October 2014 update

The Borgford Boys

Borgford Boys

Hockey Night in Oklahoma Our first trip to OKC.

 

October Results – Correction Time

October was another bumpy month with the Canadian market falling well into correction territory and the US markets getting very close to a full correction.  By the end of the month, however, the US markets had recovered and were back to setting new record highs.  The Canadian market was off its lows but still down over 6% in the past two months.

My All Canadian portfolio was down for the month but still holds a respectable 8.4% YTD gain.  My mixed portfolio (the one that I manage using my strategy) was up over 1% for the month and over 15% YTD.

 October and YTD  
Registered -1.09 8.4
Non-registered 1.38 15.51
TSX -2.32 7.28
DJIA 2.04 4.91
S&P 2.32 9.18

 

October Transactions

Taking advantage of the market pull-back, I completed a series of sales and purchases this past month.

Sales:  ADP, CDK

See my previous commentary on ADP.  I am trying to keep all my stocks above the 3% dividend level, so I am gradually culling off my lower yield stocks. As a result I sold my position in ADP and its spin-off, CDK, which doesn’t fit my criteria. In upcoming months I will be disposing of more of my lower yielding stock in favour of higher yield holdings.

Purchases: RUS.TO, HSE.TO, KMB, PEG, TOT BNS, UL, VZ

All of these stocks were from my previous suggested list of purchases. High quality stock, above 3%, dividend growth.  However, HSE has not increased its dividend in a long time, but I am hoping to

My weighted average dividend yield is now about 3.73%, providing the bulk of my retirement income.  Canadian dividends provide a very tax efficient income, while US dividends are taxed as full income.

International ETFs

Peter in Doha posed an interesting question.

Recently I bought 400 shares of TOT around what appeared to be their bottom.  Yahoo finance indicates their divined yield is currently around 5.8%, so that’s good.

I’ve also bought some ETFs.  I know you prefer stocks, but I like to have some ETFs.  I feel secure thinking they give me good diversification.  Because my accounts are overseas, I can really only by ones on the London Stock Exchange.  One I own is UDVD (http://www.bloomberg.com/quote/UDVD:LN).  It’s the Dividend Aristocrats.  But its yield is only about 2%.  Another I own is IDVY (http://www.bloomberg.com/quote/IDVY:LN).  It’s yield is much higher – 4.5%.

My questions is – am I missing anything on the IDVY?  It looks like it’s a diversified ETF of Europe’s top dividend payers yielding 4.5%.  Like most of Europe, it’s struggled lately with regards to market value.  But the dividend yield seems solid.  Do you see any ‘hidden issues’ I’m missing, such as fees I haven’t accounted for?

This is my response to his question and actions:

I think you did well with TOT.  It has been beat up pretty bad but should recover and the high yield makes it worth the weight.  They just lost their CEO in a plane crash so we will see what impact that has on the company, but I’m sure they will be OK.
 
I don’t buy on the London exchange because I don’t know all their practices and rules. I’m sure your two ETFs are fine.
 
IDVY looks great and a good time to buy.  Great yield, and although I don’t know all the companies, I know some of them and they are solid.  Only the top 30 dividend payers with a history of no dividend reduction.  I’m not sure how the London ETFs pay their dividends. In the US and Canada they are paid out in cash, but I couldn’t find any record of how London does it. If they do pay in cash (rather than retain in fund) you may not have any withholding tax as you would with Canadian or US, but I’m not sure.
UDVD, as you mention has a lower yield but contains companies with a solid history of increasing dividends.  It should be a save bet, but your returns will have to come from capital gains.  It doesn’t seem to have a long history, so there isn’t much info to base an analysis.

Here is another blog site that addresses the issue as well:

http://www.the-diy-income-investor.com/2013/01/portfolio-buy-etf-ishares-euro-stoxx.html

 

Interesting articles:

Dividend Investing:

Summary:

  • Investing in dividend growth stocks is a long-term proposition — you don’t have to watch your portfolio or the market on a daily basis.
  • For the most part, daily, monthly and yearly movements are just noise in the system.

 I added to my KMB position this month.  Here are a couple of articles on KMB.

Article 1

Article 2

ADP

In follow up to a previous discussion, I sold my position in ADP and its spin-off, CDK.  HERE is a related article.  CDK is displaying speculative tendencies and ADP is at a high share price with a dividend yield below my retirement target.

Suggested Stocks (ValueLine A++, 3% yield, 10 year dividend growth)

Note: VZ, and oil companies come up tops for current purchasing while MCD is not recommended for right now.  PEG is a good conservative play, with only modest growth.

Company Ticker Dividend Yield Dividend Growth 10-Year
Verizon Communic. VZ 4.62 3
Chevron Corp. CVX 3.85 9.5
Lockheed Martin LMT 3.25 23.5
Occidental Petroleum OXY 3.39 15.5
Royal Dutch Shell ‘B’ RDSB 5.36 7
AT&T Inc. T 5.56 4.5
Baxter Int’l Inc. BAX 3.05 10
Exxon Mobil Corp. XOM 3.05 8.5
Kimberly-Clark KMB 3.2 9.5
Merck & Co. MRK 3.29 1.5
Pfizer, Inc. PFE 3.76 5.5
Public Serv. Enterprise PEG 4.03 2.5
Texas Instruments TXN 3.12 25
Total ADR TOT 6.02 13
Coca-Cola KO 3.06 10
McDonald’s Corp. MCD 3.78 25.5
Novartis AG ADR NVS 3.25 15.5
PepsiCo, Inc. PEP 3.02 13.5
Procter & Gamble PG 3.14 10.5
Unilever PLC ADR UL 3.91 9

 Happy Investing!!

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About borgford

Feel free to contact me with questions: brianborgford@hotmail.com
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