Home » Investing » Put Your Money Where Your Mouth Is: $8,000 Invested

I’ve been doing a lot of talking around this site recently regarding the state of the stock market generally. With +2% oscillations coming almost daily, there has been no shortage of headlines to filter through.

One of our most trusted rules of investing is that downturns represent opportunities. When everyone else seems to be running in the other direction for safety, the long term investor has the chance to lock in high quality assets at good prices. In times such as these, it is time to put principles into action.

Accordingly, the past three weeks or so has seen me invest a total of ~$8,000! This represents the most active period on a volume basis in my investing career. Ultimately, there comes a point where sitting on too much cash has an opportunity cost of its own. After all, the entire reason to hold investment cash is to have it ready to be deployed.

From late August until now, I have purchased a total of four companies* which have each sat on my watch list for years before I have finally gotten around to snapping them up. Let’s consider the purchases:

Telecommunications

This past week I decided to split some cash I had aside into a purchase of two of the big three telecoms in Canada.

I picked up 70 shares of TELUS Corporation (T) for $42.98 per share. With the $0.42 quarterly dividend, this purchase will add $29.40 to my dividend income every three months; $117.60 annually. Also of note is the fact that T has committed to a 10% dividend increase in 2016 as part of its pre-established multi-year dividend policy. This, of course, assumes the company continues to perform as intended and remains within its targeted dividend payout ratio of 65-75%. At the time of purchase, T offered me a dividend yield of around 3.9%.

Subsequent to my purchase of T, I double-dipped by adding Rogers Communications Inc. (RCI.B) for a total of 55 shares at $44.57 apiece. On RCI.B’s dividend of $0.48 quarterly, this purchase will add $26.40 to my dividend income every three months; $105.60 annually. RCI.B sports a dividend yield of roughly 4.3% which, coupled with even mid-single-digit dividend growth, offers me the potential of achieving double digit growth over the longer term assuming dividend yield + dividend growth can be counted on for total returns. RCI.B has been growing through media and content acquisitions. It recently took a large share of the National Hockey League business from BCE which may yet prove to be a huge deal as Canada’s national sport draws a huge number of eyeballs.

I already own a sizeable stake in BCE Inc. (BCE). As a result, I am now overweight on telecoms. Aside from DRiPing, I expect quite some time to pass before I actually get around to buying anymore shares in this sector directly. There are other industries deserving of my attention over the coming years.

As for why I decided to make such a large investment in T and RCI.B while already being invested in the sector, my reason is simple: I was initially going to buy only one of them for the total funds invested (~$5,500), but decided to split it up to hedge my bets since, frankly, they are both high quality companies and I’d rather own both than guess as to which will outperform.

Financials

Bank of Nova Scotia (BNS) represents one of the best stock market assets in Canada, bar none. I detailed my reasons for taking a stake in BNS here. It really doesn’t take a whole lot to recognize the value of a dividend yield approaching 5% on a company with a huge track record of dividend increases which are likely to continue well into the future.

Picking up 25 shares of BNS with the current quarterly dividend of $0.70 will bring home $17.50 every three months; $70.00 annually.

Retail

Wal-Mart Stores, Inc. (WMT) is the name in the retail industry. It has established its dominance in the U.S. market and has been growing itself out internationally. While the company’s recent results have been called into question, I am willing to make a bid that this company will continue selling to consumers for years down the road.

Purchasing 15 shares of WMT on its current quarterly dividend of $0.49 will add $7.35 of quarterly dividend income to my portfolio; $29.40 annually.

I have been on the sidelines watching WMT for a few years now, waiting for the dividend yield to surpass 3%. With dividend growth in recent years and the share price pullback of late, I finally am able to initiate this position in the sweet spot I have been waiting for.

The greatest risk I see for WMT over the decades to come will be online retailing. Companies such as Amazon.com Inc. (AMZN) have been eating at the overall share of bricks-and-mortar businesses for years now and this trend is sure to continue going forward. WMT’s challenge will be to stake its own claim in the cloud to balance the tide as it continues to invest in Supercentres around the globe.

Final Tally

CompanyTotal SharesDividend Yield (%)Annual Dividend ($)
T703.9117.60
RCI.B554.3105.60
BNS254.870.00
WMT153.029.40
Weighted yield of ~4%322.60

I have blended the CAD and USD income at par here despite the fact that the USD exchange would actually add a boon to my current dividend income should I decide to make the transition. However, as part of my broader investment and life goals, I intend to build a few thousand of annual USD income since I live so close to the border and do shop occasionally on the stateside.

Conclusion

I am very pleased to get such a large sum of cash invested in the markets with high quality dividend stalwarts. With each of these positions I intend, as always, to hold them for many decades to come.

What makes the investment field so interesting is that it involves making not only financial decisions, but actually forces us to think decades down the road. When real money is at stake, it turns this from an intellectual game of crunching numbers and asks us to predict consumer trends and keep our eyes peeled as to how consumer sentiment shifts.

Investing in companies such as the four listed above allows me to sleep easily as I am reasonably sure people will continue texting and sharing videos on their smartphones they’ve purchased at a respected retailer and, of course, need to pay their bills at a financial institution they trust.

Adding $322.60 in annual growing income to my portfolio today offers the potential of huge compounding over the decades to come. Considered in the grand scheme of things, this ~$322 represents 6.7% of my $4,800 annual dividend target outlined in my Five Year Plan.

Thank you for reading.

Ryan

What do you think of the purchases I’ve made over the past month? Have I been overzealous?

* T, RCI.B, and BNS were all purchased in CAD on the TSE. WMT was purchased in USD on the NYSE.

Pictures courtesy of pixabay.com

8 thoughts on “Put Your Money Where Your Mouth Is: $8,000 Invested

  1. Alain says:

    Great buys!
    I bought for about 8k of stocks in july and august… just before the market dipped even lower… ahhh it’s hard to timd thd maket. But since then I have been able to add to my Exxon and Emerson holdings at great prices.
    Cheers
    Alain recently posted…Bilan de mes revenus passifs : août 2015My Profile

    1. Alain,

      Good stuff. Thanks for stopping in and keeping up with the journey!

      Take care,
      – Ryan

  2. DivHut says:

    Congrats on such a large amount of fresh capital being deployed and at such a great current yield too. As you stated, the volatility does present us with many new buying opportunities to take advantage of and as in the case of BNS when a yield, that is safe, goes well over 4% you have to take notice. Thanks for sharing.
    DivHut recently posted…Recent Stock Purchase – September 2015My Profile

    1. DH,

      Yeah, BNS at close to 5% is tough to ignore; I know you’ve been aggressive on the Canadian banking front as well. So long as it’s all balanced out in our overall portfolios, these are great yields on our cash flow.

      Thanks for commenting, brother.
      – Ryan

  3. Nice work! I’ve deployed 3 out of 5 tranches into the 10% correction as well. I don’t think, nor do I hope the market will go back much beyond its 10% – 15% intraday correciton lows, but if so, I plan to deploy the final 2 tranches.

    Cheers,

    Sam
    Financial Samurai recently posted…Spraying, Praying, And Missing! Analyzing A Failed Real Estate OfferMy Profile

    1. Thanks for stopping in, Financial Samurai.

      The low prices have given us all an opportunity to get some capital from the sidelines into the game. If you’re planning to be a net buyer of equities, a prolonged downturn will help returns going forward!

      Take care,
      – Ryan

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