Wednesday, April 10, 2013

Bought: Laurentian Bank of Canada (LB)

One of the Canadian companies that kept coming up in many of the dividend growth screens I have set up to identify possible investments is Laurentian Bank of Canada ("LB"). Owning every shares in every major Canadian bank except for CIBC (they seem to be in the middle of any scandal that comes up), I wasn't sold on adding another to my portfolio of investments, until I took a closer look at Laurentian Bank. The reasons I decided to initiate a position in the bank were:

- The bank's steady growth in interest income and net income over the past five years.
- The bank's annual average dividend growth rate of 10.6% over the past 5 years, and a dividend yield of 4.6% when I bought my shares last Friday. 
- A fair payout ratio of 44%, and recent comments in an earnings call about the possibility of looking to increase the dividend twice per year, when business conditions would allow it.
- A P/E of 8.9X (similar to its Canadian peers)
- The fact that it had dipped substantially last week, and was closer to its 52 week low, than to its 52 week high.

Since my shares of LB are in my non-registered account, I'm comfortable adding to my position if the shares should dip again, and I have some capital available to invest. Although my portfolio might be too heavily tilted toward Canadian banks, telecommunications companies, and REITs...they seem to be the three sectors I've had the best luck with picking winners in over the course of the past 10 years.

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