starting DRIP/SPP what companies to look at?

[Kid Bro Sweets]

I wanna start building a drip/spp portfolio and i wanna start with 5 companies and looking at the following:

BNS
Riocan
Enbridge
Thompson Reuters
SU or CGI

What do you guys think or other suggestions? Thanks:toast:

 

[selkirk]

welcome to the money forum KBS, that is a good way to invest drip/spp portfolio is a good thing to set up. I have one, along with three main trading accounts.

as for your stocks you listed: all listed on Toronto also the US except Rei.un, and CGI.

1. Riocan Reit yields 8.45%, retail big box, great properties and locations, the biggest by far in Canada. management is excellent. story in the globe a while back about how they pulled back just before the downturn on spending and development.

have it in my own drip/spp portfolio bought it over 10 years ago, at average cost of $7 cdn. also bought some for my two nieces and they have almost doubled.

negatives: they are currently not earning their monthly distrbution... covers about 85-90%
in a normal economy the cash flow will grow, do not believe they will cut, however their will be no increase in the dividend for a few years.

postives: excellent partners, good management, good properties, even signing a few deals in this climate, and partnering with residential developers, they handle the retail.

also a 3% discount on dividends that are reinvested. note: some people then say it yields 11%, no, since it is just on the dividends, a small amount.

2. BNS bank of scotia.
own this is an drip/spp portfolio along with BMO and CIBC, own TD, and Royal outside in a trading account.

this is my biggest holding in my drip/spp of the three bank stocks, yields 4.49%, believe the div, is safe.

have a large exposure to South America/latin, also very big in Mexico.

postivies: imporving retail banking, though not on the same level as TD, like the int. banking angle though when it goes wrong can wipe out a quarter or two.

believe the div, is safe, In Canada the last thing a bank ceo would do is cut the div. also housing took less of a hit.

earnings estimates are all over the map $2.70-3.80cdn.

3. Enbridge 3.61% yield
also own this for over 10 years, a theme here, actually probably since 1994. so 15. in a drip/spp portfolio.

it is just a well run North American pipeline, one of the biggest with large expansion plans in the works.

should earn 2.20-2.40 per share this year, very dependable.

since it is on a growth phase, debt is slightly higher than normal, or it will be.....

still one of the best pipeline companies to buy nothing exciting, probably made more than 10% counting div. over those years.

to be continued.

thanks
selkirk

 

[Kid Bro Sweets]

wow thanks for your insight and review sellkirk! I'm Canadian myself so i want to stick with buy home for now plus all the paper work required to set these up individually.

What's your take on Manulife? I know they cut their div the reasoning makes sense and they are making inroads in the Asian market especially china.

I look forward to reading all your hard work :toast:

 

[selkirk]

KBS I assumed you were a cdn. investor just from the list and assumed cgi stood for Cdn. general investments a closed end fund on Toronto.

as for the rest of the list

TRI Thompson Reuters
remember hearing a story about how frugal or cheap the Thompsons were, they would in the early paper days use the pencil until the very end.

one time in the mid 80s K. Thompson then one of the richest men in Canada stopped a (writer) he knew trying to find an item he had a coupon for, at a grocery store. later believe he let someone else shop for him, maybe when he became a billionaire.

anyways Thompson corp. is often recommended and overall would just fall, and dissappoint. in a way they re did their business from newspapers, to electronic inforamation and services, for financial, medical, law, ect.

the merger with Reuters should work, they should be able to cut costs, and have already delist the London shares which just made a mess of the share structure.

now listed in New York and Toronto. yields 3.52%.

should make 1.50-2.00 per share this year, and next year anywhere from 1.50 - 2.50.

the last quarter for a change was good, compare to many earnings reports in the past that would slightly dissapoint.

do not really follow it, but may start.... probably a wait and see.....

4. SU Suncor 1.16%
should say also own this in a drip/spp, bought it back in 1998....early 1999.

the one share bought for 42-45, now have 4 shares now just below 35 cdn.

let us be honest, this is a play on oil, the number of large investors in New York and Toronto think Suncor=oil, cdn. oil sands. just like they saw on 60 minutes.

they have know idea about Alberta or anything, so oil goes up Suncor goes up...oil goes down..well.

positives: long life reserves, I mean 40-50 years, but probably more, so running out of reserves not a problem in our lifetimes.

-great leverage to oil prices, this is positive or negative, just depends how it moves.

merger should work, should work, should work.
PCA provides cash flow, and projects on tap, however reserves of around 15 years.

