Saturday, November 23, 2013

Selling Walgreens and Buying Realty Income Corp?

 I held on to half of my investment in Walgreens (“WAG”) after selling shares in the fall. As the share price keeps climbing, and is now near a 52-week high, the dividend yield is only 2.1%. The yield seems ridiculously low, especially given they just boosted their dividend by 15% in August.

On the other hand, Realty Income Corporation (“O”) is trading near its 52-week low, yielding a tantalizing 5.6%. They have grown their dividend at about 5% per year over the past 5 years. I’m impressed with their management, tenant list, and the potential upside of rent increases in the US as the economic recovery continues.

I haven’t decided if I’ll pull the trigger and sell my shares of WAG to up my investment in Realty Income Corp, but it’s very tempting. 

Thursday, November 14, 2013

Christmas in November?

After patiently sitting on a chunk of cash in my RRSP portfolio, eagerly waiting for a market over-reaction to a negative earnings report, and hoping it would happen to a US dividend grower, I was very happy to read about Cisco Systems (“CSCO”) reporting Q3 results that fell (barely) short of analyst expectations. The fact management also revised their full year estimates downwards (ever so slightly), made my morning even brighter. Cisco has been on my watch-list for over a year, and I have been waiting for a good entry point into this market leader that gushes cash. I gladly placed a buy order this morning, bought shares at a bargain basement price, and welcomed a new additional to my RRSP.

Why do I like Cisco so much?
-          Entry point provided me yield of 3.3%
-          The company’s relatively low payout ratio 30-35%
-          Recently announced plans to increase their share buyback program
-          A history of revenue, earnings, and dividend growth (from $0.12/share to $0.68 in the last 4 years)
-          A strong balance sheet (more cash than debt), great free cashflow generation, and strong margins (gross margin =~ 60%)
-          A world leader in their segments which helps me diversify globally
-          Issuer ratings of A+/Stable, A1/Stable

I could go on and on. I’m so happy to have this great company as part of my investment portfolio. I feel like Christmas came early this year. 

Wednesday, November 13, 2013

Bought: Enbridge Income Fund ("ENF")

It's a good day to be a dividend growth investor. Despite a recent announcement that they were increasing their distribution by 3%, Enbridge Income Fund ("ENF") was down this morning, allowing me to double my position. I used to the proceeds of my sale of SNC to invest in a company paying a 6% dividend yield, and a history of growing that yield. Now I won't feel so bad about paying my monthly gas bill, knowing my shares in Enbridge Inc. (which usually raises their dividend in December), ENF, and Inter Pipeline Ltd (recently boosted its dividend by 13%) all pay me an increasing distribution each year just for holding their stock.

Saturday, November 9, 2013

Sold: SNC-Lavalin

I sold the last stock in my portfolio that I was no longer comfortable with: SNC-Lavalin ("SNC"). When SNC's CEO indicated the company would consider selling their interest in Altalink earlier this week, the shares surged enough for me to get out of the position with a small gain. After waiting out SNC's ethical issues of the last couple years, watching them only raise their dividend at a snail's pace, and then warn how their 2013 figures would likely disappoint on the downside, I was extremely happy to get rid of my investment in this company.

The plan is to the put the proceeds into shares of the Enbridge Income Fund ("ENF"). ENF currently yields close to 6% (vs SNC's yield of just over 2%) and recently raised their distributions by 3%. Knowing my Enbridge heating bill keeps going up, I look forward to growing my investment in ENF over the long-term.