October 2018 – Watch list / 1 Sale
Hey Hey Hey
It’s Monday Morning and here in Canada it’s thanksgiving. So happy Thanksgiving! Life is pretty good and I have a lot to be thankful for.
- I have a huge family now and generally everyone is in great health.
- We have a boy and girl who do their best to wake us up early everyday. To take advantage of the day?
- My wife is absolutely solid, and she still likes me =)
- Roof over our head, and clothes on our back
- A great group of friend’s
- This online community, (All of you) for posting your financial thoughts/ buys etc. Always letting me grow and learn something new. Also for encouraging me and keeping me motivated to keep creating post’s on the website and grow our passive income.
Thanks, and I hope all of you are having / had a great weekend. On Saturday we had a typical thanksgiving meal with the wifes side of the family. Sunday my family decided to switch it up and save the turkey’s. We went for a Mexican taco night theme. Was a sweet time. I love me a soft taco!
October 2018 – Watch list / 1 Sale
Every month we do our best to continue putting money into the market and grow our passive income. Sometimes things come up and we sell a stock. Generally Ill try to keep the same stocks and not sell them. (Last year I sold a bunch but they were beginner mistakes, and learning lessons)
On Friday I decided to sell our whole position of Manulife financial. This was one of my original buys and I think I bought it 2 years ago for around $16-17 bucks. We sold at $22.50 a share and locked in roughly a 28% gain not including the dividend’s.
What happened? Carson Block of Muddy Water’s (a famous short seller) last week claimed he was shorting Manulife financial. At first I thought the dip would be a great time to add to our position. So I decided to look into why he was doing so.
Normally Id ignore short sellers as I’m investing for a long term horizon. Carson stated he was shorting manulife based on a court trial that just happened and most shareholder’s had no clue of. Essentially some company with access to a tonne of money bought a policy from the 90’s that clearly states the policy holder can put unlimited money into the policy whenever they want. Doing so will guarantee the holder a 4% interest rate on the funds as well as possibly more bonuses.
Here is the link to Caron’s Interview about it.
Based on what Carson says The contract is a sure thing in the US courts and could essentially destroy manulife because we live in a lower interest rate environment compared to the 90’s. He does state Canada courts are different though and they can bend for the companies well being. If they did it would be business as usual.
I really doubt manulife will go Bankrupt and the courts may look at this and say this is a policy from the 90’s and shouldn’t apply to current times. By the sounds of it the policy was poorly written at the time though. I have decided to cash out and take my profits off the table. We will see after the courts decision if I will return to be a shareholder.
BNS – Bank of Nova Scotia – Typical…. This has been my go to stock as of late. A top 5 Canadian bank that is making some great moves, and yet the stock price remains cheap imo. At its current price of 75.27 per share, It offers a p/e ratio of 11.2x and a dividend yield of 4.52%. Very nice. With rising interest rates, banks should do well!
IPL – Inter Pipeline Ltd – At close to 52 week lows, Ipl is a great dividend growth stock with a nice p/e ratio and dividend yield. At 22.39 a share its p/e is 15.1 times and has a monthly dividend of 14 cents offering a solid 7.5% yield. If I recall right it’s payout ratio is around 60% which is nice! I would sell my Altagas shares if I did this as I’m wondering how safe their dividend is at the moment.
DRG.UN – Dream Global REIT – The stock has pulled back quite a bit this past week. Clearly the notion of rising interest rates is hitting interest sensitive stocks. I like this stock and the diversification it offers. Currently it yields 5.88% which it pays out monthly.
LB -Laurentian Bank of Canada – A regional Bank that has just been killed this year. It had some bad loans and got called out about them. They have a good history of raising their dividend though. Currently they offer a p/e of 7.8 times and a massive 6.07% yield! Morningstar has a 4 star rating on them and a fair value of just north of 47 bucks. Representing a 10% upside along with this massive yield. I don’t like the name as much as TD, Bmo, National or bns though. (My other banks)
Well there you have it, my current watch list as well as my recent sale. Within the last week the market has slid a bit and created some better opportunity’s for us investors. I think this month Canada will raise interest rates after the recent Nafta (or new name) deal. This will put more pressure on the utility, pipeline, reit’s and teleco sector’s going forward. Rates will continue to rise slowly though, I think.
