[kassam]

I just noticed a lot of people were saying that they were starting up a SM portfolio or we're looking to buy before this little run.

I started my SM portfolio right before things crashed in Oct 08 with an initial investment of 15k and have invested up to 22k. I keep a watch on stocks I would like to add as I build up funds and keep a 'buy list' of stocks I'd like to add.

Current Holdings
Royal Bank of Canada (RY)
Arc Energy Trust (AET.UN)
Avenir Difersified Income Trust (AVF.UN)
Riocan Real Estate Trust (REI.UN)
Encana (ECA)

I've noticed a lot of volatility with income trusts and I don't really want anymore exposure to them. I've doubled up on REI.UN in one of my other portfolios but I've built up enough funds to start looking at picking up another holding. The ones I find most interesting are:

TD Bank - the banks are paying great dividends right now and have such a great history of not decreasing them. RY is more a business bank and I think TD would give me another bank that is concentrated more on personal banking.

Enbridge (ENB) - solid, reliable, through thick and thin. Hasn't looked this attractive in awhile.

Fortis (FTS) - I don't really know their business well but they are in utilities and they should have a steady stream of income in bad and good times to keep the dividend payments coming.

I believe all three are Dividend Aristocrats so I just have to make a decision.

What do you guys think?

What's on YOUR buy list?

 

[wx_junkie]

HOW are you holding income trusts in your SM portfolio?!?!

That must be an absolute nightmare for tax-deductabilty tracking...

For my SM Leveraged Portfolio, Canadian (to maximize the dividend tax credit), Dividend (to accelerate mortgage paydown) paying equities are my prerequisites, and I'm trying to buy at a yield of between 4% and 7%.

Staying away from income trusts for the tax deductabilty implications.

Oh, Fortis and Enbridge are both on my short-list of first-purchases.

 

[FrugalTrader]

As I already hold a lot of financials in my SM portfolio, I'm waiting for ENB and CNR to correct again.

 

[kassam]

Well I started the portfolio in October 2008 so I haven't had to do any of the tax stuff yet.

I was attracted to the dividend yield of the income trusts for the most part.

For Riocan, I couldn't really find a dividend paying stock that would give me exposure to real estate.

Although the volatility of the dividends in income trusts has turned me off those instruments.

Is difficult tax deduction tracking really a good enough reason to not buy an otherwise sound investment?

 

[CanadianCapitalist]

I don't do SM but the investing part is the same as building any other portfolio. With a severe correction the expected returns from stocks is higher than it was before. The only difference is that I'd probably skip government bonds:

DIY Smith Manoeuvre

Speaking of bonds, it might make sense to pick up corporate bonds through a corporate bond fund, since the spread over government bonds is significantly higher now.

 

[Canadian Finance]

Since I have 2-3 months before I start my SM, I wouldn't call it a buy list, just a watch list for now...

AGF Management - AGF.B
ATCO - ACO.X
Bank Of Montreal - BMO
Bank Of Nova Scotia - BNS
BCE Inc - BCE
Canadian Utilities - CU
CIBC - CM
CN Rail - CNR
Corus Entertainment - CJR.B
CP Rail - CP
Emera - EMA
Enbridge - ENB
EnCana Corp - ECA
Husky Energy - HSE
IGM Financial - IGM
ING Canada - IIC
Magna International - MG.A
Manitoba Telecom - MBT
Manulife Financial Corp - MFC
National Bank Of Canada - NA
Power Corp. Of Canada - POW
Power Financial - PWF
Royal Bank Of Canada - RY
Russel Metals - RUS
Shaw Communications - SJR.B
Sun Life Financial - SLF
Telus A - T.A
Toronto-Dominion Bank - TD
TransAlta - TA
TransCanada Corp - TRP

 

[kassam]

Thanks for all the replies guys.

@Canadian Finance
I was looking into HSE - Husky as well, the stock looks very attractive from a valuation perspective.

But I looked into their dividend history and it looks like there is a lot of changes, upwards and downwards. It seems like they have more of a reactive approach. But I love the upside on the stock price.

Generally speaking, buying stocks for your SM portfolio, capital gains usually take a back seat to the dividend amount and history but if there is an opportunity to make money otherwise and still get the tax deduction why not?

 

[lb71]

Since I have 2-3 months before I start my SM, I wouldn't call it a buy list, just a watch list for now...

A lot of financials on the list, so try not to concentrate too much on them in your final portfolio. Also, be careful with Magna as the auto industry will be unpredictable for some time.

