, as I owned over 34 shares of CM prior to this purchase.  My projected income on my portfolio is now inching closer and closer to $5K… to which I just may get there with reinvestment going forward this month – stay tuned to that!  It’s funny as I remember I was on my path to crushing $4,000 in dividend income and then MyDividendPipeline stated I could strive for $5,000 to be ballsy — it seems the balls may have been in my court afterall.. 18 days will tell!

What are your thoughts with the Canadian Bank market?  BBL continues to get pounded in the market – what are all the investors in the dividend community doing?  What are you seeing?  And why is it this bad?  Thoughts?  Thanks everyone for the contributions, we appreciate it!

-Lanny

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8 thoughts on “Diplomats Weekly Purchase Summary

    • Tawcan,

      Thank you for coming by! Making any moves? Looking at CM at all? It was nice to add to my current position, that’s for sure, but it already has dropped another $2+… timing and capital – wish they were always on your side!

      -Lanny

    • R2R,

      That is what I remembered back when I first invested into them, that they are the “little guy” but still decently sized for a bank. I do have a soft spot still for Bank of Nova Scotia – as my Aunt worked there for quite a while aka until retirement. I want to talk to her more about banking in Canada and get her perspective of it all. Thanks again R2R!

      -Lanny

  1. CM is still on my watch list along with BMO. Of the large five Canadian banks I do not own those two. I am taking a little breather adding to those positions as they have all fallen quite a bit along with oil. Some might suggest tougher times ahead for Canadian banks heavily invested in the oil patch. Like the CM buy though as a nibble. BBL is still marching lower and I’m staying on the sidelines for now in that sector and energy. Thanks for sharing.

    • DivHut,

      Nice job staying on the sidelines with BBL, as I’ve taken large unrealized losses with that one. It’s okay though, but I think I should have timed my purchases better (obviously), moreso since I knew the dividend ex-date was far away. I think I took into consideration that it was appropriately valued form my metrics at that point in time and I could only find reasons to buy it. Still in the same position, hmm..

      -Lanny

    • Asset Grinder,

      Funny you mention that – I agree, I haven’t seen many people discuss or look at them at all, it’s funny in a way. I bought them a while back and am sitting at a decent gain position but decided to re-up on my position due to new information and obviously a much better dividend since back then. Thanks again AG, talk soon.

      -Lanny

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