I’m Back – Thoughts / Watch list

watch list

Hey

Guess who’s back? It’s been awhile since my last post. While I try to do weekly posts, life has been really busy lately. Landscaping has been cleared of the lock down and we have been at it full force. Of course the weather hasn’t been ideal, but a rain morning like today let’s me sit down and write out a post.

I stated in previous posts how the phone for landscaping has been dead since about March. We had 2 months of work previously booked but once we got the go ahead to work and people see us out and about the phone has been ringing off the hook. Business is really good. People have to stay at home why not make the place look mint?

It feels really good to be back at it – always love seeing the clients, the tan as well as the workout. Not to mention just leaving the house everyday again is a great feeling.

Client’s Thoughts

I have worked for certain clients for over 20 years now, and a lot of them are really wealthy. Some of them I talk about finances with. It’s interesting to hear what some of them are saying. Here’s a couple points some have made.

  • Refinance now. – I have heard this from 3 people already. Money is cheap right now and banks are eager to lend it out. If things continue as they are and housing crashes and the economy pulls back. Banks won’t want to lend money later and your house wont be valued as highly. Get that money now
  • Airbnb Will effect the housing Market – People aren’t renting from Airbnb anymore and real estate is overpriced specifically Toronto. One client has a friend who rented 30 different condos from people just to airbnb them out. He made a killing doing this. Yesterday he cancelled all 30 of those rentals, people just weren’t renting them out. They believe we will start to see big change in housing prices.
  • Mixed Views on the Market – Some say get out. They sold in February and don’t plan on getting back in for at least a year. While others stress cashflow. Hold Quality Companies……
  • Reits are going to get Beatdown – One of my clients manages bars and restaurants in Toronto. They are closed. Rent is 100 thousand a month for some of their locations. They are working on a deal with property owners that each month they are closed they don’t pay rent 1 month per year. Ie if they are closed 3 months they will make a 3 year deal to pay only 11 months of rent a year.
  • Covid Ain’t going away – One of my clients runs a high risk cleaning company. Full hazmat suits, respirators and wash down stuff. They clean buildings when there is a person who has covid there. Ie a grocery store employee, jails etc… He has over 60 people working 24 hrs a day. Business is good but he’s worried everyone will get burnt out. We get back to normal to quick and cases explode. We fear a second wave, he talks about 5-6 waves. The world will be different… Vaccines take a long time to come to market.



My Thoughts

Covid

It’s always great to pick other people’s mind’s especially successful people who have experienced a lot of these ups and down’s. I’ll be the first to admit I have relaxed when it comes to covid. I’m starting to have some beers with the neighbours. (while trying to keep a distance, but after a bunch maybe we get to close?) I have went fishing in the river with a buddy or 2. Easy to keep distance there but clearly the lock down is becoming a little more laxed in my book.

I have even debated letting our son play with our neighbours kid. (they are best friends) They both have been in lock down for roughly 2 month’s and should be safe but obviously they probably will get too close. I was hoping Ford would of said something abut kids being able to play with one friend but I guess not.

My wife’s uncle is still on a respirator in the states and doesn’t look good but think he is starting to recover. After talking to this client, maybe I need to take this covid thing more seriously again.

The Stock Market

This is a hard one. I really do feel the market is ahead of itself here. Like why are certain stocks hitting 52 week highs? Of course certain sectors will benefit and I understand that but some others I dunno. The last couple days we have seen some red again. I’ve mentioned before contemplating selling off everything. I don’t think I will do that, clearly the printing presses don’t mind running 24 hours a day. I don’t want to fight the fed, but I will get back to focusing on Blue Chip Stocks. We have seen a lot of companies cutting dividend’s, got to stick to the kings.

As for our reit’s I’ll continue to hold them and hopefully drip them, but expect a cut or 2 coming if this continues for much longer. I used to think about adding more, but this is a sector I’m just going to watch until things recover a bit. Long term they will be fine but short term there will be volatility.

Housing

I have been saying that housing here in Canada is in a bubble and will eventually pop. We have been bringing in a lot of immigrants which is great and definitely helps the housing market but I would think that would of stopped during this situation. I don’t know for sure. The air bnb thing is definitely real. My sis in law normally rents her condos in Toronto out for airbnb but that’s been dead so now just rents to a monthly tenant. Condo values have dropped this year already. Values dropping in Toronto should be a indicator and I think it will slowly spread to surrounding areas. Plus with more people working from home these days (A trend I seeing sticking around) will downtown property’s be as desirable?

