Flipped 3 Penny stocks for long term holds.

In November I decided to put just over $2,000 into 2 different Marijuana stocks, knowing full well this was a short term play/gamble.

I purchased 7100 shares of LGC Capital ($LG) for .14
I purchased 4000 shares of National Access Cannabis ($NAC) for .20
I had also previously purchased 2500 shares of Nutritional High ($EAT) for .25

Total cost of purchasing all 3 including commission: $2448.85

This week I liquidated all 3 holdings for a total of $7816.41 after commission.

Total Gain after 2 months of holding: $5367.56

Although these are obviously great gains especially in such a short period of time – I actually got a bit greedy and should have sold earlier – as I could have made an extra $3000 if I had sold LG a few days prior.  I was originally very interested in holding LGC Capital for the long haul, but after reading a bit more about their chairman, as well as seeing his antics on twitter, I ultimately decided against it as he seemed to be more worried about the stock price, and less worried about the future of the company.

Now I have almost 8k I can put towards some long term holdings, specifically ones that will add to my yearly dividend income.  Over the past few weeks I’ve been doing some research on a few different stocks, and narrowed it down to the following 5:

Northview Apartment Reit ($NVU.UN)

I have had my eye on this stock for about 3 years.  I first started looking at this stock when it was trading around $14-15 dollars and thought it was attractively valued.  It is now trading over $24 and I still think it is cheap.  With a P/E of 7.4 and a payout ratio of under 50% I feel both the stock price and the dividend still have room to grow.  The other REIT’s in my portfolio are commercial/industrial so I’ve been looking to add a residential REIT as well.  The stock currently yields 6.58%.

Interrent Real Estate Investment Trust ($IIP.UN)

This is one of the cheapest residential REIT’s I have been able to find.  With a stock price under $10, this is currently trading with a P/E of 4.4.  The yield is very low for a REIT (2.84%) and has a very low payout ratio as well which makes me think we will see some dividend increases over the next couple of years.  One concern I have with this stock is the lack of diversification (all properties are in Ontario).  Due to its extremely low valuation – this stock seems like a prime candidate for a buyout by one of the larger REIT’s.

Cascades ($CAS)

This company reminds me of one of my recent purchases (Intertape Polymer).  It is a boring, reliable company that continues to show strong profits, but has recently been beaten down by the market for no real reason.  The yield on this one is extremely low(1.17%), as is the valuation.  The 52 week high is $18.20 and it is currently trading just under $14.00.

Western Forest ($WEF)

The lowest priced stock on my list (trading at $2.68) this is a B.C wood producer that has shown consistent profits and has increased revenue over the previous 3 years.  The dividend hasn’t grown in 5 years which is a slight concern, although with a payout ratio under 40% there seems to be some room to grow it in the future as long as revenues keep increasing and they can control their costs.

Power Corp ($POW)

This is another one of those buy and hold forever type of stocks, and also another I’ve had on my watch list for some time.  Currently trading at a P/E under 10, while also paying a generous 4.45% yield makes this especially attractive right now.  Power corp is the holding company of Great West Life (one of the largest insurance companies in Canada and I believe the largest employer in my hometown of Winnipeg).  Power Corp has also maintained a dividend for 20 years, and has increased it’s dividend for 3 consecutive years.

When purchasing stocks for the long haul,  I like always ensure that I DRIP any dividends and like to have enough shares so that I can at least DRIP a full share each dividend payout.  To ensure I could reinvest 1 full share at the current prices, I would need to invest the following into each of the stocks above:

NVU.UN = $4583

IIP.UN = $4181

CAS = $4685

WEF = $356

POW = $2877

So What did I buy? 

In the end I decided I liked the idea of set it and forget it.  I purchased 200 shares of Power Corp which should give me enough to drip at least 2 shares every quarter.  With the remaining cash I only had enough to ensure I could reinvest in full shares of Western Forest so I purchased 522 shares of Western Forest which should allow me to repurchase 3-4 shares each quarter.  Another reason I leaned towards these 2, is that I already have about 10% of my TFSA invested in REIT’s, and I recently purchased a similar packaging company to cascades (Intertape Polymer).  I feel like all of these would have been good buys, but these 2 specifically help with diversification.

These purchases will add $328.56 to my yearly dividend income (purchased in my Tax Free Account).

I am still very interested in adding the other 3 stocks on my list to my portfolio, but unfortunately it will have to wait until I can inject some more cash into my TFSA.

Curious what the rest of you think with these choices – do you think I made the right choice?  Would you have purchased one of the others on my list instead (or some different stocks altogether)?

Advertisements

November Stock Roundup: Intertape Polymer beats on earnings.

This month a few of my stocks have reported earnings:

  • Caledonia Mining
  • Artis Reit
  • Intertape Polymer

While, most of them did well.  I was extremely pleased with Intertape Polymer’s results.  You may recall I purchased ITP just over a month ago when it was near its 52 week low.

Here is what I said in October:

“The business itself is boring, but it has paid and increased the dividend for over 5 years (yields 3.5%)in US dollars, has increased earnings year over year and was trading at a 30% discount to the 52 week high.  I purchased 275 shares @ 19.08.”

The stock had been beat up for no apparent reason, and last week they reported EPS of 0.32 vs the analyst expected 0.29.

Here are some other notes from their earnings report:

  • Revenue increased by almost 18% (mostly due to acquisitions)
  • Net earnings increased from $13 to $19.2 million
  • Adjusted EBITDA increased 15.9% to $32.4 million
  • ITP repurchased/cancelled almost 500k shares
  • Revenue in the fourth quarter is expected to be greater than last year
  • Gross margin & adjusted EBITDA are expected to be greater in the 4th quarter than last year.

