November 2013 update

November 2013 Investment Update

The Markets

Another reasonably good month on the markets – if you are invested in US stocks.  Canada continues to lag with a weakening dollar and falling behind on almost all market, economic and social scales that are published.

 

The Dow Jones Industrial Average led the way with almost 3 ½ % gains, the S&P not far behind at 2.8% and the TSX pulling up the rear at a mere ¼ %.

 

My Portfolio – November performance

My portfolio grew by just under 2%, slowed down by the heavy Canadian content and an excess of cash awaiting some useful placement, not to mention a small weighting in bonds and similar instruments in my RRSP funds.

 

November Purchases

Having missed the purchase window in October, I waited for the markets to slow down in November to start making my annual purchases.  Most of you would have seen my first attempt at purchasing TOT.  For those who didn’t, here is my email broadcasts over that endeavour.

First message

With the markets settling in, I decided to start my fall buying program.
 
My first decision was to increase my position in TOT (Total Oil, French ADR on the NYSE).  It fits all the criteria (A++, strong dividend, dividend growth and looked very timely).
 
When I went to make my trade (TD DirectInvesting, Luxembourg), I was alerted that I needed to call in order to trade the stock. When I called I was informed that you could no longer purchase TOT on the NYSE, but you could hold or sell. 
 
I decided that if it was not freely traded on the NYSE that I would rather not hold it, so I sold my position.  I am not advocating anyone sell their position as it is still a good stock. I’m just keeping you up to date on my activity.
 
Now I have even more cash and have to start some purchasing.  I’m looking closely at INTC, which fits all the criteria and I already own a substantial position.  But the analysts are split on the wisdom of the company. It recently had a plunge due to a weak prediction for 2014 from the CEO.  I still think it has some good long term prospects.
 
I am also looking to increase my position in AT&T (T, on the NYSE) and perhaps add Verizon (VZ).
 
Watch for my November update in the next week.

 

Follow up message:

It works on my HSBC Investdirect account.
 
Having sold all my TOT with TD Directinvesting in Luxembourg, I tried to purchase with my Canadian brokerage account, both replacing my previous shares and adding new shares and it seems to work without a problem.
 
So it appears to just be an issue with TD in Luxembourg regarding ADR’s (American Deposit Receipts, used by foreign companies traded on the NYSE). 
 
Problem solved.  So it appears that if you own TOT in Luxembourg, it’s OK to hold or sell, but you cannot buy more.

 

So I have now increased my position in TOT.  I also decided to increase my position in PM.  Philip Morris does not meet my normal criteria of A++ by ValueLine, however it is a big dividend producer and has dividend growth.  I originally purchased Altria (MO) when I was using the Dogs of the Dow Strategy (see my posting on “Evolution of and Investing Strategy”).  Altria spun off their international entity as PM and I now had shares in both companies and neither was on the Dow anymore. But they continued to grow and produce giant and growing dividends, so I held them and have been rewarded many times over. 

 

I will continue my buying in December, markets permitting, looking first at AT&T and also Verizon.  I am considering increasing my position in INTC, but I keep waffling as I read many conflicting reports on the future of INTC.  It fits my criteria and ValueLine rates it highly but the analysts are split on whether it will decline or take off.  So I sit and wait.

 

My Long Term Portfolio Performance

Here is my current stock holdings consisting of 34 companies:

ADP

INTC

MRK

RY.TO

BCE.TO

ITW

NA.TO

T

BMO.TO

JNJ

NVS

T.TO

CM.TO

KMB

PEP

TD.TO

COP

KO

PG

TOT

DD

LMT

PM

TRI.TO

ENB.TO

MCD

PWF.TO

TRP.TO

FTS.TO

MMM

RDS-A

UL

GWO.TO

MO

 

 

       

Eleven Stocks owned prior to 2008-09 crash

 

 

I have a buy and hold strategy so it is surprising when I do the math and discover that my average age of my stocks is 3.31 years.  Eleven of my stocks I have held for a long time and all eleven were purchased before the crash of 2008-2009.  Most of my stock holdings are newer, arising from new cash coming in, or from replacing items as part of my previous strategies (ETFs and Dogs of the Dow).

