July 2017 Update

Travelling with grandchildren – Regina

Oldest grandchild – 12 year old, with youngest – 2 years old

***

July Results

The Canadian market continues an anemic year with the YTD TSX still negative.  My Canadian portfolio is still outperforming the TSX with a three quarter point gain for the month and over 3 1/2 % gain on the year.

The US markets hit record levels again with YTD exceeding 10%.  Although my US portfolio has been lagging (see commentary below), it outperformed the markets considerably in July narrowing the gap for the year.

The US dollar keeps dropping relative to the Canadian dollar, erasing much of my gains due to foreign exchange and my heavy exposure to US securities. See commentary below.

July YTD
TSX -0.25% -0.94%
DJIA 2.54% 10.77%
S&P 1.93% 10.34%
BB CDN 0.75% 3.58%
BB US 4.10% 6.89%
BB Total (no FX) 1.79% 4.59%
BB Total (incl FX) 0.64% 2.51%

***

Comparison to Market

As readers will know, my strategy is not intended to beat the market. It is designed to protect my capital and provide a retirement income via dividends. However, one of the side benefits of my strategy has been to actually beat the market on average over a fifteen year period. My previous posts and my book Simple_and_SuccessfuCSP_Proof100415 provide objective evidence of this. During this year, my Canadian portfolio continues this trend of beating the market by a substantial amount. My US stocks, on the other hand, have been under-performing the US markets. In my last report, the US markets had gained about 8% for the first six months this year, while my portfolio only grew by under 3% – a big discrepancy. I have done a detailed analysis to see if my strategy or the application of the strategy needs any tweaking.

The Dow Jones Industrial average, which contains 30 stocks, had twenty-three stocks gain, and seven stocks lose. My portfolio, consisting of 17 stocks, had eight winners and nine losers. My biggest losses were in oil and telecom/technology stocks. My losers still meet the strength and dividend requirements of my strategy. There are none on my list that I feel are worthy of purging. Oil prices are still historically low, keeping those stocks from gaining. QCOM (click HERE for article) has had a bad batch of news that is hopefully behind us. Therefore, I have no immediate plans of dumping any of my stocks. However, there are some stocks that I have whose yields have dropped below my normal threshold due to the increase in market price (eg – BA). The only stock on the Dow that I would like to have in my portfolio is PFE. The others, that I don’t already have, are either rated to low (below A++) or a low dividend yield.

So for now, I will stick with what I have. Below is a comparison of the DJIA stocks and my portfolio with their six month returns. Read the next section below to reinforce the need to stick to your strategy.

Dow Jones Stocks

Symbol Company Name 01-Jan-17 30-Jun-17 Yield ValueLine gain
VZ Verizon Communications Inc. 53.38 44.41 5.17% A++ -16.80%
CVX Chevron Corporation 117.70 104.12 4.14% A++ -11.54%
IBM International Business Machines Corporation 165.99 154.13 3.90% A++ -7.15%
XOM Exxon Mobil Corporation 90.26 80.70 3.82% A++ -10.59%
PFE Pfizer Inc. 31.70 33.63 3.81% A++ 6.09%
CSCO Cisco Systems, Inc. 30.22 31.41 3.71% A++ 3.94%
GE General Electric Company 31.60 27.02 3.55% A -14.49%
KO The Coca-Cola Company 42.00 44.83 3.30% A++ 6.74%
INTC Intel Corporation 36.27 33.54 3.23% A++ -7.53%
PG The Procter & Gamble Company 84.08 86.99 3.17% A++ 3.46%
MRK Merck & Co., Inc. 58.87 64.34 2.93% A++ 9.29%
CAT Caterpillar Inc. 92.74 105.64 2.90% A+ 13.91%
BA The Boeing Company 155.68 197.46 2.87% A++ 26.84%
WMT Wal-Mart Stores, Inc. 69.12 75.93 2.70% A++ 9.85%
JNJ Johnson & Johnson 115.21 132.64 2.54% A++ 15.13%
MCD McDonald’s Corporation 121.72 153.13 2.45% A++ 25.81%
HD The Home Depot, Inc. 134.08 152.16 2.32% A++ 13.48%
UTX United Technologies Corporation 109.62 122.08 2.29% A++ 11.37%
TRV The Travelers Companies, Inc. 122.42 126.39 2.28% A++ 3.24%
MMM 3M Company 178.49 207.85 2.26% A++ 16.45%
MSFT Microsoft Corporation 62.14 68.49 2.26% A++ 10.22%
JPM JPMorgan Chase & Co. 85.49 91.15 2.19% A 6.62%
DD E. I. du Pont de Nemours and Company 73.40 80.46 1.88% A++ 9.62%
AAPL Apple Inc. 115.82 143.68 1.75% A++ 24.05%
UNH UnitedHealth Group Incorporated 160.04 185.27 1.62% A++ 15.76%
AXP American Express Company 74.08 83.63 1.52% A++ 12.89%
DIS The Walt Disney Company 104.22 105.71 1.47% A++ 1.43%
GS The Goldman Sachs Group, Inc. 239.45 224.41 1.35% A++ -6.28%
NKE NIKE, Inc. 51.72 53.17 1.22% A++ 2.80%
V Visa Inc. 78.02 94.42 0.70% A++ 21.02%

