Friday, 11 November 2011

Dividends

First, take a look at this website...


http://www.topyields.nl/Top-dividend-yields-of-TSX60.php



I love dividends!  Why... because no matter how bad the market does (well, for the most part), the stock will pay you a % every 4 months.  For instance, I bought TransAlta because like many large dividend stocks, they're a leader in their sector....so Im quite confident in 50 years, they should at LEAST still be kicking around.  They also pay me 5% quarterly!  So basically any time I see the market dip...I buy more at a discount.  Unfortunately at the moment (and this will sound funny), the stock has been hovering around $1 higher then when I bought it.  Solution, sit on it!  Take your money every 4 months till either it drops to a new 52 week low (buy more), or when it increases to a new 1-2 year high...sell.  On top of this...all is done in my TFSA....SO NO TAX!  Easy peasy:)

Now banks would be an obvious safe haven to collect high dividends.  Canadian banks are some of the most stable banks in the world.  The only problem with this is...they are soooo expensive; like $60 per share.  So as a result, these stocks will be contributed to slowly , every time the market dips, you buy 10 or so, then plan for 20-30 years or so of holding this.

Now some will say they don't jump into dividend stocks right away because these stocks tend to not grow as aggressively...based primarily on their investment to their shareholders....in dividends.  Is some cases,this can be true, BUT, if you wait long enough and keep your wits in check, this should not be the case IN THE LONG HAUL.  For example, the 2009 great recession, everyone was selling their stocks because they thought the sky was falling, when in reality, some of the biggest profits were made as a result by anyone who was buying.  Like the cliche says, buy low, sell high;)

When looking at dividend stocks, I have only a hand full of rules I follow before I buy.

  • It needs to earn more then 2%
  • It needs to be a company I know, and understand at least "slightly"
  • I need to at least want to use the product at some point if the opportunity arose.  
  • and not let myself buy when they are high.  Wait for an obvious blimp in the 52 week trend.
  • Has to be Canadian
For example, Shoppers Drug Mart.  This stock is my top one, WHY?... because they give me 2.5%, they are building ferociously in trendy neighborhoods, and they are sub-developing a separate cosmetic store in malls (Jen loves these).  Not only that, I bought when the stock was crashing based around the prescription mess in Ontario.  I will only sell this when the stock hits $38-40/share.  Its currently at 34:)

Don't get me wrong, I don't just buy based on dividends.  The earthquake in Japan ROCKED uranium stocks; the economy wasn't confident in its future stability.  I disagree.  The stock went from $40 to $28 in literally 1 week. I bought it at $25.  It later dropped further after several hick-ups to $18!  I bought a bit more averaging my total around $23/share.  It is currently at $20.  Personally, I hope it drops a bit more so when I buy next year, I can buy a large sum...because I believe uranium is not done, and should be at least worth $30/share, where I plan to sell it.  My last point on this subject...I bought Cameco...the leader in the uranium sector.  This makes it a bit more stable and long term.  I can hold it longer till I see the trends I want.  

I also use and bought Aeroplan.  They pay 5% dividend...and Im up on this, but lately I've been using them less, my interest is dropping, so I will sell when I get the percent I want...no timeline here.

Last, Suncor has been good to me.  Good dividend payer, and a leader in the oilsands.  I sold half of my stocks when it was at $41...I bought it at $30...not bad:)  Unfortunately, this is not a long hold for me, so when it hits the 40s again (give it a year?)...I will sell and move on.






Numbers...they are a fun thing haha.  Im sure the 2-3 people reading this are bored out of their mind...as I have said, my friends tend to not be interested in this sort of thing.

2 comments:

  1. BEN Can you tell me how you calculated the 25% return on Shoppers Drug Mart? Dad

    ReplyDelete