Wednesday, 25 September 2013

New Purchase - Baxter International


I originally purchased 75 shares of BAX in May 2013. Today, the share priced dropped significantly, so I added another 25 as my analysis, posted May 18, 2013 shows the price is attractive relative to the average dividend yield.

First purchase: 75 @ $70.90 (+ $9.95 commission); initial dividend yield 2.35%

Today's purchase: 25 @ $66.85 (+ $9.95 commission); initial dividend yield 2.48%

My average cost per share, including commission, is $70.09.

25 shares of BDX will add $41.65 to my forward 12-month dividends, which is now $5,466.28.

Note: The yields above take into account a 15% dividend withholding tax as BAX is held in my TFSA.

Tuesday, 24 September 2013

Sold TransForce


I sold my 100 shares of TransForce (TFI) today @$21.70 because one, the company has held the dividend steady for 6 quarters, and two, my metrics show that it is overvalued. My forward 12-month dividends are thus reduced by $52.00. 

My total return over 23 months is

($1,130.10 capital gain + $88.00 in dividends) / $1,029.95 cost
= 118.3% (net of commission)

I replaced TFI with a “cheaper” but riskier company, which I will write about later.

My analysis of TransForce:

Average Dividend Yield Analysis*

TFI
Year
High Price
Low Price
1Q
div.
2Q
div.
3Q
div.
4Q
div.
Annual Dividend
High Yield
Low Yield
2007
$15.35
$8.92




$1.58
17.71%
10.29%
2008
$9.52
$3.40




$0.74625
21.95%
7.84%
2009
$8.89
$2.78
$0.10
$0.10
$0.10
$0.10
$0.40
14.39%
4.50%
2010
$13.02
$7.64
$0.10
$0.10
$0.10
$0.10
$0.40
5.24%
3.07%
2011
$16.00
$9.76
$0.10
$0.10
$0.115
$0.115
$0.43
4.41%
2.69%
2012
$19.94
$13.00
$0.115
$0.115
$0.13
$0.13
$0.49
3.77%
2.46%
2013


$0.13
$0.13
$0.13
$0.13
$0.52


Dividend reduction; converted to a corporation in May 2008.
6y ave
11.24%
5.14%







5y ave
9.95%
4.11%







3y ave
4.47%
2.74%







5y
$5.23
$12.65







3y
$11.63
$18.98






Super Cheap
$9.93



The table above indicates anything over $18.98 is just too much.

Graham Price

TFI’s 2010, 2011 and 2012 EPS were $1.08, $1.07 and $1.52. 3Y Ave EPS = $1.22.
TFI’s BV is $8.30.
Graham Price = SQRT (3Y Ave EPS * BV * 22.5) = $15.11

Cyclically Adjusted Price to Earnings Ratio

TFI’s 10Y Ave EPS = $1.06
CAPE = Stock Price / 10Y Ave EPS = $22.03 / $1.06 = 20.8
A CAPE below 20 is good.

Conclusion

I really like management, but I like dividend growth more. I would not hesitate to repurchase shares, should they trade at a more reasonable valuation.


*My method is not perfect as the stocks low price may have occurred before the annual dividend increase.

Monday, 2 September 2013

Vodafone, I Must Be Dreaming


I’m not sure what the long-term effects will be for Verizon and Vodafone, but as a shareholder of VOD, I stand to make a lot of money very soon. Information on Vodafone’s investor relations web page says I can expect the following:

Verizon Shares Distributed to Vodafone Shareholders

$60,200,000,000 USD in VZ shares / 4,844,921,509 VOD ADRs
= $12.43 USD in VZ shares per VOD ADR

Given I own 300 shares of VOD ADRs, I’ll be receiving the equivalent of $3,729 in VZ shares (73 to 79 shares).

If I keep the shares of VZ, my forward 12-month dividends will increase by at least $154 USD.

Note: Shares outstanding was taken from www.tsx.com

Cash Distributed to Vodafone Shareholders

$23,900,000,000 USD in cash / 4,844,921,509 shares outstanding
= $4.93 USD per share

My special dividend will be 300 shares VOD ADR * $4.93 USD = $1,479.00 USD

Vodafone Intends to Increase 2014 Dividend

Vodafone intends to increase the 2014 dividend by 8%, to 11p:

0.11 GBP * 10 shares per ADR *1.54 USD per GBP – 0.03 USD ADR Fee
= $1.664 USD per ADR

This will increase my forward 12-month dividends by $34.00 USD.

Conclusion

I must be dreaming;

$32.35 per VOD ADR + $12.43 VZ share + $4.93 Special Dividend = $49.71

Dividend Increases of $34.00 and $154.00 per year = $188.00

I’d like to know how well VOD ADRs will hold up once VZ shares and the special dividend are distributed. Any thoughts?

Sunday, 1 September 2013

Portfolio

I finally took some time, if you ask my wife, too much time, to figure out Google Drive. I've always liked the idea of having an embedded spreadsheet in my portfolio page with live stock quotes.

It was quite frustrating at times, but the result was worth the effort.

I'm half way through Dividends Still Don't Lie by Kelly Wright. It's a pretty good book with a different spin. It boils down to buying undervalued dividend growth stocks and selling them once they've appreciated to a point where they are overvalued. One then reinvests the proceeds in other undervalued equities. This is pretty fantastic in theory; I just wonder how it measures up to buy and hold.