My Portfolio

Symbol Company Name 01-Jan-17 30-Jun-17 Yield ValueLine gain
TOT Total 50.97 49.86 5.57% A++ -2.18%
T AT&T 40.38 37.62 5.19% A++ -6.84%
VZ Verizon Communications Inc. 53.38 44.41 5.17% A++ -16.80%
CVX Chevron Corporation 117.70 104.12 4.14% A++ -11.54%
QCOM Qualcomm 65.20 55.08 4.13% A++ -15.52%
PEG Public Service Enterprise Group 43.88 42.92 4.00% A++ -2.19%
IBM International Business Machines Corporation 165.99 154.13 3.90% A++ -7.15%
XOM Exxon Mobil Corporation 90.26 80.70 3.82% A++ -10.59%
CSCO Cisco Systems, Inc. 30.22 31.41 3.71% A++ 3.94%
KO The Coca-Cola Company 42.00 44.83 3.30% A++ 6.74%
NVS Novartis 72.84 84.19 3.26% A++ 15.58%
INTC Intel Corporation 36.27 33.54 3.23% A++ -7.53%
PG The Procter & Gamble Company 84.08 86.99 3.17% A++ 3.46%
MRK Merck & Co., Inc. 58.87 64.34 2.93% A++ 9.29%
BA The Boeing Company 155.68 197.46 2.87% A++ 26.84%
PEP Pepsi 104.63 115.18 2.79% A++ 10.08%
JNJ Johnson & Johnson 115.21 132.64 2.54% A++ 15.13%

***

Discipline

https://economyandmarkets.com/markets/investing/adam-odell-buffetts-greatest-strength-discipline-not-genius/

THIS is an article that talks about maintaining a disciplined strategy and avoiding knee-jerk reactions.

Headline:

Buffett’s Greatest Strength is Discipline, Not Genius

Quote from the article:

Once you’ve chosen your investment strategy — whether it’s Buffett’s, Asness’, mine, or your own — you have to stick to it!

***

Globe and Mail take on the loonie (mid July)

The loonie has hit 80 cents against the U.S. dollar. Thank Trump Cross-border shopping is getting a little bit easier. The Canadian dollar reached 80 cents (U.S.) yesterday, the currency’s highest trading point against the U.S. dollar in two years. So how can the boost be explained? Growing skepticism about Donald Trump’s economic promises has played a role, Ian McGugan writes (for subscribers). “The expanding shambles in Washington could continue to drag down the greenback compared with the loonie, especially if the Bank of Canada hikes interest rates again.” But the loonie’s rise along with shrinking U.S. enthusiasm for rate hikes may prompt the BoC to hold firm in the months ahead, argues David Rosenberg, the chief economist at money managers Gluskin Sheff + Associates (for subscribers). One interesting footnote: Despite its growing value against the U.S. dollar, the loonie has actually declined against the euro and Australian dollar.

Another take on the dropping US dollar:

https://finance.yahoo.com/news/trumps-inability-advance-policies-ironically-boosting-stock-market-110128613.html

***

Oil prices

Some commentary on oil prices

http://www.marketwatch.com/story/what-a-constant-stream-of-oil-company-spending-cuts-means-for-crude-prices-2017-07-27?siteid=nwhwk

 

***

Suggested Stocks (with ValueLine timeliness indicator)

Note: contact me if you want a detailed report on any stocks you are interested in purchasing.

US

Company Ticker Timeliness Rank Financial Strength Dividend Yield Dividend Growth 10-Year Current PE Ratio
Boeing

Note: timeliness is from early June. Stock has exceeded projections.

