Back in the game.
It had been almost 3 months since I purchased stocks in last August. That was probably the longest time that I had been holding off of buying stocks since I started this blog. However that finally came to an end in November. Yay! I deserve some cookies here. I could not really resist bargains going on everywhere which made me pull the triggers again. On November 20, 2015, I purchased the following stocks.
Potash Corporation of Saskatchewan (POT)
Potash Corporation of Saskatchewan Inc. (PCS), incorporated on May 15, 2002, is a fertilizer company. The Company operates in three business segments: potash, nitrogen and phosphate. The Company owns and operates five potash operations in Saskatchewan and one in New Brunswick. Its nitrogen operations involve the production of nitrogen fertilizers and nitrogen feed and industrial products, including ammonia, urea, nitrogen solutions, ammonium nitrate and nitric acid. It has nitrogen facilities in Georgia, Louisiana, Ohio and Trinidad. The Company’s phosphate operations include the manufacture and sale of solid and liquid phosphate fertilizers, phosphate feed and industrial acid, which is used in food products and industrial processes. It has phosphate mines and mineral processing plant complexes in Florida and North Carolina. The Company also has four phosphate feed plants in the United States and produce phosphoric acid at its Geismar, Louisiana facility. The Company’s potash operations include the mining and processing of potash, which is used as fertilizer. In 2014, the Company’s potash production from all its operations consisted of 8.73 million tons of potash (KCl or finished product) with an average grade of 61.0% K2O, representing 47% of North American production (Reuters).
Potash had been in our watch list for a really long time (probably more than 1 year) and luckily the stock has dropped by 23% of its value over last 3 months and 35% over last one year period. What a great deal. I liked the company a year ago when it was being traded at $35-$36 then I like it even more when it is now being traded around $27.
Its fundamental is very strong and has been a cash cow for a long period of time. 2014 year was really great. It had cash from Operating activities of $2.6 billion and used only $1.1 billion for capital expenditure. Paid $1.1 billion as dividend and repurchased $1 billion worth of its own stocks. Even 2015 so far isn’t too bad considering the downturn of the industry as it generated solid 1.7 billion cash from operation which was spent toward paying out dividends and capital expenditures.
Dividend yield is at whooping 7.5% and it has increased its dividend for last 4 years. Its PE is around at 11 and has healthy debt to asset ratio at less than 25%. I know that Potash price isn’t doing great at this time and it is estimated to be worse for a while but I am buying this stock for a long term. I strongly believe the stock has been oversold. I don’t know whether Potash price will ever turnaround but regardless, this fundamentally strong company.
Recent insider activities aren’t too bad as directors purchased some stocks at this level.
Its 12 month price target is between $US21-41 (currently around $US20)
and analysts rating shows 1 strong buy, 1 buy, 7 hold and 1 reduce.
I purchased 110 shares at $27 and another 75 shares at $26.78. Total $4,978. I got commission rebate of $30 from the teller after crying on the phone for 30 seconds (i.e. Annualized return of $31,536,000 🙂 Crying really helps!). The purchase will add $433 to my annual dividend.
Black Diamond Group (BDI)
Black Diamond Group Limited is a provider of remote workforce accommodations, modular space solutions and oilfield products and services in Canada, the United States and Australia. The Company provides its products and services to a range of industries, including oil, natural gas, mining, power, construction, engineering, military, Government and education. It operates in four segments: Black Diamond Structures, Black Diamond Logistics, Black Diamond Energy Services and Black Diamond International. Black Diamond Structures rents and sells remote workforce housing and modular workspace solutions and provides associated services. Black Diamond Logistics provides lodging services, remote facility management and supply chain solutions and Black Diamond Energy Services rents and sells a complement of oilfield equipment and services. Black Diamond International rents and sells remote workforce housing and modular workspace solutions and provides associated services outside of North America (Reuters)
Another beaten down oil and gas related stock that I wanted to buy for a while. As you know by now, I am a managed risk taker. I love buying oil & gas related stocks considering its downturn but I don’t buy every oil&gas stocks available out in the market. I only buy oil & gas stocks (with exceptions of some speculative stocks) of which fundamentals are supported. As you can see from my portfolio, I recently purchased Oil and gas related stocks with strong balance sheets and great fundamentals.
