Friday, February 22, 2013

Bought : National Bank of Canada

After mentally preparing a blog post about how difficult of a time I was having finding quality Canadian dividend growers to purchase with the cash in my TFSA, I pulled the trigger and bought some National Bank shares today. Between this purchase and a recent one of IPL for my TFSA, I've basically used up my 2013 contribution (and the proceeds of my disposal of shares of Power Financial Corporation). However, since I'm still planning to sell my TFSA holdings in SNC Lavalin and Dundee REIT, there will likely be one or two more purchases within my TFSA in 2013.

Already owning some shares in Royal Bank, TD Bank, Bank of Montreal, Scotiabank, and Canadian Western Bank, I've discovered long ago that buying and holding shares in Canadian banks is a formula for slowly accumulating wealth, and collecting rising dividends. Looking at the 5-year track record of National Bank, and earnings estimates going out to 2015, I saw a company that has managed to grow revenue and EPS at an impressive rate, while boosting dividends by a 10% average over the last 5 years, and a 12.5% average over the last two years. Management has also maintained a conservative payout ratio, an adequate level of capitalization, and a good risk management system. Additionally, with a dividend yield of about 4.25%, and a P/E of 8.9X, I felt comfortable buying this bank at a reasonable price.

While looking at National Bank today, I also consider adding shares of Laurentian Bank to my portfolio. Instead, I added it to my watch list portfolio, to keep an eye on going forward.

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