Thursday, July 24, 2014

Dividend Growth Portfolio, June 2014 Update

Soooo... we're now past the half way point in 2014. It's felt like a really long 6 months. A lot has happened since New Years 2014.

The year started with tiny Latvia officially adopting the Euro, and becoming the 18th member of the Eurozone. We then had the Winter Olympics in Sochi, Russia, which was filled with typical Olympic controversies (judged competition scandals, ballooning costs of hosting). This was immediately followed by civil unrest in Ukraine, and the annexation of Crimea by a belligerent Vladimir Putin. Kind of made you wonder if they were just waiting for the Olympics to finish... And to think... its still only February...

Just as the world was trying to figure out Ukraine, MH370 went missing with 239 onboard, a Korean ferry capsized and killed 290, and 276 women and children were kidnapped and held hostage in Nigeria. We then had a fantastic World Cup, one of the highest scoring ever, which made it incredibly fun to watch. The climax was when Germany embarrassed the hosts 7-1 on home turf. Lucky for Brazil, Argentina did not win on their soil. Now that would have been really embarrassing.

Now, as July is wrapping up, we have Israel and Gaza going at it again, and yet another Malaysia Airlines hull loss. Honestly, I feel really bad for these guys. TWO hull losses in 4 months? I've never heard anything like it...

It is only July and I feel like we've had enough world events to last me half a decade. Fortunately not a lot has happened to my portfolio in this time. Just some minor tinkering here and there. Personally I believe the stock market overall continues to be at or near full valuation. This does not mean there are no good investments out there. It simply means you have to be more selective, and work harder to find the attractive investments.

If all else fails, blue chips are still within their full valuation band. Recall that one of Warren Buffett's most famous quotes is that it is better to buy great companies at fair prices than fair companies at great prices. You could certainly do a lot worse than buying KO at 22x or JNJ at 20x. These are the types of businesses that will provide above average returns even if you are unable to buy them at bargain prices.

That being said, someone who invests in individual stocks is always attempting to find undervalued companies to buy. Especially so if they are a dividend growth investor, because it allows you to pick up a larger income stream for a cheaper price. So here are 5 stocks which I believe are attractively valued, and could be your next potential investment.

  • Procter & Gamble
  • Baxter International
  • Rogers Communications
  • Enbridge
  • McDonalds

As always, please do your due diligence and independent research before making any investment decision. Past performance is no guarantee of future returns.

Now that we've gotten the chit chat out of the way, let's take a look at the Dividend Growth Portfolio's Q2 update.

Monday, March 24, 2014

Dividend Growth Portfolio, March 2014 Update

2014 has certainly been an interesting year so far. Thus far, as Q1 is coming to an end, TSX has been outperforming the S&P 500 to the tune of 5%. But wait, all performance is not the same. Since January 1, CAD has depreciated some 6% against the USD. Each Canadian Dollar only buys 0.893 US Dollar now. What does this mean for Canadian investors?
  • higher cost of imported retail goods
  • higher cost of fuel
  • higher cost to invest in US equities & other US dollar denominated assets
  • higher cost of cross-border shopping
  • paper gains on US dollar assets
Perhaps this is a good time to convert some USD back to our monopoly money (trust me you'll miss having color coded money if you live in the US long enough!) 

Saturday, February 15, 2014

McDonalds Analysis

The McDonald's name and brand needs no introduction. The "golden arches" company is the world's biggest quick serve restaurant operator. In many parts of the world, McDonald's is a symbol of an American way of life. In poorer areas of the world, McDonald's is also a safe bet for a clean washroom and cheap meal.

  • The world's largest quick serve restaurant
  • Over half the countries (119) in the world have a McDonald's restaurant
  • 35,000 locations world wide, serving 68 million customers each day
  • a leader in increasing the standard of service in emerging markets

Unlike Johnson & Johnson which has a myriad of subsidiaries & products, McDonald's concentrates on its core competency, serving delicious food quickly for a reasonable price! McDonald's strength is not just the corporation itself, but owner/operator franchisees. Many of its now famous products were invented by owner/operators, such as Big Mac (1968), Quarter Pounder (1971), Egg McMuffin (1975), and Canadian developed McFlurry (1997).

Saturday, January 18, 2014

Johnson & Johnson Analysis

Johnson & Johnson is the world's biggest diversified health care company. Its roots can be traced back to a surgical dressing company founded in 1886 by brothers Robert, James, and Edward Johnson. Nearly 130 years later, the Johnson & Johnson (JNJ) family of companies includes:

  • The world's 6th largest consumer health company
  • The world's largest medical devices & diagnostics company
  • The world's 5th largest biologics company
  • The world's 8th largest pharmaceuticals company

The company is organized into 3 segments: Consumer, Pharmaceutical, and Medical Devices & Diagnostics, representing 20%, 40%, and 40% of total revenues. JNJ is a S&P500 dividend aristocrat, has paid an uninterrupted dividend since 1944, and has increased it for 51 consecutive years. Only 15 companies in the entire world have managed to raise dividends for more than 50 years each. JNJ is truly among the elite companies of the world.