Tuesday, November 29, 2016

November Transactions - 2 Buys and 1 Sale

November further proved my tendency to conduct bunched buying and sporadic selling as I made two buys and one sale within the same week (November 7th - 11th). Before long-time readers question if I have changed my investment thesis on Alaris Royalty, as explained below, I merely trimmed my position inside of my RRSP to overweight from extremely overweight.

Buy #1 - Keg Royalties Income Fund (TSE: KEG.UN)

After flirting with the Keg Royalties Income Fund by buying and selling shares for a quick profit on September 30th, I made the commitment to initiate a half position in KEG.UN on November 7th. Among the reasons I purchased shares in the Keg for the long-term are the two dividend raises and special dividend within the last 12 months, the attractive 5.5% initial yield, and the fact I thoroughly enjoy eating at their restaurants. I also feel my investment in the Keg provides some diversification to my holdings of the A&W Revenue Royalties Income Fund and McDonald's Corporation as the Keg is more of an upscale establishment.

Buy #2 - Enercare Inc. (TSE: ECI)

As I let slip in my recent post 11 Canadian Dividend All-Stars with 10%+ Dividend Growth, I deployed some capital in my unregistered account on November 11th to initiate a half-position in Enercare Inc. After looking through their Q3 results released on November 10th, I noted their integration of Service Experts in the US was proceeding well and that their free cashflow remained strong. Having experienced some HVAC issues over the summer, I have first hand experience with Enercare's highly profitable and dependable business model (renting, servicing, and selling hot water tanks and air conditioning units in Canada and the US). I was completely comfortable initiating my position at a 5% yield for this monthly dividend payer that grew their dividend by 10% in 2016.

Sale #1 - Alaris Royalty (TSE: AD)

On November 8th, I sold some shares of Alaris Royalty in my RRSP in order to trim my position from extremely overweight to merely overweight. Depending on the day, Alaris is still my largest position, although Telus is a frequent challenger. One of the main reasons I am planning to slowly trim my position in Alaris within my RRSP is to free up cash to take advantage of what I hope will be a large sell-off in US REITs when the Federal Reserve increases the interest rate in December. The other key reason is that I am trying to diversify my holdings so that one position doesn't account for a disproportionately large amount of my dividend income. Despite some recent difficulties with a few of their partner companies, Alaris still remains one of my favorite holdings due to the diversification it provides me (~15 partner companies in various sectors throughout North America), a management team that has a history of delivering strong results including impressive dividend growth, and a business model that sees it receive returns in the 15% range from partners in contrast to its 5-8% cost of capital.

My investment holdings page has been updated to reflect my three November transactions. If I was to venture a guess, I think December will likely see a similar level of activity for me as I look to deploy some capital in my unregistered account and anxiously await a sale on US REITs in the event of a rate hike.

What transactions did you undertake in November???

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