• This week, I made 2 additional purchase! You can take a look at them here. I also asked you what you would do with 10K in your bank account. I used my bonus to pay off my debts. It’s probably the first time I use money to pay off my debts instead of keep investing! The feeling good thought! Here’s what I read this week:

     

    Dividend Read for the weekend:

    DivHut highlights companies suffering from another falling commodity: COPPER! I’m already getting burn by oil, I’ll stay away from a second commodity, but it is definitely a good place to search for undervalued stocks!

    Dividend Diplomats update their stock watch list. There are some interesting picks there. I even discovered a new stocks to look into (PH… does it ring a bell?).

    Dividend Jigger reviews his net worth. In a single year he jumped from 20K to 106K! Seriously! This is awesome! He was kind enough to share how he did it in the comments (I asked him).

    Passive Income Mavericks sold his emerging market ETF to buy Unilever (UL). I never really considered UL but it shows better fundamentals than Procter & Gamble (PG), I guess it worth taking at it look at it closely.

    Dividend Growth Investors suggest a simple but effective way to never run out of money. I just can’t wait to reach this level! Hahaha!

    Dividend Ladder reviews PPG Industries (PPG). Did you know that PPG was the world’s largest producer of coatings and paints for residential and commercial customers?

    Dividend Mantra explains that work and financial independence are not mutually exclusive. I totally agree with Jason; you can be financial independent and continue working. Working is so much fun when you are not forced to do it!

    My Dividend Growth analyses not 1 but 4 stocks at the same time! I like Mastercard (MA) even though the yield is very low. The business model is just… perfect! (and I love my Mastercard Elite as well! Hahaha!)

    Pollies Dividend analyses Stanley, Black & Decker (SWK). The EPS trends is a bit hectic and the dividend yield is low but the company still show strong fundamentals.

    Finally, Ben at SureDividend did some math this week and applied the Graham Formula to the Aristocrats. Only 4 passes the test!

     

    Enjoy the weekend!

     

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  • On Monday, I wrote about my lump sum dilemma. I had a big bonus this year, but I decided not to invest in the stock market and pay off my consumer debts instead. Eventually, this will leave me more cash flow to invest on a regular basis, so I guess it is a good decision ;-).

     

    Where did the 2K Come From?

    One of my “debts” was to pay back my Home Buyer’s Plan (HBP). Each year, I “reimburse” 1K from the money I borrowed from my RRSP to buy my first house. It’s an amazing program we have in Canada where first time home buyer can withdraw up to 25K from their RRSP tax free to purchase their first home. Then, you have 15 years (plus a two year grace period) to put the money back in your RRSP to avoid a tax claw back.

    The other 1K comes from… drum roll… Dividends accumulated throughout 2014. I started the year 2014 with $45,000 in my RRSP account. It has generated $1,634 in dividend income for a 3.64% dividend yield. Part of it was reinvested during the year (when I make trades) and the remaining amount was sitting in a US equity index mutual fund. I sold the fund and am now ready to invest $2,000 in my portfolio!

     

    Two Options: Buy More Shares or Buy New Shares

    When you have additional money to invest, you usually have these two options; you either increase existing positions as it may be an opportunity to boost one of your holdings (as I did with AAPL last year… it was a very good move indeed!) or you simply go on the hunt for a new company for better diversification. However, adding a new stock, also adds to the time and effort required to manage your portfolio. I personally read all quarterly reports to make sure the companies I hold still demonstrate the same reasons why I bought them in the first place. Plus, as I’ve mentioned in my asset allocation post at the beginning of the month, I’m pretty well diversified right now.

     

    I’m Going to Increase not ONE but TWO positions

    The amount I have to invest is not really important this year, if I had to buy a new company, this would only represent 3.6% of my portfolio. This is not important enough in terms of asset weight. This is why I’ve decided to boost two of my holdings. I looked at all my positions and decided to increase Gluskin & Sheff (GS.TO) and Black Diamond Group (BDI.TO). Yeah… I decided to buy two losing stocks in my portfolio!

     

    First: Gluskin & Sheff

    Unfortunately, the Canadian stock market took a hit due to the price of oil. Most financials where hit during this period and GS was part of the lot. In order to make things worse, GS published disappointing asset under management (AUM) numbers in November. For a private wealth company, it is important to have as much money under management as possible since this is the source of your income (a percentage is charged as management fees). Therefore, the more AUM you show, the higher your income will be. After the purchase of Blair Franklin, the market didn’t expect to see so many investors defect (I recall the drop in AUM was 8%). Nonetheless, December AUM numbers were much better and the stock bounced back.

    The fundamentals why I purchased GS last year are still there: strong cash flow machine evolving in one of the most profitable segments of the financial industry. Chances are GS will be bought out by one of its competitors and the company will pay a generous dividend (don’t forget the special dividend at the end of the year!) to its investors.

     

    Second: Black Diamond Group

    When I sold McDonald’s (MCD) to generate some liquidity in order to buy BDI, many people on this blog weren’t convinced of my move… and they were right… for now anyways! While MCD hasn’t gone anywhere since my trade, Black Diamond has followed oil prices down the drain. I’m currently showing -41% on this trade… not my best shot since I started investing I must say the least!

    At this point, I have two options: #1 I admit I’ve made a mistake, sell the stock and never look back. #2 I still think it is not a mistake, average my cost down and earn a bigger dividend from this “gamble”.

    You understand I took option #2. I believe BDI will go through this rough phase of oil pricing and once the commodity kicks back, I’ll be laughing. I just have to be patient!

     

    What do you think?

    I’m pretty sure I’ll have a few comments about my “journey to hell” with BDI, but I’m really interested in hearing what you have say about my two trades!

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  • Have you looked at the stock market yesterday? Let’s just say it wasn’t the best day if you were invested… However, if you are looking for an entry point, here are a few stocks we hold in our DSR portfolios and match our 7 investing principles that dropped more than 3% yesterday. This can be your entry point. You might want to check them out before you go to work this morning:

    Seagate Technology (STX) -3.38%

    STX met analysts estimates but deceived with soft guidance for 2015
    Slow Euro economy is the main reason why sales won’t be as high as expected this year
    dividend yiled: 3.79%

    Procter & Gamble (PG): -3.45%

    Currency headwinds hurts sales and profits as they missed estimates
    Profit drops 31%
    Still the company is a strong consumer defensive stock
    dividend yield: 2.98%

    Apple (AAPL): -3.50%

    70% iphone sales increase in China during the Holidays
    They sold 74.5 million iPhones while expectations were between 64.5 and 67 million
    Apples’s cash in bank is enough to buy IBM! ($178 billion)
    dividend yiled: 1.72%

    Intel (INTC): -4.52%

    It was definitely not techno’s best day!
    While Intel posted good earnings and announced a dividend increase last week, it suffered from bad news from STX & MSFT.
    dividend yiled: 2.81%

    Caterpillar (CAT): -7.18%

    profit plunges 25% last quarter on oil drop
    it’s a tough time for CAT, but it’s a good entry point since the stock is now trading below 13 PE
    dividend yiled: 3.51%

    Microsoft (MSFT): -9.25%

    Windows sales deceived and their ongoing restructuring effort in line with the Nokia acquisition cost 2 cents per shares to investors
    dividend yiled: 2.91%
    As you can see, it is not catastrophic news, it definitely be a good entry point if you were looking to buy one of these stocks!
    I’ll keep following them closely, let me know if you have any questions.
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