One of the books I am currently getting ready to write is a biography on my grandfather who was born in Iceland in 1874. Part of my research involves a trip to the homeland and the district of Iceland from where my surname emanates.
Not a great month on the markets, especially the US markets. The Canadian market was able to eke out a quarter percent gain, while the US markets were down over 3%. The Bank of Canada hit us with an unexpected interest rate drop which bolstered Canadian stocks but weakened the Canadian dollar. This currency rate change again helped out my portfolio (expressed in Canadian dollars) giving me over a 4% gain on the month due to my heavy exposure to US stocks. However expressed in US dollars it would be a loss consistent with the markets.
Canadian Banks (click for article)
Barclays has downgraded several of the Canadian banks due to the poor Canadian economy, driven primarily by Canada’s continued dependence on commodities, mainly oil. This resulted in a big drop in bank stocks. I continue to believe that Canadian banks will provide value in the long run so this event does not cause me concern.
Prices are still low on oil stocks due to low oil prices. So far the dividends appear to be safe on the large companies (COP, RDS, TOT, etc.) but it is something to keep an eye on. Eventually oil prices will rise, but the question remains, when? It will likely be at least six months and more likely considerably longer. Although I wouldn’t advocate buying oil stocks right now, I also am not prepared to sell any of my stocks as I think the dividends should hold and prices will eventually rise. All oil companies are cutting back on capital expenditures and new exploration, in addition to cutting costs. They should all be stronger and stable when oil prices rise.
This is not the time of year that I normally do purchases, but Canadian tax laws allow for a Tax Free Savings Account that accrues gains and dividends with no tax requirements. So I topped off our accounts to the annual limits and added to my positions in RUS and BNS. RUS as mentioned last month has been a bit of a disappointment, but appears to have a high, sustainable, growing dividend and good capital gains prospects. You can never go wrong in the long run with a Canadian bank and with the recent pullback in bank stocks, BNS looks like a safe bet.
A++, consistent dividends above 3%, constant dividend growth
|Company||Ticker||Financial Strength||Dividend Yield||Dividend Growth 10-Year|
|Royal Dutch Shell ‘B’||RDSB||A++||5.6||7|
|Unilever PLC ADR||UL||A++||3.59||9|
|Public Serv. Enterprise||PEG||A++||3.45||2.5|
|Exxon Mobil Corp.||XOM||A++||3.07||8.5|
|Int’l Business Mach.||IBM||A++||2.93||19|
|Baxter Int’l Inc.||BAX||A++||2.88||10|
|Merck & Co.||MRK||A++||2.88||1.5|
|Novartis AG ADR||NVS||A++||2.85||15.5|
|Procter & Gamble||PG||A++||2.82||10.5|
|Johnson & Johnson||JNJ||A++||2.7||11.5|
|Deere & Co.||DE||A++||2.68||15|
|Automatic Data Proc.||ADP||A++||2.26||13.5|
|Illinois Tool Works||ITW||A++||2.05||12|
|Novo Nordisk ADR||NVO||A++||2.03||28.5|