 

[Canadian Finance]

A lot of financials on the list, so try not to concentrate too much on them in your final portfolio. Also, be careful with Magna as the auto industry will be unpredictable for some time.

Good points lb71, these are strictly for the dividends as part of my SM. I plan to put REITs into my TFSA. I have TD's eFunds for bonds, US equities and interenational equities in my RRSP.

 

[daveking]

With the current market condition I look for stocks with low P/E and low marketprice / 52weekhigh ratio.

Made a pretty nice profit all of March 2009 with the following:

Bank of Nova Scotia BNS.TO
Canfor Pulp Income Fund CFX.UN
Manulife Financial MFC.TO
Research In Motion RIM.TO
Teck Cominco Ltd. TCK.B

Then again March was a good month for everybody.

 

[ethos1]

without going into detail, I use a discount broker, I hold Canadian banks plus YLO at an average price of $5.04

The trade structure on the banks (and maybe we should have another thread opened on this) is to buy the stock (BMO is my choice at present) to then option it long covered call just in the money. I pick up a premium on the long contract (time factor & protection on the downside) as well as collect dividends along the way. Going Canadian with Banks, I have found this to be the less risk approach that works for me.

 

[The Financial Blogger]

I actually left stock picking for my RRSP and decide to go with index mutual fund. Why not using ETF's instead? It would be cheaper, but I am buying $500 per month so I am better off with index mutual funds (Altamira has 0.53% MER's) and I don't have to worry so much about stocks.

here's how I invest right now:
Smith Manoeuvre Investment

It gives me a YTD of 4.2% as of this morning.

Good luck with your investment!

 

[Financial Highway]

Thanks for all the replies guys.

@Canadian Finance
I was looking into HSE - Husky as well, the stock looks very attractive from a valuation perspective.

But I looked into their dividend history and it looks like there is a lot of changes, upwards and downwards. It seems like they have more of a reactive approach. But I love the upside on the stock price.

Generally speaking, buying stocks for your SM portfolio, capital gains usually take a back seat to the dividend amount and history but if there is an opportunity to make money otherwise and still get the tax deduction why not?

I have been holding HSE for a while now and yea you are right their reactive with their dividend payouts, I just had a recent dividend reduction. But their dividend payments will increase as Oil prices moves up. So far I have been a happy shareholder, although taken a beating lately.

 

[moneygardener]

I own Husky as well and I really like the company because they seem to have a real focus on shareholder value and dividends. They are well managed and owners have real skin in the game.

In my opinion, if you want exposure to oil, a company that pays healthy dividends is a great choice because you receive the benefit of high oil in real time versus paper gains with the fickle oil price. Husky also has paid special dividends in the past.

 

[MoneyEnergy]

Great thread. I've been keeping a watch list, though I am done with my "investing cycle" at the moment (do this about every 4-6 months right now). My dividend reinvestment plans are still at work for me, though.

I'm watching: Encana (ECA), Husky Energy (HSE), Johnson & Johnson (JNJ), NewAlta (NAL), Shoppers Drug Mart, Cineplex Galaxy (CGX.UN). Quite a few others. It's too bad it takes a while to acquire everything. I'm aiming to get up to a 100-stock portfolio that I manage myself - all dividend-payers, of course.

 

[ethos1]

I own Husky as well and I really like the company because they seem to have a real focus on shareholder value and dividends. They are well managed and owners have real skin in the game.

Husky was downgraded recently by BMO, although I tend to agree they are a long hold.

Did not check, but what is the current dividend they're paying?

M.G, you indicated that you're holding HSE, are you just buy & hold and reinvesting the dividends or are you adding covered calls to this position?

 

[Financial Highway]

Husky was downgraded recently by BMO, although I tend to agree they are a long hold.

Did not check, but what is the current dividend they're paying?

M.G, you indicated that you're holding HSE, are you just buy & hold and reinvesting the dividends or are you adding covered calls to this position?

HSE is paying $1.2 annual dividend so yield about 4.3%. I am just buy and hold.

 

[moneygardener]

Buy & Hold here. I like oil long term with the growth of developing markets. As green technologies are developed I believe the world will still need to lean on oil for a long time.

 

[Shawn Allen]

SM = Smith Manouver

Would have been easier for me if you spelled that out in the Topic...

Also why not just same income portfolio?

 

[kassam]

Hey Shawn,

What do you mean by same income portfolio?

Cheers,
Kassam