What did you buy? What might you buy? (2014)

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DividendLuvr
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Re: What did you buy? What might you buy? (2014)

Post by DividendLuvr »

Picking up 100 more BPF.UN on the dip, as it approaches 6% dividend. Combined with my current holdings, this will allow me to DRIP a full share with each divvy.
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Re: What did you buy? What might you buy? (2014)

Post by dakota »

Shakespeare wrote:50 BNS for the TFSA.

Bought BA for the div. for my RIF to give me income, Bell has a approx 40% interest and hopefully buy it out in the future
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Re: What did you buy? What might you buy? (2014)

Post by scomac »

dakota wrote:
Shakespeare wrote:50 BNS for the TFSA.

Bought BA for the div. for my RIF to give me income, Bell has a approx 40% interest and hopefully buy it out in the future
Welcome back, Dakota! It has been a while. I trust all is well with you and yours.
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Re: What did you buy? What might you buy? (2014)

Post by Sensei »

Hello,

I opened a position in Digital Realty Trust (DLR) and will add again tomorrow.

Why? Well, I guess I'm doing what I do. I've been watching this one since last spring, but mainly as a possible preferred share holding. At that time, the common share price was around $74 USD and thus not an attractive yield for a REIT. However, the common share has become attractive since, like most other REITs, the share price has dropped dramatically. It has a current dividend yield of 6.4%.

The company: DLR is a REIT which specializes in managing, leasing, and acquiring space for data centers and other IT purposes. It leases mainly in the US, but also has operations in Europe, Asia, and Australia.

What's to like:
1. IT is the place to be in a rising interest rate scenario (although REITs less so)
2. Annual report very good
3. The dividend of course
4. S&P A quality ranking
5. Moody's = Investment grade, stable
6. Good dividend coverage
7. Well established in a growing business sector
8. Trading closer to low (43 USD) than high

Not to like:
1. Vulnerable to interest rate increases
2. Could be threatened by tech change
3. Some larger tech companies are establishing their own data centers (Apple for example)

I will probably add:
1. DLR common tomorrow
2. DLR PR E tomorrow
3. Considering KMI and DEM
Cheers

"A dividend being paid today is always a positive return." Josh Peters, Morningstar
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Re: What did you buy? What might you buy? (2014)

Post by dakota »

Welcome back, Dakota! It has been a while. I trust all is well with you and yours.

Thanks scomac, getting older but hanging in there :)
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Re: What did you buy? What might you buy? (2014)

Post by Sensei »

HI,

I successfully added to DLR and opened a position in DLR.PR.E. I'll probably stay with what I have invested in DLR for now. I'm including it in my IT sector (right or wrong) and I think I have what I want in this sector for now.

I'll add to KMI and DEM early next week.
Cheers

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Re: What did you buy? What might you buy? (2014)

Post by Sensei »

Hi,

Following the referendum results in Crimea, I cancelled my market order for DEM. I was hoping for a better solution to this problem. Although I do have some thoughts on the political situation, this isn't a political decision or statement. It's a financial decision.

According to the country breakdown, the fund is about 18% invested in Russia. The fund has altogether too much invested in Russia and also China (16.6%) for that matter, two countries that have a 'high-uncertainty' rating at the moment. Uncertainty can cut both ways, but for the moment I don't see uncertainty as being an opportunity. I'll keep what I've got, but, at best, it is a wait and see situation.

DEM used to have a much better geographic profile, but the weighting is based on dividend yield. Three of the top seven holdings are Russian oil companies and comprise about 11% of all holdings. These companies, for whatever reason, pay quite handsome dividends (according to Bloomberg).

Additions later: It makes me wonder if weighting by dividend yield makes sense if there is no geographic or sector diversification. Personally, I'd like to see bigger weightings in SE Asia, Eastern Europe (ex Russia) and Central America, especially Mexico. South Korea (2.24%) is hardly an emerging market economy, but if they choose to include it, the weighting should be bigger than that.

