Recent Buy- Dream office REIT (D.UN) and Orvana Mineral Group (ORV) +$781 of annual dividends 11


What a volatile market!

So much excitement in this volatile stock market last couple of weeks. When people thought bottom was close, the market drops even further then it turned around went up by 5% for last 2 days then head back in red. I love it. So many investors are crying on a daily basis and trying to figure out whether they will ever recover their initial investment. Some probably are thinking of selling all the stocks that are in red swearing they will never get back to investing ever again.

Meanwhile, here I am thinking whether I need to reserve cash or not for a next little while. As you probably know by now if you have been following my blog, I don’t have patience in saving and reserving cash. I hate seeing Mr. Cashman sitting in the corner of the home smoking cigarettes and stealing my beers while doing nothing. Whenever I see him, Mr. Cashman would say things like

“Hey what’s up, I will just sit here and look pretty. And just to let you know you are low on Coronas”

mr.cashman

Sit there comfortably for now and wait until I find a better use for you Mr. Cashman.

 

That being said, I am not honestly too happy about getting into the market a bit early in this downturn market. I thought stocks that I purchased were hitting near the bottom but it turns out there is always more to go. Most of the stocks that I purchased are high quality companies that produce fairy strong cash flows during its industry downturns. They are the dogs of the market so I am not too worried about the temporary capital depreciation however I could have bought the stocks a bit cheaper if I waited longer.

So after these purchases, I will try to reserve cash for a while. My rationale?? If the market heads down a bit further, then I will have more cash to invest and take advantage on even more attractively discounted stocks. If the market heads up then I will just be happy with the capital recovery and growth and rebalance my portfolio at some point. Of course, I will keep trying to find undervalued stocks. Until then, I will have to suck up with Mr. Cashman sitting in the overstuffed couch drinking my beers. But Mr. Cashman should know one thing, I am always ready to dispose him in exchange for stocks of good quality companies.

But before working on the cash reserving goal seriously, I added the following two stocks to my portfolio. Welcome home my employees without pay and benefits!

 

Dream office REIT (D.UN)


Untitled

 

Dream Office Real Estate Investment Trust (the Trust), formerly Dundee Real Estate Investment Trust, is a Canada-based open-ended investment trust. The Trust operates in segments: Western Canada, Calgary downtown, Calgary suburban, Toronto downtown, Toronto suburban and Eastern Canada. It is engaged in building and maintaining a diversified portfolio of office properties in Canada, based on an established platform, and providing cash distributions to unitholders and managing distributions over time. The Trust’s portfolio comprises central business district and suburban office properties, located in urban centers across Canada, including Toronto, Calgary, Edmonton, Montreal, Ottawa and Vancouver. Its ownership interests includes 177 office properties (207 buildings) totaling approximately 24.3 million square feet of Gross leasable area (GLA). The Trust is managed by Dream Asset Management Corp. (DAM) (Reuters).

 

Dre-graph

7 years low now and it may soon be all time low, then I will buy as many shares as I can. (Source:TD bank)

 

Dream office REIT had been in our watch list for a really long time (about 2 years) and luckily the stock has dropped by 50% of its value over last 2 years, 45% of its value over last year and 35% over last 6 months period. What a great deal. I liked the company when it was being traded at $27-$30 then I like it even more when it is now being traded around $15-17. Think about it. Its book value is $35. The main assets of the company are office buildings across Canada. The current price of the stock basically means if I buy the stocks at this price, I will get Greater Toronto 9.6 million SQ office properties for free. How does it sound to you?

scotia-plaza

Dream office REIT’s iconic landmark of Downtown Toronto. The Scotia Plaza.

 

Its fundamentals are fairly reasonable. I don’t really love it but with the decent price discount, I see it as a good opportunity to keep until this cycle passes. It has never suspended its dividend during 2008-2009 crisis, I think the management will handle this downturn pretty well and maintain the dividend. That means, I am locking it at 14% of annual dividend. Sweet tomatoes!

It has good and constant operating cash flow. After necessary capital expenditure, its free cash flow is just little short during last 2 years to cover the cash dividend. That’s the risk that I am willing to take considering its 14-15% current yield and amazing discounts that I got from buying the stocks.

dream cash flow

 

 

dream summary

Downturn in Western Canada is really hurting the stock right now.

 

Recent insider activities aren’t too bad as the company has been buying back its stocks at dirt cheap price of $15-18 last month worth $400-500K every day. Why they would buy back its own shares? because it is very attractively priced.

dre buyback

buyback2

 

Analyst recommendations are pretty even. 2 buys, 4 holds and 1 reduce.

dre-AR

(Source: Thompson Reuter)

 

Price target is from $17 to 27. That’s 43% of upside potential.

dre-pt

(Source: Thompson Reuter)

Look at all this crazy ratio right now. Dream office’s stock used to be traded at 5.5 times of 5-year average. It is now traded at 2.2 times of its annual revenue. What a bargain for me.

dre-ptsale

(Source: Thompson Reuter)

Its forward PE is also dirt cheap at 5.9 times compared to 5-year average of 11.5 times.

FrdPE

(Source: Thompson Reuter)

 

I purchased 349 shares at $16.98. Total $5,936. The purchase will add $781 to my annual dividend.

dreee

 

Orvana Minerals Corp (ORV)

 

Orvana Minerals Corp. is a Canda-based multi-mine gold-copper producer. The Company operations consist of the El Valle-Boinas/Carles gold-copper mines and the copper-gold-silver Don Mario Mine. El Valle-Boinas Mine and Carles Mine are two underground gold-copper-silver mines located in the northern part of Spain and Upper Mineralized Zone at the Don Mario Mine is an open-pit gold-copper-silver mine located in the south-eastern part of Bolivia (Reuters)orvvv

My first gold stock pick of my life and it does not pay dividend. On top of that it is a penny stock. Of course it is….