All in all, it was a great report, and it looks like the next quarter should be just as good if not better!

Here are a few notes from some other stocks I own that reported earnings over the last week or two.

Caledonia Mining:

This has been one of my favorite stocks for the last few years.  It never seems to get the attention it deserves, but it continues to be well positioned financially, trades extremely cheaply and has a lot of cash on hand.  I hope with their increased cash position & low stock price the company decides to buy back some shares.

  • Increased gold production &  gross & net profit
  • Increased EPS
  • Broke a record for most gold produced in a single quarter
  • Increased their overall cash position – net cash now close to 12 million
  • Plans to extend depth of the mine which should result in 4 extra years of production.

Artis REIT:

Artis is a REIT headquartered in my home town of Winnipeg.  They own buildings all across Canada & the USA.  The stock had been beat up the last couple of years due to a high % of their properties being in Alberta (when oil prices dropped, the Alberta economy tanked & a lot of the buildings lost value/became vacant).  Over the last couple of years they have been selling off some Alberta properties and expanding in the US market.  It looks like this move is starting to pay off.

  • Net operating income from Alberta has been reduced from almost 40% to 25%
  • Because a third of their income comes from USA when the Canadian dollar is weak, the returns are even stronger
  • Reduced total debt to EBITDA
  • Continuing to reduce retail exposure
  • Reported FFO per unit of $0.36
  • Dividend currently yielding a whopping 7.6%. The payout ratio is pretty high, but they should be able to continue to pay as they have been able to consistently reduce their debt.

 

reit stock dividend blog canada plaza reit plz.un

Plaza REIT just gave me a raise (again)!

Just a quick update on one of my favorite REIT’S:

Plaza Reit PLZ.UN just increased their dividend for the 15th consecutive year!  Plaza is one of 2 REIT’S I currently own, and was the first REIT I ever purchased.  Although the retail REIT’s are getting beat up pretty good with the Amazon/online threat, I still like Plaza for the medium to long term as they have a proven history of responsibly increasing their dividends/growing their business.

  Some Highlights from the press release today:

  • Increasing the monthly distribution from $0.0225 to $0.0233 a 3.7% increase
  • Since 2003 the dividend has grown from 8 cents to 28 cents
  • AFFO payout ratio dropped from 82.1% to 80.9%
  • FFO and AFFO per unit increased by 3.4% and 6.5%, respectively

The dividend raise today gives me an extra $10.89 per year in dividends (which will be dripped into more shares).

Plaza is currently trading at $4.36 (very close to it’s 52 Week low) and has traded as high as 5.18 this year.  I think Plaza is still undervalued and anytime the price is below 4.50 is a great buy.  At the current price Plaza Yields 6.3%.

 

 

 

 

 

Recent Buy – Chorus Aviation.

I’ve been on a roll this week.  After no purchases in a couple of months – today I made my 3rd purchase in the last 2 days.

I picked up 268 shares of Chorus Aviation for 8.76.  Chorus is one of those reasonably priced, profitable companies with a monthly dividend that yields over 5%.  Even better RBC direct investing allows this one to drip – so even though I was only able to sccop up 268 shares I should be Dripping an extra share each month as well.

Chorus recently renewed a deal with Air Canada and although it will result in slightly less revenue per year – it guarantees them solid revenue until 2025. They have also expanded  their aircraft leasing side of the business which should start generating more revenue. The dividend looks to be well covered by earnings as well.

I don’t foresee any other purchases for the next couple months (aside from the bi-weekly purchases into my funds).  My portfolio now consists of 11 individual stocks -all Canadian and all owned in my TFSA & 5 funds (held in RRSP).

Updated holdings:

Alimentation Couche Tard
Chorus Aviation INC
Intertape Polymer Group
Algonquin Power
Caledonia Mining
Canadian Western Bank
Diversified Royalty
Nutritional High
Lucara Diamond
Artis REIT
Plaza REIT
US INDEX FUND (RRSP)
RBC CANADIAN EQUITY INCOME FUND (RRSP)
RBC Global Dividend Growth FUND (RRSP)
GWL Advanced ContinuumFUND (RRSP)
GWL Aggressive Continuum FUND (RRSP)

 

Recent Buy(s). Alimentation Couche-Tard & Intertape Polymer Group

I did a customized stock screen last week where I looked at companies with a history of paying/increasing dividends, strong EPS growth and trading at reasonable P/E.  My last post highlighted some of the companies I was torn between and finally today I pulled the trigger on two of them.

Alimentation Couche-Tard  (ATD.B)

I’ve had my eye on Couche-Tard for over a year now, and with the recent price pull back – coupled with the fact I had some cash on hand I figured I had to jump in.  I scooped up 125 shares @ $59.00 each.  Although the dividend only yields 0.61% I think the long term capital growth potential and dividend growth potential will keep me happy for years to come.  I am hopeful they will get into the soon to be legal Marijuana business as well.

The addition of these shares will boost my dividend income by $45.00

Intertape Polymer Group (ITP)

This was a stock I didn’t know much about a couple of weeks ago – but it showed up on my stock screen and after doing a bit more research I thought the price was too good to pass up.  The business itself is boring, but it has paid and increased the dividend for over 5 years (yields 3.5%)in US dollars, has increased earnings year over year and was trading at a 30% discount to the 52 week high.  I purchased 275 shares @ 19.08.

The addition of these shares will boost my dividend income by $192.50 (at current exchange rate).

Both purchases were made in our TFSA so all gains & dividends will be tax free.

I am still keeping my eye on Andrew Peller & Exco Technologies.  Hopefully the next time I have some cash on the sideline they are in my buy range.