I also notice that Morningstar now gives DEM only a 3 star rating. It was 5 for a long time.
Cheers

"A dividend being paid today is always a positive return." Josh Peters, Morningstar
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Re: What did you buy? What might you buy? (2014)

Post by adrian2 »

Sensei wrote:Following the referendum results in Crimea, I cancelled my market order for DEM. I was hoping for a better solution to this problem. Although I do have some thoughts on the political situation, this isn't a political decision or statement. It's a financial decision.
When "everybody" expects the outcome to go one way, quite often the contrary happens. DEM is up today more than 1%.
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Re: What did you buy? What might you buy? (2014)

Post by Sensei »

adrian2 wrote:
Sensei wrote:Following the referendum results in Crimea, I cancelled my market order for DEM. I was hoping for a better solution to this problem. Although I do have some thoughts on the political situation, this isn't a political decision or statement. It's a financial decision.
When "everybody" expects the outcome to go one way, quite often the contrary happens. DEM is up today more than 1%.
Shucks! I've never heard that before. :wink:

Have you heard this one: 'It ain't over til it's over.' :?: It ain't over.
Cheers

"A dividend being paid today is always a positive return." Josh Peters, Morningstar
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Re: What did you buy? What might you buy? (2014)

Post by ig17 »

Sensei wrote:
adrian2 wrote:When "everybody" expects the outcome to go one way, quite often the contrary happens. DEM is up today more than 1%.
Shucks! I've never heard that before. :wink:

Have you heard this one: 'It ain't over til it's over.' :?: It ain't over.
Buy when there’s blood in the streets. But never catch a falling knife, which could lead to there being more blood in the streets. :D
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Re: What did you buy? What might you buy? (2014)

Post by adrian2 »

Sensei wrote:Have you heard this one: 'It ain't over til it's over.' :?: It ain't over.
Thanks for bringing DEM to my radar screen.
It has a nice premium for the puts (due in part to the 4.5% yield).
Imagefiniki, the Canadian financial wiki
“It doesn't matter how beautiful your theory is, it doesn't matter how smart you are. If it doesn't agree with experiment, it's wrong.” [Richard P. Feynman, Nobel prize winner]
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Re: What did you buy? What might you buy? (2014)

Post by Sensei »

Hi,
adrian2 wrote:
Sensei wrote:Have you heard this one: 'It ain't over til it's over.' :?: It ain't over.
Thanks for bringing DEM to my radar screen.
It has a nice premium for the puts (due in part to the 4.5% yield).
Adrian, I hope you make some money on it. Not being a derivatives man, doing nothing seems like the best strategy for now.
Cheers

"A dividend being paid today is always a positive return." Josh Peters, Morningstar
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Re: What did you buy? What might you buy? (2014)

Post by BRIAN5000 »

Bought a swack of VAB in RRSP today hopefully yield about 2% and only lose about 6% of capital. :cry:
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Re: What did you buy? What might you buy? (2014)

Post by Pickles »

BRIAN5000 wrote:Bought a swack of VAB in RRSP today hopefully yield about 2% and only lose about 6% of capital. :cry:
Sounds like a plan :thumbsup:
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Re: What did you buy? What might you buy? (2014)

Post by mpav »

Bought boardwalk reit....I like apartments, this is a long time hold that I add to when I see dips and it has been very rewarding...
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Re: What did you buy? What might you buy? (2014)

Post by poedin »

Peoples Trust 1 yr GIC @2.2% (proceeds from T/ING 90 day GIC @2.0%).
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Re: What did you buy? What might you buy? (2014)

Post by Pickles »

poedin wrote:Peoples Trust 1 yr GIC @2.2% (proceeds from T/ING 90 day GIC @2.0%).
Was planning to do the same until I realized I'm almost at the CDIC limit for Peoples. I went to empty my ING HISA to buy a GIC from Oaken Financial and the "Why experiment? Buy our 1 year GIC @ 2%" window popped open. I reasoned that staying with ING for 2% was simpler than the hassle of transferring and mailing off to Oaken for its 2.05% one year GIC.
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Re: What did you buy? What might you buy? (2014)

Post by JaydoubleU »

Added to my position in Corus Entertainment (CJR.B) on the dip today. Good safe, long term holding. Cheap, high ROE and lots of free cash flow.
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Re: What did you buy? What might you buy? (2014)

Post by Norbert Schlenker »

Ah, Corus. I bought some during the panic in the spring of 2009 and sold last November, at around these prices. I didn't really want to realize the capital gain, but I needed money for something else, and Corus had the dubious distinction for me of making me record a dividend every single month, so I decided I'd shed some aggravation. I liked the payout. I just didn't want to keep track of twelve of them every year. Of course, my "pain in the arse" would be some other investor's "helpful for cash management"; that's what makes a market.

