Transaction Journal

Initially, this blog was a place for me to record the reasons why I bought and sold particular securities. As the blog evolved to be more outwardly focused, I stopped recording my reasoning for transactions. Since I find returning to my reasoning regarding particular transactions to be very helpful in my investment process, I plan to start documenting these reasons again using this page.

June 28, 2018
Buy - Replicated my RRSP holding of A&W Revenue Royalties Income Fund (TSX: AW.UN) in my TFSA at $32.17
Reasons: Replicating my RRSP position in A&W inside my TFSA will ultimately allow me to only hold US dividend paying stocks in my RRSP. I continue to be a fan of A&W's food, think the 5% yield is reasonable, and expect 2-5% growth going forward.
Risks: Since I've been looking to add these shares to my TFSA since mid-May, and given I had a higher cash position in my portfolio than I'm comfortable with, I likely bought too soon. Additionally, much like my KEG.UN purchase below, I wonder if sticking to my plan vs trying to find the best value company was the right course of action.

June 6, 2018
Buy - Replicated my RRSP holding of Keg Royalties Income Fund (TSX: KEG.UN) in my TFSA at $17.87
Reasons: Over the past few years, I've been trying to focus my RRSP holdings to US dividend payers. My ultimate plan is to switch from my current brokerage to another that allows has a US dollar RRSP. The Keg units are the second last Canadian traded company in my RRSP that will still be tax advantaged in my TFSA. Although a slow grower, the units current yield a little over 6%, sell for around 15X historical earnings, and I think the restaurants will benefit from Cara's management that is focused on keeping costs low.
Risks: Distribution growth was only 3% last year (not including the special distribution in December) and the total number of restaurants is not expanding as quickly as A&W (which will likely be my next TFSA buy). I also wonder if sticking to a plan years in the making is the right course of action in the current market environment, as opposed to trying to buy the most attractively valued companies in my TFSA.

May 18, 2018
Sold - I sold my TFSA holding of TD Bank (TSX: TD) at $75.62
Reasons: As explained below, I wanted to move my holding of TD Bank from my TFSA into my unregistered account as it's a bank I'd like to add to from time-to-time, it's low yielding relative to my other investments making it tax efficient to hold in my unregistered portfolio, and to create some liquidity in my TFSA. After waiting more than a month (to avoid tax penalties), I sold today at a small gain ahead of the earnings release next week.
Risks: If they report good earnings next week, like most other transactions, this could prove to be too early. That said, TD Bank was my largest holding for the past ~2 months, and I didn't feel super comfortable keeping it any longer.

March 22, 2018
Buy – Replicated my TFSA holding of TD Bank (TSX: TS) in my unregistered account with a buy at $75.30
Reasons: Since I’d rather not add any more companies to my holdings, my plan was to pick one of my lowest yielding stocks from within my TFSA, buy it in my unregistered account, and then wait at least a month before selling my TFSA position. I chose TD Bank as it yields around 3.5%, it recently announced an 11% dividend increase and it’s a name I’d consider increasing exposure to in the future. The fact that I had a good amount of cash inside my unregistered account also contributed to this buy.
Risks: Given TD is trading around $72.50 today, I clearly bought too soon. My thought was to get in before the ex-dividend date (early April) and I had anchored at $75 which is a mental bias I’m often guilty of. Having a fair amount of cash in my unregistered account near the end of a quarter also contributed to me buying too early. 

January 4, 2018
Buy – Added to my position in Brookfield Infrastructure Partners (TSX: BIP.UN) inside my TFSA at $53.80
Reasons: With my annual TFSA contribution and the accumulated dividends I added shares in Brookfield as the share price has fallen ~5% this week leading to a P/FFO of about 14X. The exposure to the global utility, transport, energy, and communication infrastructure assets that have allowed the excellent management team to grow distributions by over 10% in recent years continues to interest me.
Risks: Although the recent $1.3B sale of an aging Chilean utility investment might mean less or no dilution in 2018, Brookfield does tend to issue shares annually in order to fund their growing back log. I also have planned to add to this position since initiating it last year, so there might be better opportunities out there that I could have used the 2018 TFSA contribution to pursue. 

December 21, 2017
Buy - Initiated a small position in Digital Realty Trust (NYSE: DLR) inside my RRSP at $109.60
Reasons: With the cash accumulating from dividends in my RRSP, I decided to add this US data center REIT. Although I was reluctant to start a new position, the reasonable valuation P/FFO below 20x, starting yield of about 3.4%, last year distribution growth of almost 6%, BBB issuer rating, and impressive list of clients drew me to this new REIT sector for my portfolio.
Risks: Definitely not as cheap of valuation or as high of initial yield as I hope for in REITs, but relatively fair for this Sub-sector. I also felt compelled to make a US purchase in my RRSP given I paid $30 this quarter for a fair exchange rate. Likely bought too soon as this purchase also meant accomplishing my incremental forward income goal for 2017 ahead of year end.