Suncor should be able to use this cash flow and develop their longer life reserves cdn. oil sands.

should note looks like a good merger, still their is a surprising number of mergers that look good at frist then blow up.

negative: Suncor use to produce oil for 18 with thoughts of that falling, those days are gone forever. production costs seem to be climbing through the years.

prefer CNQ, though have SU in a drip/spp, when accumlate a position then transfer to my trading accounts.
SU should be in a trading range.

CGI Cdn. General investments
normally when you can buy a stock for $13 and has a nav of $16+ then it is a good deal, however remember in the mid 90s it would trade near a 30% dscount buy and then sell when it would be close to a 20% dscount.

at one time the stock was thought to be taken over and go from closed end, to an open one, the fund would have traded at the NAV. however believe people who run this fund are happy with the status quo, for years, or decades.

it use to beat the index, and perform well, in fact just a couple year ago would be much higher on the fund. it got walloped in the correction going from 30 to less than 10, to me that is a sign of not selling at stops, or falling a sleep at the wheel.

so now I own a big 45 shares, that is enough for now, may add to the position but can stay a very small investment in the drip/spp portfolio. also a thin trader, low number of trades.

if perfoamance improves then would add, will see how they do in the future.

thanks
selkirk

 

[selkirk]

a few more points on DRIP (Dividend Re investment plans) and share purchase plans.

it use to be much easier, probably before 9-11, in the late 90s, you would just have to sign the back of a registered stock, and send it to the trustee. in Canada CIBC Mellon or Computershare.

or you could just fill out a short form of the info, even easier because you did not have to get the share certificate. forgot you had to get it signed and stamped at the bank but this could be done for more than one, and took no time at all....

however sold some recently, okay 9 nine months ago, BNS to get some friends in the investing in stocks.
they have the registered share but now instead of a simple note saying you want to be in a drip/spp plans their are more forms to fill out.

they even sent one share back, saying the sign did not register...so took it back to the bank same person signed it as before and then they acepted the registered stock.

once they are set up they are great for long term investors however there are some other means of doing the same thing.

1.in the US they have sharebuilder, small costs to buy but very wide selection, not available in Canada.

2. most discount brokerages and full service brokerages allow you to reinvest in most shares, with your divs, only to buy full shares, not fractional shares, the remainder of div not use to buy whole shares go to cash.

with commissions dropping to below 10, and falling, not that expensive to build up a position and then have the dividends reinvested.

3. when you set up the drip and spp, at computershare, or cibc mellon, sharebuilder, or your discount brokerage now easy to track them online.

as for stocks that were not mentioned above that would fit into a cdn. drip spp.

TRP boring pipeline power producer yield 4% over, and it is safe. trade in cdn. and the US.

Fortis if you are heating your house in BC or Newfoundland, well that is Fortis, just very well mangaged, yield 4%. also boring but great company. trades only on Toronto.

thanks
selkirk

 

[selkirk]

finally look for stocks that offer discounts ussually on the dividends reinvested. many took these aways over the years, but now they are coming back since the credit crisis.

when companies fear the credit markets are shot off they treat a drip/spp investor like gold....or cheap silver.

I want only stocks where the dividends are rock solid, in 90% of the cases.


as for MFC believe it is fairly valued where it is trading at present, 21.61 cnd.

I have puts and uncovered calls, and trying to play it in a range, so the correction actually helped me, as it was in the high end of the range...I had (options on it).

the main question is the are still a great company, but short term 6-12 months it is a simple play on the markets.

they sold segr. policys tied (insured) to the equity markets in the US...but they did not hedge this, this came as a shock to the market and holders of the stock.
how little they hedged and how aggressive some of these policies were....

in time this will be fixed, and they have already wrote this off, so if the markets come back those losses will become gains...

also the last two earnings reports were good, the last one was positive, and they can borrow money easily now....so why cut the div, and give up the market cap....they could have sold stock to boost the balance sheet, or more debt.

so why cut the div, in Cdn. divs, are sacred for financials.... and you know the stock will take a hit.

the only reason is to play it safe, and management must know more than the street what would happen if the market would correct 20-40%.

so would rate it a hold......going into the fall, later would be a long term buy...though will wait until some risk in out of the stock....

willing to buy it at higher prices even...once the danger clears.

thanks
selkirk

 

[Kid Bro Sweets]

thanks for the all the notes kirk, i have noticed it is a bit of a bit to setup the drip/spp from getting the cert from the brokers (maybe they know they will lose the commissions in the long run on onto what i'm trying to do.

 

[DOGS THAT BARK]

I've certainly enjoyed following this thread guys--thanks

 

[Kid Bro Sweets]

dtb same here reading alot of old posts some great info and insight.


Kirk, did you give physical shares to your friends to start a drip/spp account? If so did you have to transfer it in their name? TD Waterhouse is giving me a hard time saying they can't put the shares in anyone elses names unless it's an immediate relative, thanks.

