I Just Bought Another Dull and Boring Stock
Image courtesy of Scott Adams
I’ve done it again. I’ve bought another dull and boring stock that pays dividends. To help you identify the stock, a little game of “who are they?"
• They are the largest investor-owned distribution utility in Canada.
• They have over 2 million customers.
• Their holdings include natural gas in British Columbia, electric utilities in five Canadian provinces and three Caribbean countries.
• They own hydroelectric generation assets across Canada, in Belize and upper New York State.
• They own a bunch of hotels and real estate.
• They have raised their common share dividend for 38 consecutive years, the gold-standard for a public company in Canada.
• Their net earnings for 2010 were $285 million or $1.65 per common share, a new record.
• Their dividend yield is about 3.4%.
• Their five-year average dividend growth rate is over 13%.
• Their total return over the last five years (including dividends) is over 70%.
As Passive Income Earner once said on his site, “here is the type of graph we like to see when we look at dividends.” Indeed:
Going forward, I only see more good things from this dull and boring company. In partnership with Columbia Power Corporation and Columbia Basin Trust, they’ve got solid agreements to build a 335-megawatt hydroelectric generating facility in British Columbia. This agreement is for 40 years which means 40 years of paying customers for this power, after the facility comes online in 2015.
Our plan is take advantage of the company’s dividend reinvestment plan (DRIP) and share purchase plan (SPP) with Computershare to:
• Buy partial shares, accelerating stock ownership.
• Pay no commission fees.
• Get all dividends reinvested to buy more stock every quarter.
With this purchase, we just completed one goal (# 5 out of a total of 6) in our 2011 personal finance goals. I’m pretty pleased to now own this big, stodgy electrical company :)
Click here if you don’t already know what company I bought.
What do you think of my purchase and our plan to DRIP this stock?
On another but related note, I happen to own a few other dull and boring stocks;one that just annoucned it will split 2-for-1 later this year. Thanks Enbridge.
As always, I welcome your comments on my financial independence journey!
As always, I welcome your comments on my financial independence journey!
My Own Advisor
13 comments:
Nice buy Mark. This one, along with EMA and TRP are on my shopping list. 5 out of 6 goals accomplished and it's only February? You're doing way better than I am. Good luck with #6!
Easy FTS ....lol
Even though it's Canadian Aristocrat, IMHO dividends are too low for this kind of business...
I'm planning to take long position for similar US company, it's provides processing and transportation services to producers and consumers of natural gas, crude oil etc. It has yield more than 5% and rankes as a buy by 90% analysts. a little game of “who are they?" :)
P.S. IMHO now it's not a bad time to invest into US solid companies for a long run, our $ is too overvalued and in 6-9 months will cost less than US one
I'm still working on Goal # 3 - "Clean-up" RRSP Accounts (ETFs instead of high-MER funds).:)
Can you tell which funds you moved into which ETFs?
I find that not always easy to find appropriate ETF to replace mutual fund. For example I hold one Canadian Small Cap who outperformed similar ETFs...
@Gibor - thanks for stopping by! Cleaning-up our RRSP accounts, was our mission accomplished for 2010. Are you doing the same, getting out of mutual funds? :)
I used to own the following funds:
-TD Canadian Equity Fund
-TD Canadian Dividend Income Fund
Fair enough, not always easy to get out of a fund and into a comparable ETF. Care to name your Canadian Small Cap who outperformed similar ETFs? Curious.
Cheers!
@Balance Junkie - thanks :) Actually, just one goal done out of six; goal # 5 from a total of six. I've adjusted my post to make it more clear. I have no doubt you'll accomplish all your PF goals.
Nice buy Mark, you know how to pick those dividend payers :)
I am itching to pick up another REIT, will watch to see where prices go from here...
Well done! I just got my share certificate a couple weeks ago. I am a little heavy on utilities now but I am happy to reap the rewards for the next 20 years.
It is indeed a sweet graph. Thanks for the mention.
@MOA, for example CIBC Small Cap constatntly outperformed XCS (for 3 m, 6 m, 1 y, 3 y , 5y), same situation comparing CIBC Canadian Real Estate vs XRE etc.
For TD Monthly Income another task, there are several ETFs and cannot chose where to move money
@Mich - thanks, I just don't have the confidence nor understanding you do with the oil & gas sector! :) I'd love to buy another REIT. What do you think of Boardwalk REIT?
@Passive - I figure everyone needs energy, transmission or generation companies should be around forever.
@Gibor - TD Monthly Income seems pretty straight-forward to replace, but the decision in yours!
I mean, TD Monthly Income has 40% DEX Universe Bond Index; 50% S&P/TSX. Why not use XBB + XIC (50/50)? MERs = 0.3% and 0.25% respectively.
Beats paying 1.40% MER with TD?
I dunno. I know some mutual funds do have a good track record, I just don't want to own any - a personal choice.
"Their five-year average dividend growth rate is over 13%"
Don't get too excited... FTS Dividend Growth from 1991 to 2005 averaged 3% per year...
Just playing devil's advocate :P
My expectations are for future dividend growth between 5% - 7% per year.
CHEERS
@Think Dividends - I was hoping you'd comment :) Do you own Fortis? You're right, recently, nice gains but long-term Fortis is not so glamourous. Dividend-growth of 5% wouldn't be too bad.