The best Consumer Cyclical Stock? New Buy
The best Consumer Cyclical Stock? New Buy
My lowest sector in my stock portfolio has been Consumer cyclical. After my recent sale of cineplex it really had a nice hole that needed to be filled. As I have stated before this sector is my most hated sector to invest in, but I really try to even out my portfolio sectors to keep me diversified. After doing a bunch of research and absolutely loving the potential of this stock, I made the buy.
Walt Disney Company
The company is an absolute powerhouse. I probably don’t even need to talk about them. I was raised on Walt Disney, Lion king and Alladin were my go to. My parents forked out the money to take me to the parks as a kid. I’m sure we will be doing the same as well with our kids, just like almost every family with kids.
Disney brought in 55.137 billion dollars (USD) in 2017. 23.51 billion from its media networks, 18.42 billion from parks and resorts, 8.38 billion from studio entertainment and finally another 4.83 from consumer products and interactive media. Its pretty safe to say they are nice and diversified.
The pending deal with 21st century fox, will make them a content powerhouse. This will give them even more shows for one of their many streaming services! Netflix is going to have some serious competition. Disney keeps talking about creating a streaming service for all their disney content, Espn and possibly other content.
They also own ESPN which has actually been a negative but they are planning on starting a sports streaming service. Yes a sports streaming service! This will be absolutely huge. A sports streaming service will have no competition and will do pretty well. I know so many people who keep cable for the sports channels only. ESPN plus will launch this spring for $4.99 per month. An absolute steal of a deal. Once this becomes available there is a really high chance I will sign up. I only wonder how good their Canadian Content will be at the start. I’m sure in time though they will have Canadian Sports.
Disney has parks all over the world and keeps expanding. Personally I’m excited for the Pandora exhibit, I loved avatar and I look forward to all the new avatar movies which they will be making. The park is always busy and the ticket price will surely be increasing in price as its just something you need to do with your kids. There is also disney cruises now, which I hear good things about.
Its pretty safe to say Disney dominates the movie scene these days. From kids to adults there is something for everyone. Walt disney has a couple production groups. Walt Disney Pictures, Walt Disney Animation, Pixar, DisneyNature, Lucasfilm and Marvel studios. I mentioned that I think movie theater’s are slowly falling back due to lack of movies and people wanting to stay home and stream. Almost all movies I go see at theater’s are disney’s! With Disney’s potential streaming service I could see a direct rental/buy program in the future.
Warren Buffet talks about how he likes companies with a wide moat. Disney definitely has one, I really cant even think of their competition. Do you remember dvd’s? I never buy them anymore, but I have bought the classic Disney movies on dvd for our kids to watch. That’s got to say something!
O.k, this is the only negative I can think of about Disney. Their dividend is nothing to get excited about. Its current Yield is 1.63% although that is over its 5 year average of 1.3%. The dividend payout ratio is about 29%, which makes it super safe. (although nothing is guaranteed) Disney has increased the dividend the last 8 years and their 5 year average growth rate is just north of 30%. Just massive. The price/ earning ratio is 17.68 which is lower than their 5 yr average of 20%. Disney Pays the dividend semi Annually in January and July.
The stock has a 52 week low of $96.20 and a high of $116.10 and morning star gives it a fair value of $117.44. Disney has also rewarded shareholders average annual returns of more than 14% for the past half a century. According to Fool.com
I was really debating buying more Proctor and Gamble Shares or starting a position in Disney. Although Disney is not a dividend king, I feel the stock has a tonne of potential for the next couple years. We bought 20 shares at just over $102 a share. This will add $33.60 to our forward dividends.
The dividend yield is low and that caused me to him and haw. After researching more and more, I liked it. I have passed on stocks in the past because of their low yield and watched their stock double or triple in price. I’m happy with the buy and its one of those stocks you can tell people about and they instantly know the name.
Hukuna Mattata – It mean’s No Worries!
What are your thoughts? Whats your favorite Disney Movie?
Hey I’m Rob, creator of Passive Canadian Income.
