Tuesday, 5 July 2016

New Milestone and a Sell

Although it may be short lived, my dividend growth portfolio finally popped over $400,000 CAN, $30,400 of which is in cash (my non-registered account cannot be seen on the screen shot below because I have to scroll down to view it).



Last week, I unloaded my 100 shares of UL @ $48.07 because
1. the PE is in the mid 20's.
2. the dividends received have decreased over the last two/three years (due to forex).

Q1Q2Q3Q4
2014$0.3654$0.3938$0.3842$0.3637
2015$0.3253$0.3140$0.3232$0.3385
2016$0.3246$0.3598??

3. given Brexit, i don't believe the Euro (in which dividends are declared) is going to appreciate relative to the USD. So dividend payments in USD will continue to be low for some time to come.
4. my average dividend yield analysis shows that $40 is a fair and $35 is undervalued. So $48 is a little high.
5. i don't understand why the stock suddenly rallied to $48. It might be due to Mondelez making a bid for Hershey.

6 comments:

  1. Congrats on crossing $400k. Even if it's short lived that's a huge capital base to work with. FX is a pain sometimes because of exactly what UL's dividends are going through. Growing every year in the home currency but declining in your payouts. I typically just try to ignore that because it'll eventually turn the other way but FX concerns will continue to persist for non-Euro based investors especially US. Any thoughts on what you'll put those funds in?

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    1. Thanks PIP. With the recent bounce in the market, I'm not sure what i'm going to buy. Although CVS and AXP are attractively priced, I already have a lot of low dividend yield stocks and would like to find an undervalued stock yielding +4%. Maybe more Telus or TD.

      Take care.

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  2. My valuation on UL was exactly the same as yours, so while I was watching it during the Brexit rollercoaster I did not pull the trigger is it never approached those levels.

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    1. I noticed that as well. Below $40 I would have probably bought an additional 50 shares. But VOD got hammered like no tomorrow! If not for UL, there will always be opportunities. Good luck.

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  3. ADY,

    I am feeling the same way about VZ right now. It's hard to believe that it is rapidly approaching $60.

    MDP

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    1. I guess it's ok for a stock to command a premium if there is significant growth in EPS (or a very good aquisition) over the next couple years, but I don't see this for UL. I cannot speak for VZ, but if EPS growth isn't there...

      I noticed you picked up some very good companies at very reasonable prices. Very happy for you.

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