Refinance

This is one we are really debating. I have done it before and I think it was a solid move. We put that money into higher paying income producing assets and increased our yearly passive income by $12,000. Im not a fan of debt but some debt can be good. Don’t go finance cars or pay crazy interest rates. If you got those debts pay them off asap. But our current mortgage is 2.58% and due for renewal in 2 years. I think we could get a new rate between 2.5 and 3% no problem and pull out a lot of equity once again. A stack of cash would be great for a market crash or even cheaper housing / cottage. If things get really bad, cottage prices will be the first to drop. A cottage wouldn’t produce much cash flow in the current environment but would be pretty nice for the family and could be lucrative in the future. A cottage is something we have always talked about but I realize it’s not a good investment move. Cashflow is key. The values would have to really plummet.

A rental has always been the plan to add to our next source of passive income, if things get really bad there will be lots of opportunity’s out there for people with some cash. Who know’s what will happen? Things may just rebound and we will just look back and say wow 2020 what a fu&ed up year… haha

Either way I’m sticking to the plan buying some stocks monthly, 250 in xaw etf only thing that has changed is we are starting to stack some cash. I never used to do that before but believe its a good idea in these times.




Watch List

Well my rant was 1300 words so I will keep this short. I have 3 companies I’m currently debating buying this week. JNJ, MMM and Microsoft.

JNJ – One of everyone’s favourite dividend stocks. It’s not a steal at the moment but it isn’t overpriced either in my eyes. They raised their dividend last month in the heat of the pandemic and proved to me just how solid they are. We got a small position in them but I feel healthcare is a great industry to be in. Their earnings shouldn’t be affected much from this covid situation and if they come up with the vaccine watch out! Who will? I dunno but this is one stock that let’s you sleep well at night. Pays their dividend, raises their dividend and business is good.

MMM – 3m tends to always drop right before I want to make my purchase. The whole world wants their masks right now. What a moat! but at the same time other segments of the company will be lagging. In my opinion they are cheap right now. Yielding over 4.3% for a dividend king? That will get the chops wet right? I just wonder if earnings from q2/ q3 will offer a even better value. Their payout ratio is getting up there, but I think their dividend is safe.

MICROSOFT – Tiny yield but oh so much growth. Huge moat and with everyone working from home these days they should benefit. Everyone loves microsoft and I need more tech. They aren’t cheap though. I set target prices and they flirt with those numbers but then take off. Maybe I should just ignore valuation and buy them! They also have tonnes of cash on hand.

Honorable Mentions

I think I cant post this without mentioning the Canadian Banks. They are seriously cheap! BNS currently offers over a 7% yield, Bmo is just under 7. Royal at 5.2% Td 5.7%

Wow massive yields. Sure there are some risks but Canadian banks are known to be some of the best banks in the world! Those dividend’s have been paid out for a very long time too! My financial sector is a little high at the moment but if these banks go much cheaper, I may just have to buy more. Seriously check them out…




Conclusion

Well there you have it, my thoughts and some thoughts from what my wealthy clients are saying. No one knows what will happen for sure, but I don’t think it’s bad to start thinking a little more defensively. Sorry for not being so active on the site lately. Life’s busy and honestly I’m not watching the market as much. Most of my dividend’s continue to be paid, the family’s healthy, our kid’s are crazy and the sun is starting to shine again. Life continues to make me smile.

Stay healthy everyone and enjoy the long weekend? haha!

cheers

Curious out of the 3 stocks I mentioned which would you buy at current prices? Or are you buying something else?

 

 

 

 

 

 

 

27 Responses

  1. PassiveCash says:

    Thanks for sharing the insight of your clients, some interesting takes. I have the same overall view of the market as you, I’ve been idle since the market bottomed back in march. I like JNJ and MSFT as well. Not a fan of MMM. Their other businesses seem to be bleeding and the facemasks are only enough to offset.

    • Rob says:

      hey Passive

      This market is crazy but govts like their printing presses atm.

      I hear you about 3m that is the same as my thought process. They will be fine longterm but short term there may be a better entry point.

      cheers Passive!

  2. jimmbboe says:

    Love the photo! That’s how I’ve been feeling sometimes! lol Patios have been approved for restricted opening so I’m back at work on a limited basis. Been lucky so far, only had DIS dividend suspended so far but keeping my eye on some others. Been adding to utilities and telecos(funds from a bit of portfolio cleanup) and happily my MSFT position has held up well.

    Best wishes to the family and continued success with the landscaping!

    • Rob says:

      hey Jimbo

      Wonderful. It feels good to be back eh?

      We share that disney suspension. Its unforetanate but you cant blame them at all. So much potential long term. Utilitys are telcos divs should be safe but who knows these days.

      All the best!
      cheers

  3. Dominique says:

    Hi, first comment on your blog but I’ve been a reader for 6 months. With my tax refund I finished my emergency fund, 6 months everything covered (rent, food, insurance, internet, gas, etc) because of the uncertainty of the next few months. Next week I’m planning to buy about 1000-1100$ of Manulife to start a Drip (dividend is at 7% today). Might add 500$ to my Enbridge position to also start dripping

    • Rob says:

      Welcome Dominique (cool name btw)

      These are the comments that make writing worth it. Absolutely love it! A solid footing and you know I’m a huge fan of the drips!
      haha keep it up. =)

  4. Graham says:

    Good to hear you’re back to doing the landscaping work you seem to love Rob.

