Lanny’s Recent Purchase – CM

Finally… a trigger has been pulled, the market has had a pull back and Bert, the Jewish one, did not also purchase the same stock I did this time around, joking Bert.  I had been eager to add to my dividend income producing stocks, and the time for me was right.  Since I am an auditor in the financial institutions realm and don’t have too much exposure to banking – that is what step I ended up taking.  Let’s take a look at the purchase.

Recent Purchase – Canadian Imperial (CM)

I wanted to add to my current positions I owned and to start building a very STRONG base into companies that are in my portfolio.  Further, I have a good rule of thumb, similar to others, if your cost basis is down 5% overall and you purchased a stock a few times in the past at higher prices – why not buy more at an even further discount to reduce the cost basis, pick up more shares and more dividend income for less money?  Sounds like a plan to me.  Well, on Wednesday the 15th, I purchased more Canadian Imperial or CM.  This company was on the watch list I had when Mr. Market was taking a downturn, which I posted last week.  Back in December, I did a 3 Canadian Bank analysis – and back then, they were trading at $86/share!  Wild, huh?  They have been on our watch list before, and I really do like this bank.  

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I know I had comments at my last week Market post about there being better banks out there.  However, as a good company and a great dividend performer, I like CM, I truly do.  Why?  Well to bust out our stock screener and other metrics to… take a look at the numbers, with a summary screen shot along with 2 competitors:

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1. Price to Earnings Ratio: Rock solid here, with a below 15 P/E, below the S&P and below the 2 competitors I evaluated.  This showed, that even with a projected-lower EPS, they are trading at a price that shows a sign of being undervalued.  This gets a check mark in my book.

2. Yield: The dividend yield is the highest among the 3 at roughly 5.00%.  This is above my overall portfolio yield by over a full percent, therefore, this adds to that facet.  Further, it’s not an alarmingly high dividend yield either.

3. Payout Ratio: As stated earlier, if you were worried about the higher yield, take a look at the payout ratio.  Still under 60% and above 20%, therefore, there is plenty of room to keep growing the dividend going forward.

4. Dividend Growth rate: Ah, yes I do love the growth rate.  The last 12 months, CM has increased their dividend 3 times, from $1 (CAD) all the way to $1.09 (CAD) each time.  The dividend above is reflected/adjusted for currency translation back to US$.  Further, the growth rate has been slightly better than the other 2.  Not by much, but definitely showing better signs than what CM has historically performed.

5. The 5 year dividend yield average – pretty much right on target here.  I usually like to see them yielding above their average, like the other two, but right now, this shows the yield is fair, possibly because they’ve increased the yield so much this year?

As I explained in my 2nd quarter goal post review, I was a projected dividend income of just over $5,901 going forward.  Therefore, this also helps aid in that case, as it is a higher yielding portfolio, with some sort of growth rate, that has had a nice pull back in stock price.  I know I deployed capital into Norfolk, which was a lower yielding stock at around 2.70%, this one definitely is adding some bang to my portfolio and helping me potentially hit my forward dividend goal in a more efficient manner, but not over zealous, if that makes sense?  

Stock Purchase Summary

I deployed a total capital amount of $1,068.20, buying 15 shares (with a fee) of CM and added $52.80 (in U.S. $) to my forward looking dividend income.  Though a lot of the community was suggesting other positions, I couldn’t help but look at my own, see that I was down in total over 5% and felt that it was time to re-up and add to my current position.  Adding $52.80 to my annual goal breaks down to an extra $4.40 per month that I will start to see the benefits in the 4th quarter dividend, as I missed the ex-dividend date with this purchase.  However, my total position now in CM yields/produces over $240 in forward income for me from just one stock, it’s awesome and feels like I have that Strong position that I was looking for.  As I said earlier, this purchase also allows me to reach closer and closer to my goals for 2015.

It was weird, I once was feeling the lack of purchasing anxiety, but now I feel like I am on the right track.  July has been a great month in dividend income so far, due to a few extra little things going on this month, that you’ll see in the month end post, so I’m looking forward to adding this purchase to my forward looking Jan/April/July/October income, as that is when they pay.  The Greece impact, as well as other wild things in the market (NYSE shutting down briefly, China markets, oil/gas ups & downs, etc.) have allowed for great opportunities in the Mr. Market place.   My account, funny enough, for where I make my investments and extra payments towards my mortgage, now sits at a whopping $85… talk about how I am still running on thin ice… but I love it and would have it NO other way!