 

The average annual return on these 34 stocks is 10.4% in capital gains.  My whole portfolio has a return of only 8% due to cash and bonds dragging it down.

 

The dividends on these stocks is an average of 3.59% on current market and 4.76 % on original cost giving a total return of between 13.95% to 15.12% per year depending on whether you count market or cost.  Not a bad annual return.

 

Suggested Stocks to Purchase/Own:

Standard criteria – A++, dividends over 2% and dividend growth.

Note that Apple is not on the list, but if it had a dividend growth record it would be, with an A++ rating and over 2% dividend.

Company

Ticker

Financial Strength

 Dividend Yield

 Dividend Growth 10-Year

Abbott Labs.

ABT

A++

          2.31

          8.50

AT&T Inc.

T

A++

          5.18

          5.00

Automatic Data Proc.

ADP

A++

            2.41

         13.50

Baxter Int’l Inc.

BAX

A++

          2.87

          8.50

Bristol-Myers Squibb

BMY

A++

          2.67

          2.00

Chevron Corp.

CVX

A++

          3.24

          9.00

Coca-Cola

KO

A++

          2.99

         10.00

Colgate-Palmolive

CL

A++

          2.15

         12.50

ConocoPhillips

COP

A++

          3.76

         13.50

Deere & Co.

DE

A++

          2.43

         13.00

Du Pont

DD

A++

            2.99

          1.50

Emerson Electric

EMR

A++

          2.54

          6.50

Exxon Mobil Corp.

XOM

A++

          2.66

          8.00

Gen’l Dynamics

GD

A++

          2.49

         13.00

Honeywell Int’l

HON

A++

          2.05

          6.00

Illinois Tool Works

ITW

A++

          2.12

         13.00

Int’l Business Mach.

IBM

A++

          2.09

         18.00

Intel Corp.

INTC

A++

          3.57

         26.00

Johnson & Johnson

JNJ

A++

          2.77

         12.50

Kimberly-Clark

KMB

A++

          3.00

          9.50

Lockheed Martin

LMT

A++

          3.84

         22.50

McDonald’s Corp.

MCD

A++

          3.32

         27.00

Medtronic, Inc.

MDT

A++

          2.03

         16.00

Merck & Co.

MRK

A++

          3.54

          1.50

Northrop Grumman

NOC

A++

          2.20

          9.50

Novartis AG ADR

NVS

A++

          3.12

         16.00

Occidental Petroleum

OXY

A++

          2.78

         14.50

PepsiCo, Inc.

PEP

A++

          2.68

         13.50

Pfizer, Inc.

PFE

A++

          3.00

          6.00

Procter & Gamble

PG

A++

          2.85

         11.00

Raytheon Co.

RTN

A++

          2.60

          8.00

Royal Dutch Shell ‘A’

RDS/A

A++

          5.32

          8.50

Smucker (J.M.)

SJM

A++

          2.28

         10.50

Texas Instruments

TXN

A++

          2.83

         21.50

Total ADR

TOT

A++

          5.25

         15.50

Travelers Cos.

TRV

A++

          2.24

          4.00

Unilever PLC ADR

UL

A++

          3.53

          9.50

United Technologies

UTX

A++

            2.15

         15.50

Verizon Communic.

VZ

A++

          4.21

          2.50

Wal-Mart Stores

WMT

A++

          2.54

         18.00

 

 

 

 

 

 

 

 

 

 

 

 

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About borgford

Feel free to contact me with questions: brianborgford@hotmail.com
This entry was posted in Commentary. Bookmark the permalink.

One Response to November 2013 update

  1. Peter Cape says:

    Care is needed with UK tobacco companies. Looks like government will be imposing a uniform olive green to the packaging to add to the advertising ban.

    Whilst smokers may continue to smoke, companies will be powerless to impose a branding and this will hit the higher margins branding normally attracts. Thus dividend cover.

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