Welcome to the August edition of Money While You Sleep. The wild ride continues as we see markets climb yet again.We bought into a few timely new positions.

Here are a few highlights in the month as we enjoy the summer as best as we can:

  • Went camping for a week at Kimbell in Saskatchewan. I recommend if you like camping and beaches
  • Visit with Grandma as she just celebrated her 96th birthday, amazing!
  • Getting ready for back to school and C is pretty excited about going to preschool
  • More golfing.
Z taking a nap on the beach, rough life
Backflips anyone
Enjoying the water
Photo bombing anyone
C is pretty excited about his lunch bag
A visit with Grandma is always special

Portfolio details:

This month the market continued its gains barely as we saw the TSX go from $16,169 to $16,514 which is an increase of 2%. We saw our portfolio outperform the market with a month over month increase of 18%, thanks to some timely growth stock positions and new buys. Note not mentioned below: Sold DND.TO at over a 60% profit.

Sold

None

Bought

Bought a small position in BMO by purchasing 15 shares at $77.99

Who is BMO.TO:

The Bank of Montreal is a Canadian multinational investment bank and financial services company. Founded in Montreal, Quebec, in 1817 as Montreal Bank, its head office remains in Montreal, with its operational headquarters and executive offices in Toronto, Ontario, since 1977

Our why:

If you have been keeping up with the markets you may have noticed that the banks have lagged many other sectors. BMO has also been a bit of a disappointment over the past couple of years. On Aug 25 BMO reported earnings prior to market open and they were solid. They reported EPS of $1.85 beating analysts expectations of $1.71. In current market conditions this is very impressive beat as you can see the stock is now trading above $82 and I would expect for it to creep up a bit more over the next several weeks. BMO pays a very nice yield of over 5%. It may be the banks time to catch up with the market, time will tell but either way i feel comfortable holding.

Bought a new position in MIC.TO (Genworth MI Canada Inc) by purchasing 45 shares at $32.55

Who is MIC.TO:

Genworth MI Canada Inc., through its subsidiaries, operates as a private residential mortgage insurer in Canada. It provides mortgage default insurance to residential mortgage homebuyers, lenders, brokers, and realtors. The company was founded in 1995 and is headquartered in Oakville, Canada.

Our Why:

Genworth has been absolutely crushed since the start of the year. The stock at one time had dropped over 57% when Covid19 became news to us all. As i was studying mortgage insurance a few things came to mind. Mortgage insurance will be needed if you can’t put 20% or more down on the purchase of a new home. With a pandemic going on I’d bet less people that are buying today are going to put that type of money up. I also noticed that homes in my area were selling and read plenty of articles of housing selling like crazy in July than past years throughout Canada. When you combine the research above it made me personally feel that fear had set in and Genworth was feeling its wrath. So on the day before earnings I made the decision to purchase and it paid off. Genworth beat expectations big time by reporting EPS of $1.17 vs expectations of $0.89 (31% beat). The market liked it as the stock is now trading above $36 which is still well below its yearly highs. Genworth pays an attractive dividend of over 5% with a comfortable payout ratio of around 45%.

New position in Barrick Gold Corporation (ABX.TO) by purchasing 50 shares at $37.50

Who is ABX.TO:

Barrick Gold Corporation engages in the exploration, mine development, production, and sale of gold and copper properties. It has ownership interests in producing gold mines that are located in Argentina, Canada, Côte d’Ivoire, the Democratic Republic of Congo, Dominican Republic, Mali, Papua New Guinea, Tanzania, and the United States. The company also has ownership interests in producing copper mines located in Chile, Saudi Arabia, and Zambia; and various other projects located throughout the Americas and Africa. Barrick Gold Corporation was founded in 1983 and is headquartered in Toronto, Canada.

Our Why:

As I’m sure your all aware Covid19 has put a lot of uncertainty in the economy. Many businesses are struggling, Government spending (handouts) are through the roof and it looks as though this is far from over. There will come a time when the Government closes the tap on programs such as CERB and my gut is telling me that were in for a long recovery. I’ve talked briefly in past posts about Gold and Silver and that I’d like to have a % of our portfolio in it to hedge against the almighty dollar. I’m a little late to the party as I never pulled the trigger back in April however not much i can do about that now. So when searching the sector Barrick sticks out like a sore thumb. Not only are they making money (currently have 3.7 billion in cash) they also have very little short term debt, have met or beat expectations for 6 straight quarters , knocked off 25% of their debt in the second quarter alone, doubled the dividend since May of 2019 and has a payout ratio of less than 10% which can easily manage increases in the future. This tells me Barrick knows what they are doing and I’d expect the uncertainty in the market to fire Barrick over the next several months. Last thing to consider is Warren Buffett one of the greatest value investors of all time that has in the past had no interest in the gold market made a position in Barrick. Makes you really wonder what he sees coming in the future that he would change his mind!