In 2011 me and my wife had almost $60,000 in debt and a negative $7,000 Net Worth. Through hard work and financial education we paid all that off. Now we are focusing on increasing our Passive Income Streams to make the money work for us. Feel Free to Follow along the Journey by clicking the Social Media links below or subscribing to get notified of new posts on the sidebar.
Wow! I wish it, you do it! Great buy and concerning your ‘only negative point’, just look back in 20 years, you’ll be glad you bought DIS asap. Congratulations on your 20 shares, nice work!
When you wish upon a star………….
Classic disney quote. Its definitely a stock that i dont think i need to worry about.
Hi Rob, Good purchase, but I do not own Disney myself. Probably for the same reason you debated it in your mind, low dividend yield. Hopefully you will get some good dividend growth which is what I look for in lower yielding stocks. I do, however have a position in Proctor and Gamble. Good luck. Tom
Thanks, heres hoping they keep that dividend growth rate up and if it returns 14% a yr on average no complaints here. Just like CNR low yield but absolute monster companies! Super Moats and solid history’s.
Nice buy Rob, you made a great decision to buy Disney 🙂
hey Thanks Matt, Low yield but if it returns 14% a year no complaints!
PG is on a downward loop. It will turn around but not sure of time. DIS on the other hand is an awesome stock. Has good growth potential … should probably make up for the low yield. BTW, low dividend yield is good for you 🙂 avoid US taxes. The last point is diversification … adding DIS provides diversification. 115 looks like fair value.
Thats what ive been thinking too regarding pg.
As for the dividends they are tax free since they are in my rrsp account and dont lose the withholding tax. Winning!
As for the diversification, yup! Haha
I love how diversified they are..
Thanks for swinging by
Great purchase! Love the company. Great growth opportunities. I was recently at the Disney resorts in Orlando and ran into the common issue of “it would be more popular if there weren’t so many people.” Man, were some of the lines long! Still had a lot of fun. At least I knew that a small portion of the food and tickets that we bought would go back to me in stock growth and dividends.
Haha yeah thats what i keep hearing. I thought canada’s wonderland was bad!
Always nice doing business with stocks you own!
Aladdin is one of my favourite Disney movies. It’s just magical.
I think Disney is definitely worth owning as they have so many revenue streams. If one division doesn’t do too well, th still have many others to make up the shortfall. Good buy.
Hey Leo. Its a classic for sure! Thanks definately a stock i want to get more of!
This is a good buy… I have it myself on my buying list.
Recently I bought, Lowes, Walmart and Dollar Tree…
A few months ago we discussed about HLF as a good buy but unfortunately the price went down based on some unexpected bad news and a little too much debt from the last year recall.
Anyway, I still believe in the company and the other day I added another 100 shares at $10.85… now my average is around $14.8. I don’t want to say to do the same but, I felt bad that the things didn’t go the way I really expected.
Something else, I recommend to check the following link… there might be some opportunities in the next month or so.
What was happening with you car?
Thanks a lot. Interesting charts. Is it saying based on the past the next 60 days may trend down? I got a wait and see approach now for march. This new trade war could really create a nice buying opportunity. Id love to buy telus atm, but this stock doesn’t go down! Typical. Also got a nice chunk of change for cnr, but waiting to see if it can go to 90 before next ex dividend date. (after cnr ceo gone and nafta still in the air, we will see) With the wife on mat leave, we will be done contributing to her rrsp until next yr. So my buys will most likely be Canadian now. As for Highliner, don’t worry about it. I liked it at that price and still feel it could pop. Just wish it would drip! I wont be adding to it at the moment, like I said Im watching cnr and telus currently.
AS for my car, still got it. My fuel pump went on it, so cost 500$ to get that fixed and weld some minor hole on the exhaust. I’m glad it was a cheap fix, I think the wife wanted a newer car for us though!
Thanks for the charts and info again Cris
Regarding the TFSA and RRSP contribution, I have a nice and simple Excel calculator but can not downloaded to your site… maybe on a private email if you replay to my personal email.
will do, thanks
Your net worth will go up with this company. Good buy.
I think it should continue to do well!