BA 1 A++ 2.55 13 22.95
Intel Corp. INTC 1 A++ 3.12 12.5 12.27
Home Depot HD 2 A++ 2.71 17.5 20.38
Lilly (Eli) LLY 2 A++ 2.51 3 20.25
Smucker (J.M.) SJM 2 A++ 2.56 10 18.91
AT&T Inc. T 3 A++ 5.02 4 13.59
Bristol-Myers Squibb BMY 3 A++ 2.88 3 16.69
Chevron Corp. CVX 3 A++ 4.09 9 23.32
CVS Health CVS 3 A++ 2.53 25.5 13.49
Exxon Mobil Corp. XOM 3 A++ 3.81 9.5 19.96
Johnson & Johnson JNJ 3 A++ 2.6 8.5 20.6
Lockheed Martin LMT 3 A++ 2.61 19 23.05
Merck & Co. MRK 3 A++ 2.95 2 16.54
Novo Nordisk ADR NVO 3 A++ 2.65 28 18.44
PepsiCo, Inc. PEP 3 A++ 2.79 10.5 22.78
Procter & Gamble PG 3 A++ 3.04 9.5 23.02
Total ADR TOT 3 A++ 5.47 3.5 12.61
Unilever PLC ADR UL 3 A++ 2.73 5.5 27.84
Verizon Communic. VZ 3 A++ 4.83 3.5 12.75
Air Products & Chem. APD 4 A++ 2.65 10 22.52
Grainger (W.W.) GWW 4 A++ 3.06 17 15.23
Int’l Business Mach. IBM 4 A++ 4.21 19 12.14
Kimberly-Clark KMB 4 A++ 3.12 7 19.72
Pfizer, Inc. PFE 4 A++ 3.88 3.5 24.44
Public Serv. Enterprise PEG 4 A++ 3.92 3.5 15.56
Qualcomm Inc. QCOM 4 A++ 4.34 19 12.26
Schlumberger Ltd. SLB 4 A++ 2.95 16 48.41
Wal-Mart Stores WMT 4 A++ 2.56 12.5 18.34
Coca-Cola KO 5 A++ 3.3 9 24.93
Emerson Electric EMR 5 A++ 3.22 8 22.87
Novartis AG ADR NVS 5 A++ 3.2 12.5 27.5

Canada

Company Ticker Timeliness Rank Financial Strength Dividend Yield Dividend Growth 10-Year Current PE Ratio
Bank of Montreal BMO.TO 3 B++ 3.8 5.5 12.24
Bank of Nova Scotia BNS.TO 3 A 4.02 7.5 11.98
BCE Inc. BCE 4 B++ 4.5 7 19.62
Cameco Corp. CCO.TO 5 B+ 3.09 12.5 37.03
Can. Imperial Bank CM.TO 3 A+ 4.79 5.5 9.88
Can. Natural Res. CNQ.TO 3 B+ 3.05 22.5 33.61
Emera Inc. EMA.TO 3 B+ 4.48 7 13.53
Enbridge Inc. ENB.TO 4 B++ 4.72 13 23.48
Finning Int’l FTT.TO 3 B+ 2.87 12 21.19
Fortis Inc. FTS.TO 3 B+ 3.76 9 18.61
Jean Coutu Group PJC/A.TO 4 B++ 2.51 14.5 20.35
Manulife Fin’l MFC 2 B++ 3.05 2.5 13.55
Methanex Corp. MEOH 3 B+ 2.78 10.5 18.73
Nat’l Bank of Canada NA.TO 2 B++ 4.21 9 11.42
Pembina Pipeline PPL.TO 3 B++ 4.78 5 30.47
Power Financial PWF.TO 4 B+ 4.86 5.5 11.18
Rogers Communications RCIB.TO 2 B+ 2.96 42.5 25.95
Royal Bank of Canada RY.TO 3 A 3.91 9.5 12.88
Russel Metals RUS.TO 3 B++ 6.05 4.5 15.7
Shaw Commun. ‘B’ SJRB.TO 3 B+ 4.69 21.5 22.56
Sun Life Fin’l Svcs. SLF.TO 3 B++ 3.65 4.5 11.36
Suncor Energy SU.TO 3 A 3.22 24 24.86
TELUS Corporation T.TO 2 B++ 4.57 13.5 17.49
Toronto-Dominion TD.TO 2 B++ 3.81 10 12.4
TransCanada Corp. TRP 3 B++ 4.94 4.5 40.46

Europe

Company Ticker Domicile Code Timeliness Rank Financial Strength Dividend Yield Dividend Growth 10-Year Current PE Ratio
ABB Ltd. ADR ABB CH 5 A 3.17 23 21.23
Garmin Ltd. GRMN CH 3 A+ 3.93 19.5 17.89
Novartis AG ADR NVS CH 5 A++ 3.2 12.5 27.5
Daimler AG DDAIF DE 3 B++ 5.27 5 6.91
Deutsche Telekom ADR DTEGY DE 4 B+ 3.96 1 22.73
Siemens AG (ADS) SIEGY DE 4 A 2.86 9.5 15.41
Novo Nordisk ADR NVO DK 3 A++ 2.65 28 18.44
Sanofi ADR SNY FR 3 A+ 3.43 8.5 24.66
Total ADR TOT FR 3 A++ 5.47 3.5 12.61
AstraZeneca PLC (ADS) AZN GB 3 B++ 4.85 10 30.4
Brit. Am. Tobacco ADR BTI GB 3 B++ 3.15 11.5 21.17
GlaxoSmithKline ADR GSK GB 5 A+ 4.81 4.5 24.7
Rio Tinto plc RIO GB 3 A 4.45 9.5 12.07
Vodafone Group ADR VOD GB 2 B++ 5.42 8 31.07
WPP PLC ADR WPPGY GB 1 A+ 3.11 15.5 12.9
Tenaris S.A. ADS TS LU 4 B+ 2.69 8.5 53.23
Unilever PLC ADR UL NL 3 A++ 2.73 5.5 27.84

***

Happy Investing!!

***

Advertisements

About borgford

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

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s