Wednesday, March 25, 2015

First Long-Term Buy of the Year: Telus

     Having cash in any of my trading accounts used to be a rare occurrence. Being aware that no one is able to consistently time the markets, I'd find cash burning a whole in my pocket, and my desire to add to my forward projected 12-month dividend income would compel me to buy the best opportunity available. However, since embarking on my portfolio transformation mid 2014, I've developed more discipline with holding cash, as I see the value in being able to take advantage of opportunities as they arise. Given one of my main goals for 2015 is to complete my portfolio transformation, and there's only four stocks I was looking to buy in order to complete this process, I built up a considerable cash position waiting for a dip in the price of one of those four companies. Today, I made my first long-term buy in 2014, and bought enough shares of Telus so that I'll be able to hold all my shares in my taxable account, and sell off my partial holding inside my RRSP (in at least one month and one day in order to avoid creating a taxable event).

     If you know me, or have read my blog for any length of time, you'll know that not only is Telus  my top holding (about 7% of my total portfolio weight), it's also my favourite Canadian dividend growth stock. There are many reasons why I've built a large position in Telus in my portfolio, but I think the strongest argument I can make on behalf of the company is its predictability. Management provides guidance on when they expect to raise their dividend and by how much, and then they follow-through. Don't get me wrong, the stock isn't cheap (P/E ~ 18X), and the yield isn't as compelling as it has been in the past (current dividend yield ~ 3.8%), but I'm willing to pay a bit extra for management that knows how important a dividend is to their shareholders, and follows through on their commitment.

     Remaining on my watch list are Rogers Communications, Bell Canada, and the Royal Bank. All of these companies are pretty close to achieving my strike prices, but I'm in no rush to buy.

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