- Canadian Natural Resources, Ensign Energy Services, Trans Canada, Chevron, National Oilwell Varco, Husky Energy, Penn West Petroleum
- Mining stocks– BHP Billiton, Alliance Resources Partner
- Other sector stocks that are closely related to Oil&Gas stocks– Artis REIT, Boardwalk REIT, Cominar REIT, Atco and Canadian Utilities, Canadian Western Bank,
All of the stocks will be volatile next little while but eventually when supply and demand balances out (which will), all of them will reward me handsomely and then I will restructure my portfolio.
Black Diamond Group is a very interesting company. Without further ado, watch the video to understand what they do.
Its fundamental is strong and its cash flow has been great. 2014, it generated about $50 millions of free cash flow which was used to buy back its stocks and paying out dividends. For the first 9 months of 2015 wasn’t too bad considering the downturn of the oil&gas industry as it still generated $50 million of free cash flow which was used in paying out dividends and retiring debt.
It had recently cut its dividend from $0.08 per share to $0.05 per share (it pays monthly dividend) which I believe a prudent move considering the challenges they are facing. Because of the announcement, the stock had dropped by 20% over the month which gave me the signal to jump in and snap the bargain as the investors are definitely panicked and sold at dirt cheap. Dividend yield is still at whooping 8.5%. Its PE is at around 23 and has healthy debt to asset ratio at less than 25%.
Its 12 month price target is between $7-14 (currently around $7)
and analysts rating shows 1 strong buy, 8 buy, 3 hold and 1 reduce.
The price to sale ratio is at 0.9 as opposed to 5 year average of 3.0 which is about 70% discount on the stock (Can you believe that?)
Insiders, especially CEO, have been buying back its own stocks like madmen which is another good signal that I will take. Who knows about the company better than its CEO and directors?
I purchased 737 shares at $6.85 totaling $5,058. The purchase will add $442 to my annual dividend income.
Both purchases will add approximately $875 to my annual dividend income. That’s at least $73 passive monthly income that will be given to me year after year. Highly likely $73 will get bigger as time goes by. What a life! We will keep buying when opportunities are out there in the market. I see many opportunities lately due to the crash of the oil price which is just perfect for me. As you may know, it did not take too long to build this portfolio. When I started this blog (a year ago), our net worth was around 80K (excluding my car) and that only provided us less than $2,000 of annualized dividend income. However, now it provides predictable $7,500 of annualized dividend income per year and that number will always go up. Amazing huh?
As I mentioned several times, building your dividend portfolio isn’t very difficult. See the following links for excellent ways to save money and invest.
- 30 most important tips to be a millionaire no matter how much you make.
- Renting vs Buying
- 16 most important tips to save on car insurance by 40-60%
- Norbert’s Gambit- Save thousands of dollar from foreign exchange conversion fees
- What’s in my wallet
- Needs vs Wants
- 20 smart moving tips that will save you time and money
- How to save $1,000 annually from your TV cable bill
- 7 extremely easy tips to save 20-50% on flight tickets
Check out my portfolio page to see what stocks I own and the following article for more investment tips-How to Simply Invest and Get Richer for Dummies in 8 Easy Steps.
If you are also a dividend investor like me, then you should check out the following page to see how other dividend investors are doing. You won’t regret a moment of reading their valuable and inspirational articles. The Financial Bloggers Dividend Income List. Oh right, you may want to check out the following section to see what other investing bloggers are up to as well. Blogroll
Hope my recent buy updates inspire anyone who is dreaming of becoming financially independent. I am not there yet but I am happy to share where I am and where I will be headed along the journey to be a millionaire thus financially more independent. Don’t dream on winning lottery or a jackpot from your local casino. That’s not going to happen to you. Dream on something that is so real that you can catch it after executing easy passive income strategies. It is not going to take very long to see the results and I am sure you can do it as well. All you need is a strong commitment for your future. Start your first step right now and come along for the million-dollar journey. Hang in there because your loved ones got your back (and me )
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