Money While You Sleep 2020 February Edition

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Hello all and welcome to “Money While you Sleep February Edition”. We this month has really showed us how the market can change rather quickly. The Coronavirus has shaken not only the stock markets but people’s lives. I really hope they get this under control. When it comes to investing at this time it’s really important to ensure your buying really great companies that don’t have too much connection to the Coronavirus. That doesn’t mean they shouldn’t be on your watch list just keep in mind there is a high chance that revenues will miss substantially over the next quarter or two minimum. Let’s take a peak at Air Canada for example: (although it doesn’t pay a dividend) This was a stock on fire that sinces its lows in the $7 area went all the way to $51 by the end of 2019. This was an increase of over 610%. That’s pretty impressive if you asked me. Then the news came out of the Coronavirus and the stock took a nose dive and continues to go lower. At the time I’m writing this (Feb 26) Air Canada is now trading at $34.92. So in two short months it has dropped over 31 percent from recent highs, crazy! You can see that the virus has already impacted companies and they haven’t necessarily come out and stated what the impact will be on the business.This is why it’s so important to know what’s going on in the world and to continue to learn what is impacted by an event. I’m confident a company like this will recover over time however it’s difficult at this point to tell how long until they get this Coronavirus under control. I do know for sure that although many are cancelling their flights those same people still have a power bill, gas bill, phone bill, car insurance, home insurance and the list goes on and on. If your going to buy into this market you should be considering what sector has been punished unfairly due to market reaction and be buying those companies. Before I get into the portfolio details here is what we have been up to.

This was a very hard month for our family as we lost our Grandpa Cam. He was a good man, served his country proud and we will miss him dearly. Take care of Grandma up there!

Here are a few highlights from this month

• My beautiful wife Maria celebrated her 34th birthday by having Sushi by Vinh which basically Vinh comes to your home and makes the best sushi for a party up to 20 people, highly recommended if your in the Edmonton area
• Family time

Portfolio details:

Well the portfolio did not perform how we’d like it to (Except dividends continued to come in) however you cannot control what went down in February, what you can control is your emotions. I see this as an event that should not exceed more than a year, so to me this is the opportunity over the next coming months to add in the portfolio. We made a minor move which i will discuss below. As we add new money in over the next few months we will be adding to more great companies.

Sold

Full position of Sleep Country Canada ZZZ by selling 59 shares at $20.80

My Why: Although I like this company I really wanted to add to another so this one left the portfolio for now. As i write this it’s attractive again ( Feb 26 $18.74) due to the sell off of the market. They own Endy which has worked out for them big time as it gave them an online presence that they didn’t have before. The only knock that i can see is they have many stores that seem empty nowadays. Sold this at a small profit plus dividends however has not performed as well as I’d like. I’d also note that we sold after the ex dividend date so we will get one final paycheque.

Bought

Added to our position in Manulife by adding 50 shares at $26.10

My why: As you can see from my watch list MFC was my number 1 pick in January. They currently have a great PEG ratio of 0.64 well below it’s competitors SLF (1.03) and GWO (1.24). They have the lowest payout ratio of the 3 at 36.1% (SLF 47.73%, GWO 66.27%) and the lowest PE ratio of 8.44 (SLF 14.08, GWO 13.10). They recently increased the dividend by 12% and have shown investors that they have improved the business over the past few years. We purchased this before the ex dividend so we will be receiving the dividends next month along with ZZZ that we sold. Double dividend!

Dividend increases and decreases

• Suncor (SU) increased the dividend by 11%
• Manulife (MFC) increased dividend by 11%
• Royal Bank (RY) increased dividend by 2.86%
• Brookfield properties (BPY) increased dividend by 0.76%
• TD (TD) increased dividend by 6.75%
• CIBC (CM) increased dividend by 1.4%
• No cuts this month

Now that is a month of increases that I like to see

2016 – 2017 – 2018 – 2019 – 2020 Dividends received

In February we received $164.15 Which is an increase of 17.5% when you compare to last February. We have set a goal of $3,100 for the year. The increase we received from 6 companies alone in February will give us a huge boost for the remaining months in 2020.

Dividends received in TFSA 1

Stock List	February
ZZZ.TO	$11.51
FRU.TO	$5.99
GH.TO	$5.18
SIA.TO	$13.26
CJ.TO	$4.08
EXE.TO	$6.92
TOG.TO	$9.23
CSH.UN	$11.10
ALA.TO	$5.36
CHW.TO	$7.00
PLZ.UN	$9.47
ARX.TO	$9.05
NPI.TO	$14.00
CHR.TO	$15.52
SIS.TO	$4.98
RY.TO	$31.50

Top 5 stocks on Watch List

#5 Canadian Natural Resources Limited (CNQ) New to the list bumping out NTR

At the beginning of the year Imperial Oil was on top of my Oil and gas picks however due to the recent pullback CNQ has become more attractive from a value perspective. At the current price they have a PEG ratio of 1.39, PE ratio of about 10, payout ratio of 42.8% and did i mention they know how to make money? They have been hitting double digit profit margins and return on equity of over 11% on a TTM basis. They beat EPS expectations for the first three quarters of 2019 and we will see if they can keep that trend going as they will report on March 5. If your looking for an oil and gas stock, this one should be on your radar.

#4 NFI Group (NFI) Moved from #3 to #4

These guys have a great Moat and are far away from their all time high. They continue to receive bus orders globally as governments look to move to diesel/electric options. 2019 was a terrible year for NFI. They have a crazy back order though. Watch the year end results closely as this will be one you may want to pick up, they report March 12 and personally I’m hoping for a weak quarter so I can pick away at it.

#3 Exchange Income Corporation (EIF) Moved from #4 to #3

I’ve owned this in the past, one of the best stocks I’ve ever held. With the news regarding Coronavirus this may get a bit cheaper although its already down from where it was a month ago and would probably be a good time to step in and nibble away. Great management, always over delivering which they did again when they reported on Feb 20 and a juicy dividend just over 5%.

#2 Canadian Imperial Bank of Commerce (CM)

CM has not performed well in comparison to other banks however they are a value pick. Current PE ratio is 9.22 and a juicy dividend of over 5%. You can read about them in my recent post by clicking here which goes into detail on valuation: https://www.labourtoleisure.com/money-while-you-sleep-2019-december-edition/

#1 Manulife Financial Corporation (MFC)

In the last recession MFC left a bad taste in peoples mouth as they didn’t fair well however they have been meeting expectations for quite some time now and it looks like potential shareholders are starting to come back. They just announced a juicy 12% increase on the dividend which is as expected from last month’s post .PE ratio is quite attractive and still lagging competition. Growth in China is expected to continue to rise, although the Corona Virus could slow this down. US side of things look like they are improving. and Canada has been flat.

I’m looking for more companies to do research on so if you have some that look attractive in this fairly valued market, please feel free to share. See you next month and remember:

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.