What are your thoughts? Are You buying anything? Manulife buying opportunity or get out?
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.
I’m taking a gamble on CJR.b with hopes that it will recover, what are your thoughts?
nice! I was actually thinking of doing the same, but the stock has already ran up a bit the last week or 2.
I think its still cheap and maybe after earnings, people will see how much cashflow they have after that dividend cut.
I dont feel like adding to them after that but do think the stock is cheap. Just trying to focus a little more on dividend growth stocks vs beaten down stocks.
Under 4 bucks I may rethink that though!
Thanks for sharing and interesting on Manulife. Further, BNS is always up there, can’t go wrong!
yeah its becoming pretty predictable. I swear when I get enough to drip them there will be something else…. haha!
Manulife will be interesting to watch from the sidelines…
Happy Thanksgiving to you PCI, and quite a nice list of things to be thankful for this year!
It will be interesting to see how that shakes out for Manulife, and I cannot fault the logic behind your decision to take your profits now and watch to see what happens. I’m not overly familiar with the stocks on your watch list but it looks like you might have some good buying opportunities!
Thanks alot, it was a great weekend.
It will be interesting to see what happens if the policy is as clearly written as he states. I really dont think Manulife would go bankrupt but they might be ordered to pay the plaintiff a very large sum to throw the document away.
That sucks about Manulife. I use to own them a few years ago.
Stuff on my watchlist: RY, BNS, BEP.UN, TD, QSR
I do not have any money to invest right now, but I keep an eye on these stocks from time to time.
Yeah for sure but may create another cheap entry point. I originally bought manulife for like 16-17 bucks.
That is a solid list and I have thought of bep as well. That may be next month if rates rise (as i believe they will)
Cant always have money, things come up. In sure you will be buying soon enough.
Happy Thanksgiving! Those tacos look very delicious!! Good call for selling Manulife, especially for locking those gains. I think the stock will be cheaper due to short seller pressure, but eventually things will settle. I doubt our court will rule against Manulife or destroy it. I remember a few years ago this stock was on my watchlist for under $17 per share. If it gets back to that level I will be buying it.
I like your picks for October, but the ex-dividend dates for banks have just passed. So if you but more banks in October, you won’t receive the dividends until next year. I would buy IPL or DRG and then the banks in December, not to miss the monthly dividends. But it’s up to you, bro!
haha so true German.
It has actually made me debate adding to my national bank position, to get the dividend next month. Its p/e is lower than bns and i eventually wanna get them dripping as well.
If the bank of canada raises the rates this month those reits and ipl should be cheaper next month, while the banks should profit from that so im torn.
I actually bought manulife back then and am hoping its history repeating itself. Ill wait for the court verdict though just to see what happens.
Like you said i doubt they will go bankrupt but they may get hit with a big financial penalty.
Hey Rob. Another great post. Glad you enjoyed Thanksgiving with your family. I finally bit the bullet and bought 51 shares of BNS @ $59.04 per share. Quality company at a good price. Looking forward to your next solar update as we head into fall and winter.
Dam sweet man! That is a hell of a buy. Wish i had stacks to make purchases like that. Very nice.
Its dipped a bit more recently and i keep debating buy but with no ex dividend date in sight im in no rush.
Anyways just awesome man. keep it up!
Happy Thanksgiving and NHL season!
I’m going to keep an eye on Manulife. If it continues to drop, might be a good time to dip my toe in.
Regarding your watchlist, I’d lean towards BNS.
Go Jets Go!
haha hey man
Yeah the season has been good so far, we need Anderson to get into prime shape already but that will happen in dec/jan. Until then its the Tavares, Matthews, Marner show!
Manulife could create a nice buying opportunity but this dip lately, has created tonnes.
I am holding on to my Manulife for now. We will see what happens.
I am closely watching Square, more volatile stock but may be some nice gains to be made.
Square is a interesting one. Dont see many people interested in that but from a business perspective its a great product!