    Among other Canadian sectors the big five banks are still on my buy list.

    Wishing you and your family a great holiday weekend.

  5. I enjoyed this post Rob. It’s scary out there and nobody really knows what’s going to happen. I’m worried about the whole Airbnb thing. I will be closing on my new condo in June. I bought it as a second home (vacation rental) with the idea of using Airbnb when I’m not there, which is most of the year. Unfortunately, I’m locked in a contract (which I entered before coronavirus) and now can’t get out. So, I’m hoping it works out in the end.

    I did refinance from a 3.5% mortgage to a 3.0%. Time will tell if the closing costs I paid were worth it. I think so though.

    I have all three companies on your watch list. I actually recently sold CSCO and bought MSFT. I hate the yield, but I agree, I like the growth potential.

    Good to hear your thoughts on the various issues and welcome back to posting.

    • Rob says:

      hey Port. Im sure long term it will be a great investment. The lack of airbnb will hurt currently. Do you plan on renting it out monthly now then?

      3.5 to 3 is a great move. why sell cisco? I love them networks and modems etc will do very well in the future. Microsoft is solid as well though.
      cheers man!

  6. Engineering Dividends says:

    Hey Rob. MMM seems like the best value here, but comes with the most uncertainly, making it quite the tough decision. I like the steadiness of JNJ and the cash hoard & growth of MSFT. MSFT is a position I’d like to build, too. It’s a much smaller position for me than I’d like, but it’s really run up a bit since I initiated my 10 share position in March. Guess I should have purchased more at that time!

    • Rob says:

      hey Paul

      yeah that cash hoard of microsoft is huge. Their price has soared. They still are priced like they got that federal contract which is up in the air at the moment. I hope they pullback soon. I feel the same about 3m and may wait a bit. I guess that leaves jnj….. haha

      cheers

  7. JamesB says:

    I literally have the exact same watch list minus BNS. I have been buying MSFT, TD and RY. I have also been watching MMM and JNJ.

  8. Cris says:

    All 3 companies are good long term investments.
    If you are not sure which one then I recommend you 3 ETFs to look into: ZQQ in CAD, CLIX and FDN in USD.

    Stay safe everyone.

  9. I actually don’t own the condo yet. We should be closing next month. I plan on still renting it out on a short term basis. I’m sure I’ll be losing money until next summer, but I’m hoping not by much.

    I was just revamping my portfolio. I sold CSCO only because I liked IBM and MSFT better and since Apple was also in my portfolio, I figure that would have been too much tech stocks. But, I may add it back in later. The total stocks in my portfolio is 22. I may eventually take it to 25. But just trying to build up the portfolio right now.

    • Rob says:

      ahhh

      things seem to be turning back to normal, so your rental should be fine.
      Sounds like a good move love increasing holdings vs adding new positions.
      cheers port

  10. Some great companies on your watch list right there. I can’t say anything bad about them. Interestingly, in your housing insights, I didn’t consider the impact that Airbnb will have on the market. A lot of people will be underwater since they can’t rent their second property anymore and cover their mortgage + taxes. I wonder if they will just rent it out monthly to earn that consistent income. Also, you should always refinance if you save monthly, the expenses aren’t bad, and you have a low payback period. Thanks for sharing your insights my friend!

    Bert

    • Rob says:

      hey Bert np

      yeah some people I know who were doing airbnb are now renting monthly, not as lucrative but still pays the bills.
      cheers Bert

  11. Dominique says:

    Thanks! Got 68 shares of Manulife for 16,08$.
    Eventually I might start a bilingual personal finance blog, it’s something that is lacking in french (all the blogs are in english, with you and “my own advisor” being based in Ontario). Nothing from Quebec that I can see (I’m in Montreal btw).

    • Rob says:

      Yeah like German said hes from Montreal

      Nice dom, great pickup. A bilingual site may do fantastic. opportunity’s always arise from problems. Sounds like you found a little niche.
      All the best

  12. German says:

    I’m from Montreal

  13. German says:

    Glad you are back. Thanks for sharing your client’s perspective on the current situation. I’m on the road very often and I see more and more traffic jams, something I haven’t seen for at least 2 months. So the economy is opening up, the gas price is going up. Things will stabilize eventually.

    • Rob says:

      hey German

      so true the last couple days the roads have been packed. I have been debating loading up on suncor at these prices….. The great debate…

      haha cheers man

  14. Dominique says:

    Hi German, seems like your blog flew under my radar. Will read it!

  15. Graham says:

    The Dividend Girl says she’s French Canadian. She’s been blogging from New Brunswick since 2007.

Id love to Hear What You Think

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: