I have been very busy lately due to busy quarter end at work that drained all my energy out of me. Finally the quarter end closing was done, our financial statements are issued to the public and here I am relaxing a bit and got back on writing again. Even though I did not have time to post, I made several transactions in August which I am going to share with you briefly.
I sold all of my VTI holding, I figured, if I am going to keep investing for a long time or forever, then I would switch to stocks from ETFs especially for US and Canadian markets. I am still interested in buying international ETFs to minimize investing complication in the future but it is quite simple to buy individual stocks in US and Canadian markets. By buying individual stock, I can take advantage of temporary volatility on stocks that are in my watch list. I will stick to keep buying US stocks in my RRSP and Canadian stocks in my TFSA and non-registered accounts.
I am not going to lie, VTI was amazing for last one year as I purchased at $104 but due to strengthening US currency, my average cost reduced to $95-$97. I sold some VTI about 3-4 months ago at $110.50 and about a week ago, sold the rest at $108.76. Both of them generated about 10-15% gain for one year while I held which I am extremely happy with. It has been good VTI. So long.
When I got proceed of $26,537 from sale of 244 shares at $108.76, I purchased the following stocks immediately.
1. Alliance Resources Partners LP (ARLP)
Alliance Resource Partners, L.P. is a producer and marketer of coal primarily to the United States utilities and industrial users. The Company operates through four segments: the Illinois Basin, Appalachia, White Oak Resources LLC (White Oak), and Other and Corporate. The Company’s Illinois Basin mining operations are located in western Kentucky, southern Illinois and southern Indiana. The Company’s Appalachian mining operations are located in eastern Kentucky, Maryland and West Virginia. It owns, and operates the coal handling and processing facilities, and provides mine products and services. The Company also develops and markets additional services, including ash and scrubber sludge removal, coal yard maintenance and arranging alternate transportation services (Reuters)
ARLP has fantastic cash flow from operation, reasonable capital expenditures and 10% of dividend rate. It increased its dividend for 13 straight years and its stock suffered about 50% for last 1 year period. What a bargain. Its PE is around 6 -7 and has healthy debt to asset ratio at 30%. I know that coal industry isn’t doing great but if any coal companies survive the temporary industry downturn, then this gotta be it. Long contracts with major utility companies will safe-guard the temporary setback as well as its fundamentals.
Analysts rating shows 2 holds, 2 buys and 1 strong buy.
I purchased 140 shares of ARLP at $24.82.
This purchase will add $378 to my annual dividend.
2.BHP Billiton (BHP)
BHP Billiton PLC (BHP) is an Australia-based mining company having interests in diversified natural resources. The Company mines, extracts and produce aluminium, coal, copper, iron ore, manganese, nickel, silver and uranium, and oil and gas. The Company extracts and process minerals, and oil and gas from its production operations located primarily in Australia, the Americas and Southern Africa. The Company’s assets, operations and interests are separated into five business units, Petroleum and Potash, Copper, Iron ore, Coal and Aluminium, Manganese and Nickel. The Company’s Petroleum and Potash Business comprises conventional and non-conventional operations and a potash project. The Company’s Copper business produces copper and related ores and minerals. The Company’s Iron ore business produces iron ore. The Company’s coal business produces multiple variants of coal. The Company’s Aluminium, Manganese and Nickel business is a producer of aluminium, manganese and nickel (Reuters)
BHP is one of the biggest (market cap of $95 billion) mining companies in the world. It has a great reputation all around however the mining industry has been seeing its downturn for a several years which is great time for me to initiate my position. It has excellent cash flow from operation and has been buying its stocks quite sometime which is also an excellent news. Capital expenditures is reasonable and 7% of dividend rate is great. Its payout ratio is at less than 70% and the company increased its dividend for 12 straight years. Its stock suffered about 50% for last 1 year period (Can’t beat that). Its PE is around 10 and has healthy debt to asset ratio at around 25%.
Analysts rating shows 2 holds.
I purchased 100 shares of BHP at $35.58.
This purchase will add $248 to my annual dividend.
3. CSX Corp (CSX)
CSX Corporation (CSX), together with its subsidiaries, is a transportation company. The Company provides rail-based transportation services, including traditional rail service and the transport of intermodal containers and trailers. The Company has three lines of business: merchandise business, coal business and the intermodal business. The Company’s merchandise business transports aggregates (which include crushed stone, sand and gravel), metal, phosphate, fertilizer, food, consumer (manufactured goods and appliances), agricultural, automotive, paper and chemical products. Its coal business transports domestic coal, coke and iron ore to electricity-generating power plants, steel manufacturers and industrial plants, as well as export coal to deep-water port facilities. Through a network of around 50 terminals, the intermodal business serves markets east of the Mississippi and transports manufactured consumer goods in containers, providing truck-like services for longer shipments (Reuters)
CSX is one of the biggest (market cap of $27 billion) rail-based transportation companies in US. It dominates Eastern US railway network and have great fundamentals. Temporary market setback made the stock very attractive so I pulled the trigger.
It has excellent cash flow from operation and has been buying its stocks quite sometime which is also an excellent news. Capital expenditures is reasonable and 2,5% of dividend rate isn’t too bad. Its payout ratio is at less than 35% and the company increased its dividend for 11 straight years. Its stock suffered about 11% for last 1 year period. Its PE is around 14 and has healthy debt to asset ratio at around 15%.
Analysts rating shows 12 holds, 6 buys and 5 strong buys.
I purchased 120 shares of CSX Corp at $29.60.
This purchase will add $86 to my annual dividend.
4. Chevron (CVX)
Chevron Corporation (Chevron) manages its investments in subsidiaries and affiliates. The Company operates through two segments: Upstream and Downstream. Upstream operations consist primarily of exploring for, developing and producing crude oil and natural gas; processing, liquefaction, transportation and regasification associated with liquefied natural gas (LNG); transporting crude oil through international oil export pipelines; transporting, storing and marketing natural gas, and operating a gas-to-liquids plant. The Company’s Downstream operations primarily consist of refining crude oil into petroleum products; marketing crude oil and refined products; transporting crude oil and refined products by pipeline, marine vessel, motor equipment and rail car, and manufacturing and marketing commodity petrochemicals, plastics for industrial uses, and fuel and lubricant additives (Reuters)
World class oil and gas company being traded at 5-6 years low. I had to pull the trigger. This great company is being sold at 40-50% discount. The discount may not last a long time. Its market cap is $151 billion and it still shows positive net income in 2015 Q2 under this extremely low gas price environment. How fundamentally strong a company has to be to still make positive net income under the circumstance?
Its PE is around 13 and has healthy debt to asset ratio of less than 10%. It pays out dividend 5.3% which is less than 50% of EPS payout ratio. The company increased its dividend for 27 years.
Analysts rating shows 11 holds, 4 buys and 2 strong buys.
I purchased 40 shares of Chevron at $83.20.
This purchase will add $171 to my annual dividend.
5. National Oil Well Varco (NOV)
National Oilwell Varco, Inc. (NOV) is engaged in providing design, manufacture and sale of equipment and components used in oil and gas drilling, completion and production operations. The Company also provides oilfield services to the upstream oil and gas industry. The Company operates through four segments: Rig Systems, Rig Aftermarket, Wellbore Technologies, and Completion & Production Solutions. Its Rig Systems segment makes and supports the capital equipment and integrated systems needed to drill oil and gas wells on land and offshore. Its Rig Aftermarket segment provides aftermarket products and services to support land and offshore rigs, and drilling rig components manufactured by the Company’s Rig Systems segment. Its Wellbore Technologies segment sells and rents solids control equipment; and provides solids control, waste management and drilling fluids services. Its Completion & Production Solutions segment provides technologies for well completions and oil and gas production (Reuters)
Another great oil &gas company at huge discount. Currently traded at 5-6 years low. It has market cap of $16 billion and has strong fundamentals. It bought back 1.8 billion worth of stocks during the last 2 quarters of 2015. That’s more than 10%. The management thinks that now is the best time to utilize their cash from debt to buy back its heavily discounted stocks to give back more to the current shareholders. How can I say no to that? The company pays 4.3% of dividend which is only EPS payout at 35%. It has been increasing its dividend for last 6 years.
Analysts rating shows 4 underperforms, 19 holds, 4 buys and 3 strong buys.
I purchased 76 shares of NOV at $39.52.
This purchase will add $140 to my annual dividend.
6. Norfolk Southern Corp (NSC)
Norfolk Southern Corporation is a holding company. The Company owns a freight railroad, Norfolk Southern Railway Company. The Company is engaged in the rail transportation of raw
materials, intermediate products and finished goods primarily in the Southeast, East and Midwest and through interchange with rail carriers, to and from the rest of the United States. The Company also transports overseas freight through various Atlantic and Gulf Coast ports. It provides logistics services and offers an intermodal network in the eastern half of the United States. The Company’s system reaches various individual industries, electric generating facilities, mines, distribution centers, transload facilities and other businesses located in its service area. The Company’s general merchandise market group is composed of five commodity groupings: chemicals; metals and construction; agriculture, consumer products, and Government; automotive, and paper, clay and forest products.
Another Eastern US railroad company that competes with CSX Corp (market cap of $24 billion) and have great fundamentals. Temporary market setback made the stock very attractive so I pulled the trigger again on this amazing stock. I love railway stocks so much that I will eventually buy all of available railway companies when they become attractive (CNR and CP wait for me a big longer).
It has excellent cash flow from operation (all railroad companies are) and has been buying its stocks aggressively for last several years. Capital expenditures is reasonable and 3% of dividend rate is pretty good. Its payout ratio is at less than 40% and the company increased its dividend for 14 straight years. Its stock suffered about 27% for last 1 year period (Awesome!) Its PE is around 13.5 and has healthy debt to asset ratio at around 25%.
Analysts rating shows 1 underperform, 18 holds, 2 buys and 2 strong buys.
I purchased 34 shares of NSC at $81.99.
This purchase will add $80 to my annual dividend.
7. Union Pacific Crop (UNP)
Union Pacific Corporation operates through its principal operating company, Union Pacific Railroad Company. The Company is a Class I railroad operating in the United States, which has 31,974 route miles and maintains coordinated schedules with other rail carriers to move freight. It links 23 states in the western two-thirds of the country by rail, providing a supply chain link around the world. Its business mix includes agricultural products, automotive, chemicals, coal, industrial products and intermodal. The Company serves United States population centers, operates from West Coast and Gulf Coast ports to eastern gateways, connects with Canada’s rail systems and serves six Mexico gateways. The Company’s freight traffic consists of bulk, manifest, and premium business (Reuters).
My favorite railroad company of all time. Union Pacific Corp (UNP). UNP never stop surprising me. It dominates Western US and there are tonnes of business articles written about this company and its cost cutting measures that made the already solid company to the one of the best managed companies in the World. It has market cap of $75 billion and have solid fundamentals across the board.
It has excellent cash flow from operation (all railroad companies are) and has been buying its stocks aggressively for last several years. It bought back $3.2 billion worth of stocks in 2014 and 1.6 billion worth of stocks in Q1&Q2 2015. Capital expenditures is reasonable and 2.5% of dividend rate is pretty good. Its payout ratio is at less than 40% and the company increased its dividend for 9 straight years. Its stock suffered about 18% for last 1 year period (Awesome!). Its PE is around 15 and has healthy debt to asset ratio at less than 25%.
Analysts rating shows 6 holds, 10 buys and 7 strong buys.
I purchased 36 shares of UNP at $92.68.
This purchase will add $79 to my annual dividend.
8. Walmart (WMT)
Wal-Mart Stores, Inc. is engaged in the operation of retail, wholesale and other units in various formats around the world. The Company offers an assortment of merchandise and services at everyday low prices (EDLP). The Company’s operations are conducted in three segments: Walmart U.S., Walmart International and Sam’s Club. The Walmart U.S. segment operates retail stores in all 50 states in the United States, Washington D.C. and Puerto Rico, with three primary store formats, as well as digital retail. The Walmart International segment consists of operations in 26 countries outside of the United States and includes numerous formats divided into three main categories: retail, wholesale and other. The Sam’s Club consists of membership-only warehouse clubs and operates in 48 states in the United States and in Puerto Rico, as well as digital retail.
One of the most recognized companies in the world. Walmart. The stock is suffering at 3-4 years low. The fundamentals aren’t really suffering. Online retailers such as Amazon can be a threat to WMT but offline retailers will not die anytime soon.
Cash flow from operation is superb and has been buying back its shares aggressively taking advantage of its low priced stock. It has been buying $7 billion of stocks constantly for last 3 years and $1 billion in 12 months ended 2015. It has only 25% of debt to asset ratio, P/E of less than 14 right now. It has been increasing its dividend for outstanding 42 years and currently provides 3% of yield (Only 40% of payout ratio).
Unfortunately, I purchased right before significant drop due to lower than expected last quarter performance but it is what it is and it would not make much difference as I will probably hold this stock forever as long as the fundamentals are strong.
I purchased 50 shares of WMT at $71.80.
This purchase will add $98 to my annual dividend.
All the purchases were made in just one day. Could have been better if I waited a bit but who really knew the market would drop like that. If I knew, I would have been a billionaire by now. 🙂 I will update My portfolio page reflecting all the changes shortly. All the purchases add approximately US$1300 to my annual dividend income. Can you believe that? That’s at least $110 passive monthly income that will be given to me year after year. Highly likely $110 will get bigger as time goes by. What a life! That’s it folks. Thanks for stopping by and as always, have a great day!
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Some very solid buys man. Way to deploy that much cash for dividend stocks.
Thanks, Tawcan. It felt really good reallocating the capital for sure. Hopefully things go well for my picks forever!
Awesome purchases BSR. Good play. You can always buy VTI again so all good. Love the play with all these find Quality Companies. Way to add 1300 in Dividend Income and nice swap since you were only getting around 450 dividend income from VTI.
Thanks for sharing and always a pleasure reading your posts. Hope you squeeze in some time here and there to update us with your life. Cheers bud.
