May 2017 Update

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Grampa Time

Grampa with Cassie

I got to visit Cassie’s grade three class to present my books and discuss my writing.

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May Results

Not a great month for Canadian investors, but the US market continued moving up.  The TSX dropped one and a half percent for a flat YTD at just under a half a percent.  The US markets were up (one third of a percent for the DJIA and over one percent for the S&P) for a solid YTD gain of 6 to 8 %.

My Canadian portfolio was in line with the TSX for the month, but I still have a YTD gain of almost two and a half percent, well ahead of the market.  My US stocks were ahead of the two indexes at almost one and a half percent, but a bit behind on a YTD basis at over 3%.  My combined return was down about 1% for the month for a YTD gain of over 3%.  Still an adequate performance for just under half the year.

May YTD
TSX -1.52% 0.41%
DJIA 0.33% 6.31%
S&P 1.16% 7.73%
BB CDN -1.59% 2.42%
BB US 1.38% 3.17%
BB Total (no FX) -0.69% 2.63%
BB Total (incl FX) -0.90% 3.25%

 

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More Reading

More words of Wisdom from the Oracle

5. “Never invest in a business you cannot understand.”

Again, Buffett makes it clear that people should only invest their money in companies and industries that they know about. From a man with such a high net worth, it’s probably wise to take that advice to heart. In fact, it even works for Bill Gates.

Reading List:

Some good bullet points in this CNN article:

http://money.cnn.com/2017/05/05/pf/money-mistakes/index.html

Become a Millionaire:

http://cnnmon.ie/2qpBFbS

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Reader Comments and Questions

Regular reader and contributor, DP, provided the following update on his travels and investing:

Here’s a fun tidbit I just received via email from Interactive Brokers:

They say they recommend setting up a bank account and residence in Uruguay.  That is the only country in Central and South America, they say, is stable for the long haul, and one they have no problems with. Everywhere else changes with each election, so they are not sure about governments other than Uruguay.

Weird huh?

In addition, DP has informed me that TD International out of Luxembourg is changing ownership from TD bank of Canada to J.C. Flower in the US and reverting back to the name Internaxx.  This should not be an alarming move, but I did feel some comfort with Canadian ownership.

BG currently in Romania  asks the following question.
Can I ask your opinion of IBM these days? I bought a chunk a few months ago and it has only gone down since then, and I read that Warren Buffett has sold a third of his shares in the company. Do you think there is a concern with this stock?

My Response:

IBM March 2017 (click for ValueLine report)

Warren Buffet’s moves have a disproportionate effect on the market.   Short term market moves are driven mainly by emotion, while long term movement are based almost entirely on company performance.

There is no doubt that IBM has been a disappointment.  So you need to decided do you sell now and anchor in the losses, or hold on for better times.  IBM had a great run up with a peak in February of this year.  Will it recover to those levels or is is stuck in a rut?  Hard to decide.

IBM is still rated A++ by ValueLine and has a good and growing dividend, which makes it a stock I would still buy.  In retrospect, it would have been better to sell earlier and lock in the profits, but its too late for that.  If I were starting a new portfolio, IBM would likely be one of my purchases now.  So I will likely hold onto it for now.

You will need to make your own decision.  In doing so, you need to determine whether cash from the sale will be better used with another stock.

For me, I’m still getting my dividends which is what drives my retirement income.  If that were to change I would reconsider.  

Note: a contrary view:

https://seekingalpha.com/article/4073313-look-selling-ibm-shares-now?ifp=0

***

RDS

Royal Dutch Shell is not longer on my suggested list as it has dropped from the ValueLine A++ rating.  At A+, it is still a good company with a good dividend, so some of you are still holding it.  Here is the latest ValueLine assessment of Shell.

On My Radar

Ian Gendler

This week’s Issue of The Value Line Investment Survey is dominated by energy-related industries. More specifically, the Value Line Research Department has analyzed the equities assigned to the Petroleum (Integrated), Natural Gas (Diversified), Natural Gas Utility, Oil/Gas Distribution, and Pipeline MLP Industries. Of the stocks in those groups, we are once again highlighting Royal Dutch Shell (RDSB). The Netherlands-headquartered corporation is one of the world’s largest oil companies with about 92,000 employees in 80 countries. Looking ahead, Royal’s prospects appear bright. Oil and gas markets ought to mount a steady recovery over the next few years, underpinning our optimistic sales outlook. In addition, greater international investment by RDSB, particularly in Brazil, is expected through late decade. This should nearly double Shell’s deep water production in the region. All told, we project that earnings will recover significantly out to the 2020-2022 time frame. As for the stock, we think it holds broad appeal. The equity is relatively safe, offers above-average long-term appreciation potential, and has a lofty dividend yield.

Best,

Mario Ferro
Associate Director
Value Line Research

***

Stock Screener

I haven’t published an updated stock screener for a while, so here is the latest.  For US I have chosen only A++ (ValueLine), dividends over 2.5% and 10 year dividend growth.

