Companies I Invest In? Those With a Future

Investing should be really simple - you buy low and sell high. The problem is that when the 'low' is available, stocks are about as attractive as the girl who did the 100 meter dash in the 90 meter gym. Has the five letter word 'S-T-O-C-K' become a four letter word yet...?

As Canadian Dream: Free at 45 put it, I have been buying up a storm since the S&P 500 index (SPY) plunged really hard in early October. I thought I'd summarize the additions I've made to my non-registered portfolio since the sky came crashing down.

Oct. 6 Alcoholic Beverage Firm, Diageo PLC (DEO) at $58.61 [BEER].

Oct. 9 Integrated Energy Co., Husky Energy (HUSKF.PK) at $33.85 [GAS].

Oct. 16 Utility Firm, Fortis Incorporated (FRTSF.PK) at $31.31 [LIGHTS].

Oct. 22 Financial Services Co., Sun Life Financial (SLF) at $29.37 [RETIREMENT].

These stocks were all yielding at least 4.7% at my time of purchase. This means that I'll be paid at least 4.7% of my money back annually in the form of dividends for my investment in these companies.

It is no secret that the reason I am doing a great deal of buying right now is because I feel there is a lot of really good long term value in the stock market right now. Many of the stocks I've purchased and attempted to purchase were trading at or near multi-year lows, and I feel that their potential to grow their earnings and dividends in the long term are very good. Near term there are currently countless hurdles and issues such as write downs, economic pain, and consumer and investor fear, that are keeping many companies from growing their earnings. It is my belief that the companies in which I am investing will move through this period to excel in the future.

I must take advantage of these low valuations and high volatility in order to truly 'buy low.' Has the market bottomed? Who knows, but I will do my best to buy whenever I see value that is hard to resist when I look out long term. Hopefully I can stagger my purchases enough that when we look back at this period I'd have done at least some buying at the most opportune times to do so. If I'm wrong, my significant income in the form of dividends will be my solace. As long as dividend cuts are rare I'll be quite happy in the long term. I'm no Warren Buffet, but even Warren himself could give you a list of what he is buying right now.

Disclosure: The author has positions in DEO, HUSKF.PK, FRTSF.PK, and SLF.

Comments

[PastTense:]

But if the world economy falls apart, dividends are going to be dropping massively.

2008 Oct 24 07:47 PM

[peachberry_tea:]

don't agree with pasttense
i honestly don't see how companies like diageo and fortis will cut their dividends

people drink in times like these.. and alberta still needs its electricity

2008 Oct 25 04:18 AM

[Paul Killinger:]

I've been kicking myself for the past couple of years over the cash I've been too lazy to move out of an old checking account. Now, however, it's made me a "genius" during this market fall out. Go figure. That makes the latest score - Procrastinator 1, Dedicated Investor 0.

2008 Oct 25 10:58 AM

[moneygardener:]

If every company I own cuts its dividend by 50% then I am probably making some bad decisions by trying to buy quality stocks when they are cheap and yielding more than 4.7%. Are corporations that manufacture branded alcoholic beverages, and produce and distribute electicity likely to be affected by a very weak economy, probably not to th extent that they'd cut their dividend 50%.

For that matter, will insurance companies and banks in Canada be in situations where they'll be forced to cut their dividends? Perhaps, but I am betting that they won't. Bank of America cut their dividend by 50% after losing billions on bad mortgages, etc., yielding over 8% at times, and making two industry changing acquisitions. Canadian financial institutions are in much better shape than any of the major U.S. banks that have faltered or cut their dividends.

2008 Oct 25 12:09 PM

[Diegojames:]

WORLD ECONOMY IS STRONGER THAN CHEAP , CHEATING GOVERNMENT AGENCIES AND WALL STREET FRAUD..... but BUT THIS comeBACK WILL TAKE TIME.

BUT BRANDED VODKa can ease the pain and work in your car. BUY 200 pounds EACH of RICE ,BEANS, ORANGE SLICES, TOILET PAPER and a YURT AND A GOOD DOG AND WAIT IT OUT...because your wife will probably not like this down turn. OH WELL
DIEGO

2008 Oct 25 08:41 PM