Thanks, Dividend Hustler. VTI was good but I wanted to buy and hold individually depressed stocks. As you said, I can buy VTI whenever I have spare cash and nothing else to buy. There are so many bargains nowadays which is quite exciting but at the same time nerve-racking. Really appreciate for your comments and I feel great that we are doing this together! Cheers!
Wow! Some great purchases here, BSR. Lots of railroads – which is a great move at these prices. Congrats on adding some quality companies at fantastic prices.
Some new ones here for me .. will need to check em out. Thx for sharing
Thanks R2R. Since railroads aren’t going anywhere, I figured this is a great time to buy all of the major railroads of USA. Great long therm value for sure. Thanks for stopping by R2R.
Nice move there. You swooped in and grabbed some great companies at some really solid valuations there. Would have loved to have nailed UNP in the low $80s like that. Awesome work.
And that’s a big boost to your annual dividend income. Closer and closer! 🙂
All the railroads including UNP are currently traded at excellent prices and I had to pull the trigger to just buy them all Haha. VTI was good and all but I think I made a right choice to switch into stocks for US market. My dividend is getting higher for sure and I am loving it!
Thanks for stopping by Dividend Mantra. It is quite an honour.
I have NSC, wmt, unp, I’ll pull the trigger on oil stocks at some point, waiting for the signal from OPEC. Mr. Buffett had put in $4B into Phillip66, so he’s probably see oil near or at the bottom.
NSC, WMT, UNP all great companies for sure. Glad to be a fellow shareholder on those amazing companies. I have been focusing on oil&gas related stocks (whether directly or indirectly) and will continue to do so until the time comes. The time will come for sure sooner or later. Cheers and Happy hunting!
Holy rail stocks batman! I too recently got 25 Walmart shares @ 66.10. I also bought XOM recently. I was debating between XOM and CVX. CVX seemed like more of a bargain and sported a higher yield, but I had to go with the larger of the two oil giants. I have been looking at rail road stocks as well, but I just haven’t bought any yet. With the coal sector being pummeled I was concerned that it would effect the rail industry in the long run. Any insight? Nice stocks all around!
Yeah, I thought railways are not going anywhere so I closed my ears and purchased them. Only issue was whether to just own UNP or with other railways. 🙂 I wanted to buy XOM as well but did not have enough fund to allocate. XOM and CVX both are very attractive at this point in my opinion and they sales would not last. Coal sector has been plummeted for sure but railways will still find different ways to increase their earnings. Low oil prices would negatively impacted the railways as well due to trucking getting cheaper than before. I bought a coal company called Alliance Resources Partners LP (ARLP) this time believing that this coal giant will buy other smaller unsustainable coal companies at super cheap price if coal sector keeps being hammered like this. Peter Lynch once said, he likes no-growth and slow growth industries as survivors basically will dominate the market and no or less competitions will jump in. We will see how the purchase goes but I am happy with the purchase for sure!
I thought I posted a comment, maybe it didn’t go through… Im a bit new to this. I wanted to applaud your purchase of CVX & WMT, I think they will be great long term holds. Do you have any take on declining coal sales and prices due to the new regulations and cheap nat gas, and do you think it will have any significant effect on the rail stocks future earnings? Thanks!
I think railways would be fine. Living in big countries like US and Canada, nothing can beats the efficiency of railways. All I can think of is I wish I made railway purchases a long time ago. 🙂 But I guess it is never too late as I expect to suck the fresh honey out of them probably forever. Haha Thanks for stopping by Andrew. Cheers!
Wow… you are hitting the rails hard. Can’t blame you. They all have taken quite a beating in recent weeks and are sporting much better valuations. You are certainly in good company as many DGI bloggers have been buying into various rails too. These buys will enhance that dividend snowball of yours nicely.
Hi DivHut, Gotta love the railways due to their attractive valuations and fundamentals. On top of that, nothing can beat the prices that I paid. Can’t wait to squeeze the juice out of them. Cheers!
Pretty busy recently, eh? I’m glad to see that I owned two of the stocks you just purchased: CVX and NSC. I like you deployment in the railroad industry considering how railroads have been slammed over the past several months. The 3 RR you selected are the major pillars of the industry and aren’t going anywhere anytime soon, so why not take advantage of this short-term pullback to initiate a position and watch it grow over the years as you hold and collect the dividend check.
Great job and keep on pushing towards financial freedom!
CVX and NSC are really sweet railways.and now all you need is to initiate your position on UNP to monopolizing railways. 🙂 I totally agree, the railway stocks are not going anywhere anytime soon. No matter how cheap the oil price would be, the railways will still be more attractive choices for consumers due to its reliability and cost effectiveness. Thanks for stopping by Dividend Diplomats and glad we are on the same journey together.