After selling HNZ, I purchased 21 shares of TD in my ROTH IRA for $82.42 per share. I like Toronto-Dominion Bank because I trust them. TD has been paying dividends since 1857... try to wrap your head around that! That is freaking pre-civil war people! Pretty crazy. They didn't cut the dividend during the recent financial meltdown which is also very important to me. Even though TD is Canadian they do a lot of business in the U.S. In a way I feel like I'm sort of getting an American bank run the Canadian way. If the housing market does implode in Canada TD has diversified into the U.S. too. I have confidence in this institution. If dividends don't lie... 156 years of dividends is the truth.
TD shares are undervalued by pretty much every measure I use. DDM, average historical p/e, FAST graphs, morningstar, etc. I still have a buy price of $80 on this stock but decided to pay a little bit extra since I was forced to sell Heinz.
In the end this transaction will increase my yearly passive income by only $15. It's not very significant. TD should grow dividends at a pace that meets or exceeds what HNZ would have done.
I'd like to pick up another company in the food industry now that I'm left with just General Mills. I've started looking at KRFT which is a powerhouse collection of brands. I need to learn more about the business, specifically the dividend policy. I started listening to KRFT conference calls. I'm impressed so far.
Nice move. If I bought another bank I'd definitely look to Canada. Their banking system is top notch and pay nice dividends.
ReplyDeleteI just posted my new purchase with the HNZ proceeds, I ended up getting GIS. I was also looking into KRFT. You have to love their high dividend.
Nice move too! GIS has been about as steady as they come. Every time I buy groceries something in my cart is made by General Mills. Cheerios ftw!
DeleteCI,
ReplyDeleteNice buy here. I recently bought a bank too. Great minds think alike!
I think most banks are pretty cheap right now, and TD is no different. That said, however, they've all had pretty big runs with the general market.
Either way you made out huge with your HNZ position, and now you're rolling it into a company that is cheap and it also increased your dividend tally. Awesome!
Let me know what you think of KRFT. Not sure if it's going to be a dividend growth play, but the yield is very nice and I like the produce lineup. MDLZ should be the better growth play, but without such a low yield and the same questions surrounding the growth of the dividend, KRFT would be my play for now. Great products with these companies.
Best wishes!
I'm not interested in MDLZ at this time (yield). KFT was in the middle of a long freeze before the spinoff. That concerns me. You can't argue with the brands the old KFT owned, but a long freeze didn't fit my strategy.
DeleteThe new KRFT has my attention. The conference call from a few days ago stated that they plan to consistently grow dividends in the mid single digit range. A quality company with a 4% yield growing ~5% per year sounds good to me. I have yet to look at the financial statements, but I think I want in on this one! Especially since I lost HNZ.
I plan to let the smoke clear in the food industry for a bit then see what happens. The HNZ deal seemed to lift everybody.
TD is a solid company. My sister works for them and owns some shares. You may get a chance to average down when Canadian real estate takes a nose dive in the coming year(s). It's hard to say how the banks will be affected because the Canadian government insures a shit load of risky mortgages; almost $600 billion! I've been saying housing prices are over the top since 2008, but prices keep climbing; it's different here...ya right. On another note, I love Kraft products and bought shares soon after Josh Peters of morning star added some to his portfolio. I based my purchase on a 4.4% yield + a 4%-6% dividend growth rate. If Kraft does not grow its dividend, I will not hesitate to sell.
ReplyDeleteThanks for the information. I think TD will be ok. They've been through pretty much every scenario possible in the past 150 years. World wars, depressions, recessions, you name it. The lending practices are much stricter than what is allowed in the wild wild US. Doing a lot of business in the US could help to dampen the situation since the housing crisis has pretty much run its course. I'm likely done buying TD for a while unless the stock price declines tremendously. I broke my buy target here, but I made out like a bandit with HNZ.
DeleteVery nice pick up with KRFT. I do plan to own some shares there, but it will only be a small to medium position until they can prove to me they are serious about dividend increases. There is very little stand alone financial and historical data. I tend to use historical p/e and the like, which is nonexistant. I ran some numbers and came up with a $54 fair value. Based off that I have a $49 buy price. I like the company, but will have to put it on probation for a few years. Sounds like you've done the same!
I like TD and consider it as my next buy. not sure about HNZ, but think, people will eat ketchup won't they? I still like TD better, mainly it is in banking industry and these days it is hard to find a good rep in this industry (after all the dividend cuts, bankruptcies and troubles). Maybe Wells Fargo would be a good candidate, but their dividend is low (I require 3% or more yield).
ReplyDeleteWell HNZ was just bought out, that's why I had to sell it. Average Dividend Yield brings up a good point about the Canadian housing market. He lives there and has first hand experience. Anyways it's something to think about. There are yellow flags for pretty much every single company though. One could argue private labels are the demise of GIS. Unstable Oil prices for CVX. Packaging and regulation for PM and LO. The list is endless. We cannot completely avoid risk, but can buy quality & stability at undervalued prices. And diversify!
DeleteIf you are looking at TD, I recommend putting it in a IRA/ROTH or the dividend will be hit with a withholding tax!
Thanks for advice, I totally forgot that TD is located in Canada, so I will be subject to the withholding.
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