US

Company Ticker Financial Strength Dividend Yield Dividend Growth 10-Year Current PE Ratio
AT&T Inc. T A++ 5.19 4 12.91
Total ADR TOT A++ 5.16 3.5 14.27
Verizon Communic. VZ A++ 5.13 3 11.73
Qualcomm Inc. QCOM A++ 4.13 19 13.08
Chevron Corp. CVX A++ 4.11 9 26.29
Int’l Business Mach. IBM A++ 3.98 19 12.62
Public Serv. Enterprise PEG A++ 3.97 3.5 15.37
Pfizer, Inc. PFE A++ 3.97 3.5 23.87
Exxon Mobil Corp. XOM A++ 3.77 9.5 20.7
Coca-Cola KO A++ 3.43 9 23.93
Novartis AG ADR NVS A++ 3.4 13 28.1
Boeing BA A++ 3.32 13 17.24
Emerson Electric EMR A++ 3.3 8 22.31
Procter & Gamble PG A++ 3.21 9.5 21.79
Intel Corp. INTC A++ 3.1 12.5 12.36
Kimberly-Clark KMB A++ 3.06 7 20.11
Grainger (W.W.) GWW A++ 2.95 17 15.78
Merck & Co. MRK A++ 2.94 2 16.81
Bristol-Myers Squibb BMY A++ 2.9 3 19.21
Unilever PLC ADR UL A++ 2.87 5.5 25.97
PepsiCo, Inc. PEP A++ 2.82 10.5 22.36
Schlumberger Ltd. SLB A++ 2.8 16 46.08
Lockheed Martin LMT A++ 2.79 19 21.54
Novo Nordisk ADR NVO A++ 2.72 26.5 18.81
Johnson & Johnson JNJ A++ 2.68 8.5 19.69
Air Products & Chem. APD A++ 2.66 10 21.05
Lilly (Eli) LLY A++ 2.66 3 19.01
Wal-Mart Stores WMT A++ 2.63 12.5 18.03
McDonald’s Corp. MCD A++ 2.61 16.5 23.34
CVS Health CVS A++ 2.61 24 13.1
Texas Instruments TXN A++ 2.52 29.5 19.96
Automatic Data Proc. ADP A++ 2.5 12.5 27.7

Canada

Company Ticker Financial Strength Dividend Yield Dividend Growth 10-Year Current PE Ratio
BCE Inc. BCE B++ 6.48 8 18.44
Russel Metals RUS.TO B++ 6 10 17.83
TransCanada Corp. TRP B++ 5.5 5.5 45.49
Power Financial PWF.TO B+ 5.13 5.5 10.73
Can. Imperial Bank CM.TO A+ 4.85 5.5 9.77
Manulife Fin’l MFC B++ 4.83 2.5 11.56
Pembina Pipeline PPL.TO B++ 4.66 5 33.03
Enbridge Inc. ENB.TO B++ 4.63 13 21.54
Shaw Commun. ‘B’ SJRB.TO B+ 4.58 21.5 21.84
Nat’l Bank of Canada NA.TO B++ 4.53 9 10.62
Emera Inc. EMA.TO B+ 4.48 5.5 17.62
TELUS Corporation T.TO B++ 4.41 13.5 17.8
Bank of Nova Scotia BNS.TO A 4.19 7.5 11.49
Agrium, Inc. AGU A 4.15 40.5 16.98
Royal Bank of Canada RY.TO A 3.94 9.5 12.77
Bank of Montreal BMO.TO B++ 3.93 5.5 11.86
Toronto-Dominion TD.TO B++ 3.92 10 12.07
Sun Life Fin’l Svcs. SLF.TO B++ 3.91 4.5 10.61
Fortis Inc. FTS.TO B+ 3.8 9 18.11
Rogers Communications RCIB.TO B+ 3.09 42.5 24.45
Cameco Corp. CCO.TO B+ 3.04 12.5 43.9
Suncor Energy SU.TO A 3 24 30.53
Finning Int’l FTT.TO B+ 2.85 12 21.35
Methanex Corp. MEOH B+ 2.81 12 14.19
Can. Natural Res. CNQ.TO B+ 2.65 22.5 33.15
Magna Int’l ‘A’ MGA A 2.52 9 7.72
Potash Corp. POT B++ 2.52 34 27.4

Europe

Company Ticker Domicile Code Financial Strength Dividend Yield Dividend Growth 10-Year Current PE Ratio
AB InBev ADR BUD BE A++ 3.59 26.3
ABB Ltd. ADR ABB CH A 2.95 22.79
Garmin Ltd. GRMN CH A+ 3.92 19.5 17.96
Logitech Int’l LOGI CH A 1.52 31.59
Nestle SA ADS NSRGY CH A++ 2.75 27.63
Novartis AG ADR NVS CH A++ 3.34 13 28.54
SAP SE SAP DE A 1.26 14.5 31.42
Siemens AG (ADS) SIEGY DE A 2.73 11 16.12
Novo Nordisk ADR NVO DK A++ 2.63 26.5 19.47
Sanofi ADR SNY FR A+ 3.26 8.5 26.5
Total ADR TOT FR A++ 5.22 3.5 13.22
Aon plc AON GB A+ 1.11 6.5 23.48
Diageo plc DEO GB A+ 2.95 22.74
GlaxoSmithKline ADR GSK GB A+ 5.45 6 24.47
Rio Tinto plc RIO GB A 4.59 11 10.89
STERIS plc STE GB A 1.45 19.54
WPP PLC ADR WPPGY GB A+ 2.84 17 14.14
Medtronic plc MDT IE A++ 2.06 15 15.53
Perrigo Co. plc PRGO IE A 0.89 13.5 16.33
LyondellBasell Inds. LYB NL A 4.46 8.49
Unilever PLC ADR UL NL A++ 2.76 5.5 27.02
Autoliv, Inc. ALV SE A 2.22 7.5 16.64

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Happy Investing!!

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About borgford

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