Dividend increases and decreases

  • No Raises
  • No Cuts

2016 – 2017 – 2018 – 2019 – 2020 Dividends and Rebates received

August dividends came in at $143.04 which is a slight decrease year over year due to dividend decreases and portfolio moves. Our next big month will be September and should keep us in line with our goal of $3,100 in annual dividends.

Dividends received in TFSA 1

Stock ListMayDrip
FRU.TO$1.76No
SIA.TO$13.65Yes
EXE.TO$7.12Yes
CSH.UN$15.71Yes
ALA.TO$5.36Not enough
PLZ.UN$9.85Yes
NPI.TO$14.10Not enough
SIS.TO$5.17Not enough
EIF.TO$6.84No
PIF.TO$31.08Yes
Total:$143.04

My thoughts moving forward

Current economy conditions

Unemployment rates are starting to improve by going from 12.3% in June to 10.9% in July, the consensus for August is set at 10.1%, we’ll see. As long as the feds continue to print my gut tells me we will see the stock market perform well however once the taps are shut off we will get the reality of what it will all look like and it probably won’t be pretty.

Careful where you put your money

I believe its good to have some money on the sidelines however if your in the market for the long term and are buying solid companies that number doesn’t have to be large. We are currently at 10% as we like to be able to take advantage when the right opportunities present themselves. Be very cautious on what sectors your putting your money in. It’s not hard to look around or talk to various people in different sectors to understand which ones are struggling. This is your hard earned money so do your due diligence.

Sectors I like

Its not hard to see that cloud based technology is here to stay. Many of these companies are booming as governments have vocally and financially started to support the industry. So here are the sectors I currently like under current market conditions: Financials, Communications, Healthcare and utilities.

What to look for

As I mentioned last month continue to check those balance sheets as they are changing quite quickly. Do you see liabilities moving from short term debt to long term debt? How much cash do they have? Do they have more assets than liabilities? Have they done any public offerings? Why are they doing it? To grow or to pay off debt? This is information you need to know, keep digging until you understand.

Does the company have any catalysts that could provide growth in the future? Has there been a massive change in revenue, why? How did the company manage in the last recession? Do they pay a dividend, whats the payout ratio? Do they continue to increase dividends over time? Have they cut the dividend before and how often? What is their current payout ratio? Is the company raising cash just to pay those dividends? Dilution is not always the solution!

Current companies I’m watching. I own some of these but don’t have a full position that’s why they are still on the list.

PIF.TO, ARE.TO, RY.TO, EQB.TO, MFC.TO, SLF.TO, NWH.UN.TO, FTS.TO,CPX.TO, AQN.TO, T.TO, NFI.TO,BCE.TO, POW.TO, MIC.TO,DOC.V, NEWU

As Warren Buffet would say:

“PRICE IS WHAT YOU PAY. VALUE IS WHAT YOU GET. “

Invest in yourself

Brian

Disclosure:  I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. Please ensure you do your own research.

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Money While You Sleep 2020 August Edition


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4 thoughts on “Money While You Sleep 2020 August Edition

  1. Nice Brian

    I also had a slight decrease in income. All good its a long term game.

    Nice purchases, I also added to my bmo position not to long ago.

    We are starting to see some red in the market again which is refreshing. The market is a little ahead of itself imo.

    Im looking at adding to our positions in either qsr, rio, smart centers or nutrien this month..

    while rio and smart may be higher risk the risk/reward ratio is too tempting and riocan is having their pivot residential building (361 units) done construction fall 2020. Got to love that they are diversifying away from retail.

    keep it up
    cheers

    1. Ain’t that the truth. Time on your side is a good thing!

      Markets had to cool at some point, some profit taking in the tech sector hopefully brings capital to some of the blue chip companies.

      QSR is a good one for sure, talk about market share! The others are good as well just get nervous when it comes to commercial real estate as many big companies are liquefying and sending employees home to work for at least the near future. I like Riocan diversifying forsure.

      All the best and thanks for you input!

      Brian

  2. Nicely done Brian. Nice purchases in August. You’re right, cloud based technologies are here to stay and companies in this sector are going to prosper in the long run.

    1. Thanks Tawcan

      Cloud based technologies should have some legs for the next year with a great long term platform!

      Brian

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