Monday, November 2, 2015

Stock Watch List for November 2015

Posting my September and October stock watch lists helped focus my research and tracking efforts while also increasing my accountability to readers. With more cash in my unregistered, TFSA, and RRSP accounts than normal, November could very well be a busy month for me. Here are the stocks I will consider purchasing in November, along with target prices that would make them difficult to resist. In order of appearance, there’s a new entry, two stocks that remain on my watch list from October, and a re-entry from September’s list.

Inter Pipeline Ltd (TSX = IPL); Target Price = $24

My favorite thing about being a dividend growth investor is the constant and growing inflow of distributions into my investment accounts. As my TFSA continues to throw off cash, I’m looking to “nibble” in order to re-establish a full position in Inter Pipeline. Investors have punished pipeline companies in 2015 as commodity prices have fallen, and I feel lucky to be in a position to add more shares to this monthly dividend payer with a 6% dividend yield. The company increased their dividend by 14% last December. The company has reported record profits through six months in 2015, and I expect another large (10%+) dividend increase this year.

Alaris Royalty Corp. (TSX = AD); Target Price = $27 (up from $26 last month)

Despite already having a full position in Alaris in my RRSP, I remain open to adding more shares of this high yielding dividend growth royalty company. There are so many things to love about this company, but a few of my favorites are their diversified royalty revenue stream, the fact it’s a monthly payer, their very affordable P/E of  ~15X, and the fact they recently started looking at smaller opportunities through a new business development stream. My revised target price represents a yield on cost of 6% and is higher than their 52-week low price of $25.50.

Royal Bank (TSX = RY); Target Price = $72 (up from $70 last month)

I continue look to add to my position of Royal Bank in my unregistered account so that I can subsequently sell the same position in my RRSP in order to complete my portfolio transformation. After initiating the position in RY in my unregistered account in June 2015, I’ve been overweight Royal Bank, making it my largest Canadian bank holding. I haven’t lost any sleep over being overweight this wonderful company since it’s fairly priced (P/E of 11X), has a healthy 4.3% dividend yield, and has very shareholder friendly policies. My target price represents a premium over the $68 52-week low.

TransCanada Corporation (TSX = TRP); Target Price = $42

After adding to my position in TransCanada in September, I’m a “nibble” away from completing a full position in this company. I grew more positive on TransCanada when management committed to accelerating dividend growth (in the 8% range).  With pipelines still in investors’ doghouses, TransCanada current P/E of ~18X seems reasonable and their 4.8% dividend yield is tempting.   My target price corresponds to what I paid when I added to my position in September and is almost a dollar higher than the $41.10 52-week low. Looking at their cashflow statement, TransCanada continues to invest heavily in pipelines that should fuel dividend growth for years to come.

There you have the list of companies I’ll be playing close attention to in November.  There are a handful of US companies I’m keeping an eye on (i.e. Kinder Morgan, Omega Healthcare Investors, and Emerson Electric), but I’d likely hold off on any of these until my brokerage FINALLY introduces a US Dollar RRSP. The notion of paying $10 a month for a “fair” exchange rate is completely illogical to me.

What companies are on your watch list for November? Do you have differing positions on any of the four companies outlined above?


2 comments:

  1. Some really strong names there on the list. Looking forward to see which ones you pick up in Nov.

    Happy investing
    R2R

    ReplyDelete
    Replies
    1. Thanks R2R - After reading your November outlook, looks like we're both curious about IPL's upcoming Q3 results release and dividend increase. Good luck in the markets this month.

      Delete