I'm not disputing the investment merits, though I raise an eyebrow at "safe holding" and "lots of free cash flow". Let's hope there's never a repeat of 2008-09.
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Re: What did you buy? What might you buy? (2014)

Post by JaydoubleU »

I raise an eyebrow at "safe holding" and "lots of free cash flow". Let's hope there's never a repeat of 2008-09.
Safety, of course, is relative. It is a fairly low-beta safe stock in my portfolio. It gets a risk rating of 10 from Thompson Reuters, though I don't set much store by TR reports. Current ratio of 0.8 could, admittedly, be higher.

As for free cash flow, to quote from the latest report, "Overall, the  Company’s  cash  and  cash  equivalents  position  increased  $27.8 million  over the three months  ended November  30,  2013. Free cash flow from operations for the three months ended November 30, 2013 was $49.6 million, compared to free cash flow of $39.8 million in the prior year. This increase in free cash flow primarily reflects higher cash from operating activities during the year."

Sounds alright to me. In the event of another 2008-09, I would hope to buy some more shares as low as $11.50, for that's how low they closed on Dec. 8, 2008, yielding 5.2%. Today they are yielding 4.5% at my purchase price. Not bad at all. Now let's hope Corus gets taken out at $30+ a share :)
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Re: What did you buy? What might you buy? (2014)

Post by Taggart »

I had followed free cash flow for over twenty years in various equities. After YLO blew up, having had a lot of free cash flow, this one event cured me of my obsession. I realized that it wasn't "present" free cash flow that was important, it was "future", and since I would be as useless in that, as predicting future earnings for a company, it's not as important to me now.

Just show me the cash you've actually distributed to common shareholders over the last few years.
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Re: What did you buy? What might you buy? (2014)

Post by scomac »

I initiated a new position this morning in refiner HollyFrontier Corp. (HFC-N) with the proceeds from my CHRW sale. This is one of the few stocks left that screens favorably using Graham's Simple Way. The company has an intriguing mix of assets that are well suited to handling heavy oil and bitumen that are well placed within existing and proposed transportation corridors. The company has been extremely shareholder friendly with numerous dividend hikes and special dividend payments since the 2011 merger of Holly and Frontier Oil Corp. The stock has been selling off this quarter due to concerns over the compression of refining margins as the spread between WTI and Brent tightens. It's not the typical sort of stock that a Canadian investor would necessarily buy, but if you compare this to Canadian mid stream players, it is much cheaper.
"On what principle is it, that when we see nothing but improvement behind us, we are to expect nothing but deterioration before us?"
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Re: What did you buy? What might you buy? (2014)

Post by robertro »

scomac wrote:I initiated a new position this morning in refiner HollyFrontier Corp. (HFC-N)
I've never seen such regular special dividends :)
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Re: What did you buy? What might you buy? (2014)

Post by Sensei »

Hi,

I added to an existing position in Prospect Capital Corporation or PSEC @ 10.80.

PSEC is a business development corporation or BDC. Basically BDCs invest in or finance non-listed companies such as start-ups, family businesses, and closely held businesses.

The good points of this BDC and others are that you get exposure to businesses that you wouldn't normally invest in and therefore add diversity to your portfolio. Prospect is one of the larger BDCs at 3.4 billion market cap which is an advantage. It also has an investment grade rating. Another point is that government regulations require BDCs to be flow through structures so taxes are passed on to investors. Good or bad? Good for me because the yield is quite high at 12.27% and my US taxes are fairly minimal. You get well paid for the risk you take on. Also, the same regulations require to BDCs to follow some fairly strict guidelines about what they do, so it is not really the wild west. Most BDCs invest in a wide variety of businesses which provides sector diversification. The CEO of PSEC compares his company to Berk or GE which I think is somewhat apt. (Actually he said, 'We aren't Berkshire or GE yet.)