 

[selkirk]

KBS all of the brokerages will be the same including TD waterhouse. most charge you for them to send you a registered share.

with BNS just used that form believe you can get on their website, computerhshare or CIBC mellon however I have shares in the drip/spp, so computershare or CIBC mellon will do it that way.

they will also send you a registed share for free (at least that was the case a few months ago) and you can sign the share over and send it to computershare and CIBC mellon. also good when you build up a position and want to transfer from the drip/spp to td waterhouse, or just sell the stock ie. Nortel... they sent me the shares by regular mail then just went to TD and put them in my waterhouse account.

so if I were you would set up your account, in what ever share you want, and then take the shares from your drip/spp.

that way you just need to use the form.... and have it signed by a bank teller/ they will know at the bank.

great once it is set up, however harder, for instant, in the past would write a short note, with the form and you were in the plan.

now often there is another form, have to phone computershare about bns since 4 friend are still not in the drip/spp though they have registered share, one.


by the way I charged them $5 extra over the share price, for a few reasons.

1. $5 my time in trouble should be more like 10 or 100 ...lol.

2. have done this for friends and they still have one share, did this for 4 four friends in 1999 for SU, only one bought more, it went up over 400%. the rest have four shares

3. if a child (parent want one for son/daughter) I give them the share for free, children should get a break, hope to get them investing early.

my brother has three children, they are holders of Riocan, it has doubled for them....

so set up your and then deal with either computerhsare or cibc mellon.

by the way tell people when they set up the drip/spp the cheques to buy more shares are made out to the trust company, not company (share).

so computershare or cibc mellon, not to Suncor or Fortis. enbridge. ect.

so set yours up first, then work through the trust company to get others in the drip/spp.

thanks
selkirk

 

[Kid Bro Sweets]

thanks for all the advice kirk, i will do mine first.

 

[Kid Bro Sweets]

hey kirk i've got a question i got a physical cert and was trying to do a transfer, i've filed in the back and i just need a guarantee signature, will any bank do this? The back of the cert says any charter bank can do it but the tellers seems very lost and wanted me to take it to scotiamacleod.

thanks,

 

[selkirk]

:mj07: that is funny, KBS I can just imagine what Scotia Mcleod would think of you...the teller is wrong, but do not blame her, she is does not come across that, and may not be able to do it...

any bank will do it, go make an appointment with your banker, if you do not have one, phone them and get one.... you know the person at the bank you talk about mortgage, GIC, RRSP, ect.

now most not all will know what it is, and sign it, have someone at TD who does it for me, she just stamps it, and then signs the back of it, now the odd one will not have a clue, you need it stamped and then they sign it..... so phone, probably your own banker, by the way once you have one that knows how to do it, use the same person.... and also do some other business there make life easier.

I like using the power of attorney form over the share cert, for instance if you lose the share cert that is a pain lose the form and get another one.
still it will work fine. by the way when your friend gets the cert in their name they will not be in the drip spp.

with computershare believe you can register online, hope to try this with a few I sold months ago, and see how it turns out, will let you know, of coarse someone has to look for it, may have lost it...

but your personal banker should be able to do it, find someone at a branch will do it, knowing the brokerages probably want to charge you for sitting down.

thanks
selkirk

 

[selkirk]

do not bother with the tellers as they are not trained for that,....

thanks
selkirk

 

[Kid Bro Sweets]

ya didn't blame the teller cause i was sure they didn't know any better

"by the way when your friend gets the cert in their name they will not be in the drip spp."

By this you mean they have to still register with cibc mellon/computershare?

Thanks again for all the help Kirk.

 

[selkirk]

KBS back 10-15 years ago, you would just have to include a small written note with your share cert or form, saying you would like to enroll in the (companys name) and maybe include your sin number.

however now after you send it in they will have a registered share however the note, (you could try), does not work.

you need to fill out a form, though many can do it online, maybe do it when your on the phone with them as sometimes not easy to find.

I realize anyone reading this might believe why bother, but there are some great advantages, no fees, can even do electronic withdrawals or deposits and have shares sent to you...

also with a regular brokerage if you allow the div to be reinvested, there is no fee but can only buy whole shares...and there are charges if you want the share cert or sometimes transfer of shares....

a pain sometimes to set up, however great once it is....

thanks
selkirk

 

[GuitarCrazyo]

starting DRIP/SPP what companies to look at

starting DRIP/SPP what companies to look at

Any idea of what kind of performance gains you achieved? I was curious on what would be possible for my vehicle, can my shift points even be changed on my vehicle? This really caught my attention. 96 k1500 suburban. Thanks