November 15, 2017
Buy - Completed my position in Canadian Utilities (TSE: CU) at $37.92
Reasons: Instead of initiating a new position in Cineplex or Power Fnancial, I decided to complete my position in Canadian Utilities, a utility company with the longest streak of consecutive dividend increases in Canada. Given the elevated level of the overall market, I was drawn to the simplicity of this utility company that is priced fairly (P/E ~ 18.5X) provides a nice initial yield (3.8%), and will likely grow their dividend again in January as it has for 45 consecutive years.
Risks: Beyond sensitivity to interest rate increases, an elevated amount of debt, and likely slower dividend growth going forward (I don't think the company can maintain their recent 10% annual DGR), I have the feeling that I made an investment due to excess cash, instead of waiting for a better moment to buy. Furthermore, this particular buy puts me in a better position to meet my forward dividend income and average dividend growth rate goals by year end. In summary, I don't know this was the best possible buy if I wanted to maximize the total long-term return of my portfolio.

October 27, 2017
Buy - Completed my position in Tanger Factory Outlet Centers (NYSE: SKT) at $23.00
Reasons: JC Penney cut their outlook for 2017 and I was able to purchase shares in Tanger at a ~5% discount to yesterday's price (which was a good deal at about P/FFO of 10X) in order to complete my position. Dual kickers: JC Penney isn't even a tenant of Tanger and by buying today, I will benefit from owning before the shares trade ex-dividend on Monday.
Risks: My bet is that Tanger will continue to trend downward in the short-term, and I'll likely miss out on buying at the bottom. That said, I can't time the market, and I view Tanger as a long-term holding. The way mall stocks are trading lately, the death of bricks-and-mortar retail seems to be imminent, even though online retail only accounts for about 10% of total US retail sales.

September 15, 2017
Buy - Initiated a new almost full position in Canadian Utilities (TSE: CU) at $37.95
Reasons: With the longest streak of consecutive dividend increases by any Canadian company, CU has always been on my watchlist. I've owned it twice before, but bought it this time in my unregistered account knowing I barely ever sell anything that will trigger tax consequences. Dividend streak aside, with a P/E under 18X, yielding 3.8%, and with nice exposure to the US market, this will likely be staying in my portfolio for the long-term.
Risks: Utility stocks tend to be very sensitive to interest rates given the elevated amount of debt most of them have outstanding; CU is no different. There's also the potential that if dividend growth slows (it's been 10% the last couple of years), investors might abandon ship driving the share price lower. Lastly, although I waited for a dip in the share price, I think I once again bought too early as the share price did proceed a bit lower after I purchased. Oh well, market timing is clearly not my strength.

September 5, 2017
Buy - Initiated a new full position in Canadian Imperial Bank of Commerce (TSE: CM) at $103.90
Reasons: Given my fondness of Canadian banks, I decided to add the only one I didn't already own given its currently the cheapest (P/E < 10X), had good dividend growth (~7% over the past 12 months), a generous initial yield of 5%, and I like their recent US acquisition to give them some international wealth management exposure. To be frank, another reason was after taking a couple months off, I had quite a bit of cash in my unregistered account and felt I should put some of it to use.
Risks: Over-concentrated in the Canadian banking sector, yet, so are the Canadian indices that passive investors favor. CIBC does tend to be headline prone, in a bad way. They also may have overpaid for their recent US acquisition. I also wonder if I felt the need to put my cash to work might have forced me to buy too soon?

June 21, 2017
Buy - Added to half position of Tanger Factory Outlet Centers (NYSE: SKT) at $24.98
Reasons: With the valuation sitting around P/FFO of 10X, I think this discount mall REIT is one the biggest bargains I see in the US markets. The 5.5% yield, proven management team, and history of distribution growth throughout different points in the economic cycle all led me to add to this position.
Risks: Even though Tanger was down 3% when I bought for no reason, I do think it will go lower with any bad news/results in coming months. Chose to add now given my plans to discontinue paying the $30/quarter to my discount broker to give me a better CAD/USD exchange rate. Lastly, although I think the "death of the mall" rhetoric is overdone, I don't expect strong growth out of Tanger in 2017 given secular headwinds.

May 26, 2017
Buy - Initiated half position in Aecon Group, Inc (TSE: ARE) at $15.10
Reasons: Exposure to the construction sector in Canada (new for me), solid history of dividend growth (8.7% in 2017), decent current yield of 3.3%, and tax efficient to hold in unregistered account (lower yield than my portfolio average).
Risks: Doesn't have a full economic cycle of dividend growth, P/E of 20X is slightly high vs historic average, and I have been making a lot of purchases lately so this might not be my best idea.