There are some bad points too. First, leverage is an important part of BDC operations. They must be able to fund deals when they come up. They can be very sensitive to the broader financial landscape especially when funds become unavailable. I think many BDCs operate without much room for error. Several went belly up during the sbmm. They do bear watching and I check prices and news every day. I already got burned on one BDC that I own. (See below).

My plan is to further spread risk by building a small portfolio of BDCs that I consider the best of 42 or so in the US. This mini-portfolio will never be a great part of my overall portfolio. Presently it is at 2.1% and I don't plan on making it more than 3%.

I currently own Medley Capital Corp (MCC 1.3b mc), Fifth Street Finance (FSC 638m mc), and PSEC. However small the portion, the distributions really pack a punch adding some $860 a year to my investment income. The majority of analysts rate these a Buy or Strong Buy at least according to First Call Earning Evaluation Reports available on TDW.

If you are interested in this sector, I strongly suggest reading as much as possible before doing anything. Don't sell the farm. I've only been in this for about a year and I've already got into trouble with FSC. Market cap too small and not the best BDC. They cut the dividend a little in December. However, they seem to be crawling back and some writers say it was a strategic pullback. I'm happy with MCC and PSEC.
Cheers

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Re: What did you buy? What might you buy? (2014)

Post by Sensei »

Hi,
Sensei wrote: Additions later: It makes me wonder if weighting by dividend yield makes sense if there is no geographic or sector diversification. Personally, I'd like to see bigger weightings in SE Asia, Eastern Europe (ex Russia) and Central America, especially Mexico. South Korea (2.24%) is hardly an emerging market economy, but if they choose to include it, the weighting should be bigger than that.
I followed up on this thought and as of yesterday, I now own SPDR EDIV, iShares DVYE, and EG Shares HILO. These are all ETFs consisting of dividend paying companies in emerging markets. I've maintained my position in DEM with no change although I may reduce my unit count in the near future. Adding other like ETFs is step one to building a lower risk, better geographically diversified mini-portfolio in this space.

Reasons:

1. I was unhappy with DEM for reasons I mentioned upthread. The basic idea is good, hold companies in EMs that pay dividends, which is what attracted me to it in the first place. It adds exposure in my overall portfolio to valuable companies in countries where I normally wouldn't invest in individual stocks. The problem is that nearly 35% of its holdings are in China, and Russia, two countries that are high risk at the moment. I'd like to see broader geographical exposure to less geo-politically sensitive regions, but as the website notes (and I noted recently) this aspect is not included in the formula. Consequently the beta is higher than my other new additions. There are also too many companies in the fund (300 +) or, IOW, it is over diversified without at all reducing risk.

2. My three new funds have different methods of determining index participation. For example, EG Shares HILO is also a dividend weighted index, but also requires low-volatility as a criteria for inclusion. This changes the country mix considerably and I think it reduces portfolio risk.

3. My three new funds have less companies represented. For example, HILO holds 30. In my opinion, a more focused portfolio of companies makes sense. While again there is no specific geographic diversification formula, by requiring relative low betas (1 in this case) the mix is different. The top four countries, China (15%), Brazil (15%), Thailand 12.5%, Czech (10.5%) represent 50% of the fund.

4. Emerging markets are not done yet. My investment thesis is that emerging markets will begin to rise again, and indeed they have in the last few months. I've noted this in other EM funds that I hold ex-Canada. DVYE has tracked upwards from a 52-week low of 43.58 and today is 47.99. Its 52-week high was 55.15. Thus I'm looking for considerable unit price appreciation.

5. All pay dividends (of course). Yields are in the 4% range.

Risks

1. Developed country slowdowns or crises.
2. Political uncertainty in-country (Think Russia, China, Thailand).
3. It might seem like over concentration in this space, but these funds represent only about 3% of all holdings in my USD stock portfolio. I may also reduce the number of ETFs by 1 or 2.
Cheers

"A dividend being paid today is always a positive return." Josh Peters, Morningstar
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