Recent Purchase: Laurentian Bank

Hey guys! Just a quick update about my latest purchase. I increased my position in Laurentian Bank by purchasing 28 shares at $44.51 per share. I bought this bank for the same reasons I stated last month, except that I was able to buy it cheaper. At this price, the bank offers a 5.75% dividend yield which is fully covered and safe. I now own a total of 92 shares of Laurentian Bank which equates to 6% portfolio weight. My position in LB is now full, but I also plan to start new positions in other Canadian banks.

For the next few months, I will be looking to average down some of my losing positions. Stocks like Pizza Pizza, Morguard REIT, Crescent Point, and Cominar are really getting attractive.

That’s it for today! Cheers!

My First Investment in Cannabis Stock: FSD Pharma

Hello folks! Canadian cannabis stocks are on fire as of late so I decided to give it a try and invest in that space. Most of the weed stocks are already very expensive, but I found one stock that could potentially multiply just like Aurora, Aphria and Canopy Growth.

The new company I’m talking about is FSD Pharma, symbol “HUGE” on the Canadian Securities Exchange. I believe this company has a perfect blend for success. They are transforming a former Kraft facility into world’s largest, indoor, hydroponic cannabis facility. The facility is on scheduled to be completed in 2019 and the first harvest will start in the first quarter. The balance sheet is in top shape with 31 million cash and zero debt. I don’t know how high the stock can go, but it will be a lot higher in 3 to 5 years. Anyway, I encourage you to visit their website to learn more about their growth plan. If you click on the logo, you will be redirected to their website.

Today I bought 4,000 shares for 49 cents per share. This stock purchase is an exception and will not affect my monthly contributions to buy dividend paying stocks. The purpose of this post is to make you aware that I’m buying something else on the side. If I can make a good return from this investment, I will use the gains to invest in dividend paying stocks. Hopefully it works out! I will not include this stock in my “Portfolio” page because it’s not a dividend paying stock. But I will keep you posted when I decide to sell it and invest the capital in dividend stocks.

Please note that I do not make any buying recommendations. There’s still a big risk attached to this stock, just like any other small cap, penny stock. Please do your research before making any investments. If you believe that cannabis space will be huge in Canada, then all odds are in your favour. And if you do invest in that space, make sure to invest the amount you can easily afford to lose. Just like gamble. But be prepared to walk with a ten bagger out of this deal.

Portfolio Value Update - August 2018

Hello guys! It’s time to share my monthly update about my investment portfolio and dividend income. To be honest, it felt like the month of August was a bit stretched. For me, it didn’t pass as fast as the other months. I was counting the days to finally write this post. August was a great month. My wife and I celebrated our birthdays. We did a few cosmetic renovations around the condo. Daughter started fourth grade and newborn girl turned three months. I also published four blog posts, which is a lot, because usually I post once or twice per month. So I’ve been pretty active on my blog as well. Anyway, let’s talk the stock market. 

Portfolio Value
As of August 31, 2018 my investment portfolio balance stood at $63,463.74. That’s an increase of $2,938.70 from last month. This was the best performing month of all time. The main increase came from the buyout of Enercare (TSX:ECI). When the takeover was announced in the beginning of August, my ECI position went up by $2,000. The rest of the value increase came from my monthly contribution and dividends.

In August, I received $260.18 in dividends vs $224.79 for the same period a year ago. That's an increase of $35.39 or 15% on year-over-year basis. My total year-to-date dividend income is $2,056.53. Last year, it took me ten months to exceed $2,000 in dividends. That’s the power of compound growth! Also, I just wanted to let you know that when I receive dividends from companies that pay quarterly, I split them in three parts and report them on monthly basis. It’s just the way I prefer to do.

Every month I transfer $700 of fresh capital to my TFSA account. I plan to keep that pace until the end of the year. Next year I will adjust my contributions, depending on 2019 TFSA limit.

August was probably the busiest month for capital relocation. I liquidated my Enercare position and bought Canadian Utilities (TSX:CU), Fortis (TSX:FTS), and Brookfield Property (TSX:BPY.UN). A few days later I sold Magna (TSX:MG) and bought Laurentian Bank (TSX:LB). In total, I relocated around $10,000 from one stocks to another. You can always refer to my previous posts to read more about those transactions.

Performance Charts

Thank you for your time and I’m looking forward to read your updates.

My Largest Holding: Killam Apartment REIT

Hello guys! For the past few months, Killam Apartment REIT has been leading the way as my top portfolio holding. Killam is in rental business. The REIT owns residential properties in six Canadian provinces. You may want to consult the company’s website if you want to see their rental properties.

I started to invest in Killam last year when the stock was trading under $13. I purchased 290 shares of KMP between February and May of 2017. At that time it was probably my 5th biggest holding. However, the stock has outperformed all of my other stocks and became number one. This year alone, the stock is up 23% and continues to trade at all time high.

So what should I do with the stock? Can it go higher? Should I trim my position and re-enter at pullback? These are the questions that are going into my head. So let’s evaluate the stock and decide what to do with it.

It’s current P/E ratio is 8.9x which is slightly higher compared to industry average of 8.5x. It’s current P/B ratio is 1.2x, inline with industry average. So based on these metrics alone, I wouldn’t say that the stock is expensive. It looks expensive on the chart, but it could easily go up another 10% from here. I’d put a price target of $17 for this year. I think this company should be traded at a premium because of the high quality properties and sound fundamentals. In fact, I’m ready to invest more money in it if the stock pulls back. They have exciting developments coming along in 2019 and 2020 so that also could be the catalyst for the stock to go higher.

Here are a few high-rises to be developed in 2019-2020. These buildings look very nice and occupancy rate is usually higher in newer buildings.

Let me know what would you do if this was your top holding. Would you let it run further?

New Buy : Laurentian Bank of Canada (LB.TO)

Well, August turned out to be a busy month for me. As you already know, I sold Magna shares on August 8th, and received around $2,250 from the sale. Also, my monthly contribution of $700 was on the way to my TFSA account and the amount got posted today. 

So today I had a bit over $3,000 to play with and I decided to buy a bank. I had enough money to buy 64 shares of LB.TO for $47.37 per share. Why Laurentian Bank and not TD, RY or BNS? Well, my decision was purely based on valuations. The Laurentian Bank is the cheapest dividend paying stock compared to other banks. Laurentian is currently trading at P/E ratio of 8.4x and 10% discount to its book value. The current dividend yield is 5.41% and the payout ratio is 44%. How sweet is that?

Here’s the valuation of other Canadian Banks:

Banks P/E Ratio P/B Ratio Dividend Yield %
Royal Bank (RY.TO) 13.2 2.1 3.69
TD Bank (TD.TO) 13.7 2.0 3.45
Bank of Nova Scotia (BNS.TO) 11.2 1.6 4.26
Bank of Montreal (BMO.TO) 13.3 1.7 3.69
Laurentian Bank (LB.TO) 8.4 0.9 5.41

Here’s the chart for the last three years. It’s certainly lagging behind, compared to other banks, but I feel like the stock price is turning around. At some point, it will have to catch up with other banks. Based on its 5 years average, the stock has at least 20% upside potential. 

Your thoughts and critics are welcome. Do you hold Laurentian? Would you buy it here?