May 24, 2017
Buy - Bought a small number of shares in Bank of Montreal (TSE: BMO) at $92.40
Reasons: Was down 2.5% due to earnings disappointment, part of my 2017 plan of adding to positions in which I am comfortable, fair P/E valuation of ~12X, and a decent current yield of 3.8%.
Risks: Fell further in subsequent days (struck too soon), seems to be the only Canadian bank to report weaker results in the US, and I'm already overweight in the Canadian financial sector.

May 18, 2017
Buy - Initiated a half position in Brookfield Infrastructure Partners (TSE: BIP.UN) at $53.01 in my TFSA
Reasons: Exposure to infrastructure assets located worldwide (new for me), love the management team and their focus on dividend growth (10.6% in 2017), and a good use of remaining 2017 TFSA contribution due to the unfavorable taxation of their distribution if held in an unregistered account.
Risks: Paid about 19X the FFO/Share (slightly high), considering selling it after price appreciated and was in for dividend holder of record date, thinking it would be smarter to hold in my RRSP with other companies who pay US distributions (in preparation for potential move to a brokerage with USD RRSP).

May 18, 2017
Buy - Bought a small number of shares of Cisco Systems, Inc. (NYSE: CSCO) at $31.18 in my RRSP
Reasons: Stock was down 6% after providing disappointment guidance for next quarter, part of my plan to add to positions in which I am comfortable, good dividend yield (3.7%) and growth (11.5% in 2017), pretty fair P/E valuation of ~16X vs broader US market P/E of ~27X.
Risks: Having a difficult time growing top line as they move from a hardware to services business, three recent acquisitions in May that result in integration risk, and buying at a time when the CAD/USD exchange rate was ~$1.36.

May 17, 2017
Buy - Bought enough shares of Emera Inc. (TSE: EMA) at $46.60 to close my position
Reasons: P/E Valuation of ~16.5X was fair, in before the next dividend holder of record date, closing a position, and management's guidance of dividend growth of 8-10% over the next couple years.
Risks: Bumpy earnings, continued use of bond and secondary share offerrngs to fund their aggressive CAPEX plans, can never trust management guidance, and my need to complete/close positions had a roll in pushing me to make the purchase (i.e. there might be better utilities out there than EMA).

May 9, 2017
Buy - Bought a small number of shares of Bank of Nova Scotia (TSE: BNS) at $76.03
Reasons: Part of plan to add to positions in which I am comfortable, fair P/E valuation around 13X, good dividend yield (4%), and getting in before dividend holder of record date.
Risks: Latin American exposure, already overweight on Canadian financial sector, bought too early (has been down further since purchase).

April 28, 2017
Buy - Bought a small number of shares of Toronto-Dominion Bank (TSE: TD) at $64.25 in my TFSA
Reasons: Part of plan to add to positions in which I am comfortable, the best dividend growth among Canadian banks in my portfolio (9% in 2017), fair P/E valuation of ~13X.
Risks: Dependence on the US for earnings growth, already overweight on Canadian financial sector, bought too early (has been down further since purchase).

April 26, 2017
Sale - Sold my half position in Corus Entertainment (TSE: CJR.B) at $13.08 in order to create a tax loss
Reasons: Creating a tax loss to carry forward in my unregistered account since I had a minimal tax loss to use in 2017, stalled dividend growth, constantly disappointing quarterly results, the Shaw family dictate actions in their best interests vs. those of minority shareholders.
Risks: Selling the highest yielding security in my investment holdings, prompting a decision of whether or not to buy the shares back after a month plus a day, and selling too soon (share price has rallied since I sold my shares).



7 comments:

  1. Interesting post man. Great companies there. I will also do an update on my latest buys in my next dividend post. I also bought some BNS. As well as some REI.UN, CUF.UN and ENB. Thanks for posting.

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    1. Merci Monsieur. Great minds think alike on BNS ;-) ENB has been pretty tempting to me as well. Enjoyed your post about the companies you added last month.

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  2. I recently heard of SKT as well so your post about Tanger caught my eye. My husband recently bought some more CU. I have FTS myself and added to that.

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    1. Seems like we have quite a bit of overlap in our portfolios. I think FTS will be on my watch list for Q1 2018. I like the consistency and predictability of their business.

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  3. CU has been good to me. Its parent company, Atco, has a lower yield but increases its dividends faster. (And it's more diviersified.) Both good companies...

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  4. Nice move. Im curious with your bip in a tfsa. Is there no withholding tax on it? Seem to find mixes reviews online but my brookfield renewable has been tax free in the tfsa.

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    1. Yes, there’s no withholding tax on BIP in my TFSA. I try to structure my investments to be as tax efficient as possible. Sadly, I don’t always succeed (I.e. paying withholding tax on Granite due to their US income included in their distribution).

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