Anyways – I have to thank each and everyone one of you for motivation and helping keep this train moving.  Cannot do it without everyone and one of my best friends Bert included.  What do you think of the purchase?  Do you like the Canadian bank area?  Would you purchase into this company?  Would love the feedback, thanks everyone!

-Lanny 

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22 thoughts on “Lanny’s Recent Purchase – CM

    • IE,

      Thanks for coming by. I’m glad you like the purchase, I felt the time was great for me, given my current position and then ability to average down my cost basis, aka picking up more yield for less. Liking the bank so far!

      -Lanny

  1. Great purchase Lanny! Quality for sure. Amongst the big 5 in Canada. Awesome yield, consistent dividend and low payout ratio. I’d love to own it as well. Keep it up and you’ll crush every goal in sight. No doubt. Thanks for sharing and always a pleasure to see a post. Take care bud.

    • Hustler,

      Thanks for coming by. I know I’ve taken a page out of your book, as I know you like the Canadian banks as well! Love that I was able to scoop up more yield for a less cost, not a bad page at all, eh? Thanks again DH.

      -Lanny

    • Div4son,

      Thank you for coming by – I do see quite a few bloggers out there talking and investing into the Canadian banks. Great yield, weren’t too hurt/stung by the financial downturn, more stable than others, etc.. Due diligence is key!

      -Lanny

  2. Nice purchase here. I picked up at the beginning of the year at around this same price. Since then the stock has had its ups and downs, but the dividend is solid. Keep up the good work.

    • DDreams,

      Thank you for stopping by. Nice job picking them up at a great price. Dividend has been solid, and actually has gotten better this year, right? Strange they’ve had such increases this year, I’m not complaining though!

      -Lanny

  3. After dividend income posts, I like seeing recent buys the most. To see the DGI community continue the pursuit of passive income is encouraging for all. Without putting our money to work for us, we are instead guarantying that we will be the ones putting in the physical work and time for our pay. I think passive income is by far the better path. Good work and thanks for sharing.

    – HMB

    • MoneyBags,

      Thanks for coming by. I do like the recent buys quite a bit – gives an insight into what individuals see into the stock or company that they are purchasing, because maybe we don’t see things from all perspectives, you know? Passive Income from these companies feels great, and I’m closing in on $6K projected per year, which is insane to me… So close! Lets keep at it.

      -Lanny

    • MD,

      Thanks for coming by. I feel that as well, cannot go wrong and felt that I already had a nice position in CM, might as well add to it when my overall cost basis is down. Liking my re-up’d addition to my position, that’s for sure.

      -Lanny

  4. Nice purchase, Lanny. CM is a great company, even though its the baby of the Big-5 Canadian banks. The high yield and the dividend growth is really attractive on the company. Congrats on adding to your forward div income.

    cheers
    R2R

    • RoadMap,

      Thank you for the comment! It is the smaller of the 5, little engine that could, maybe? I do like the position I have right now and am eager to keep their dividends in reinvestment mode as well. Each quarter I should almost be receiving an additional share! Thanks again R2R, talk soon.

      -Lanny

  5. I’m leaning more towards TD and RY right now with their larger exposure to the US. My guess is that the C$ will weaken a little further. However, good move on averaging down!

  6. I am long on all 6 of the big Cdn banks. CM has been an under performer for many years, however. RY, TD, and NA seem to consistently outperform.

  7. Hi Lanny,

    I’m a fellow CM investor. The company has surprised me over the past year with the number of dividend increases we have seen. I also hold TD shares and am not intending to add any financials in the immediate term future, though BNS also has my eye.

    With that said, I bought two shares of BNS earlier this week… one each for my nephew and girlfriend’s son. The shares will be in the DRiP and SPP and allow an easy way to get them started on the DGI path.

    Take care!
    – Ryan from GRB

    • GRB,

      Very sweet that you bought a share of BNS for the 2 loves ones. That should be extremely fun to see from year 1 to year 50 down the road — it’ll be worth so much and paying quite a few dividends to boot. Just very awesome overall – thanks again Ryan for coming by, I don’t plan to add anymore to my position of CM anytime soon, unless something really drops in the market.

      -Lanny

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