Yes go ahead. Give it to me. I can hear you booing 🙂

I gotta spice up a little bit. Let me go through the company briefly and explain why I bought it.

 

As you know, I am not a big fan of gold stocks. As Warren Buffett famously said,

“It doesn’t do anything but sit there and look at you”

gold

Yes. Yes and Yes. Mr. Buffett, it sits there, look at you and does not do anything.

 

He sees very little to no value in gold as he perceives that gold has no usefulness and that’s how I see it as well. However due to gold’s prolonged downturn for last several years which hurt various gold mining companies as well as their stocks and current general economic downturn, I purchased a gold stock as a safe haven. The further economy headed down, the better gold mining stocks will do. Well… it won’t be as simple as what I just said but it will certainly better position itself compared to other stocks during economic downturn.

I think Orvana is a very interesting value pick. It has been traded around for about 2 decades. It once was traded at around $10 then it dropped to penny stocks level then it jumped back up in 2011 reaching $4 then it dropped again and currently being traded at around a dime. What a ride that I never want to imagine however, I would certainly enjoy the ride up if the direction of the wind changes.

I still see this as a very risky bet so if you are going to follow my suit then please use your own discretion.

orv graph BV=$1.16

Pretty Scary stock chart if invested in it in 1997 but if you invested in 2000-2001 this stock could have been 40 bagger during 2011 peak. (Source: TD bank)

 

The fundamentals of Orvana is pretty decent so far based on the numbers. It always had a positive cash flow from operating activities regardless of its net income. Its capital expenditures have been always reasonable and lower than cash from operating activities. As you can see its free cash flow has been positive for last 4 years. Awesome.

One thing that I will have to admit is that, I don’t understand very well and how to analyze mining companies future perspectives effectively but at least I see positive cash flows and prudently having no debt during the downturn as positive moves by the company’s management. It recently completed its audit and its auditor PwC sees the company is still worth $1.16 in the book. Well… I paid it for $0.11 per stock so at least that’s comforting. 🙂

I purchased 23,000 stocks at $0.11. As I said there will be no dividend from this purchase.

 

orv

Yes. That’s right 23,000 shares.

 

The management is really committed in reducing its long term debt. 

orv debt

With the positive cash flow from operations, Orvana paid down the debt to basically 0. (Source: Google)

 

Beautiful cash flows over the years.

CF ORV

Free cash flow is easy to understand and probably one of the most important factor in considering stocks. At least for me it is. (Source: Morningstar)

 

Both purchases, well… Dream office purchase will add approximately $781 to my annual dividend income. That’s at least $65 passive monthly income that will be given to me year after year. Highly likely $65 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.

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 Blogroll

 

inspirational

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 I do as well)


Leave a Reply

11 thoughts on “Recent Buy- Dream office REIT (D.UN) and Orvana Mineral Group (ORV) +$781 of annual dividends

  • DivHut

    This REIT seems to be quite popular among the Canadian dividend bloggers. I see it quite often in their portfolios. I am not too familiar with the name but can guess that it’s a strong REIT candidate for any long term portfolio and ORV is a name that I have never come across before. I figured the Canadian banks would be most of the buys these days as they are severely beaten down in the last year. Thanks for sharing. I see I have many more names to learn about.

    • monsterid
      Be Smart Rich Post author

      Yup. Dream office has been punished very hard lately that its always 50% off of its book value now. Good time to pick up Canadian Office real estate. Orvana is more of speculative play for me for my own enjoyment. We gotta have some fun from stock picking once in a while don’t we? 🙂 Canadian stocks especially banks are becoming increasingly popular among Americans considering favorable currency impact as well as downturns in Canadian market in general. I wish I was an American right now. I will be on shopping spree all over on Canadian stocks.

      Cheers!

      BeSmartRich

  • FerdiS

    If you buy great dividend paying companies with solid fundamentals below fair value, the exact timing shouldn’t be a big concern. Like you, though, I sometimes feel annoyed when I pull the trigger just before a drop in the share price due to market volatility. Thinking about the long-term dividend income and growth rather than future capital gains helps.

    Congratulations on your new stock purchases!

    • monsterid
      Be Smart Rich Post author

      Thank you FerdiS. I always mess up my timing. I really do but that’s what happens to almost every value investor who invests in downturn economy. I am all about long term plays and I am confident that I purchased solid stocks. Now it is time for me to wait and see. Thanks for the comments!

      BeSmartRich

  • Wallet Squirrel

    I’ve been hearing more and more people looking closely at Canadian stocks lately and I’m a huge fan of an attractive REIT. I’ll take a closer look at Dream Office REIT. Everyone loves Canada, so I see their economy picking back up soon here.

    • monsterid
      Be Smart Rich Post author

      Haha Economy will be picked up eventually. Although I am worried a bit about over valuation of Canadian housings lately, I will stick to value stocks which will help manage the risks in downturn. Thanks for coming and comments Wallet Squirrel. Hope to see you often!

      BeSmartRich

  • Dividend Beginner

    Hey BSR,

    I’m with you on buying high quality assets while all the other investors are crying. Great times.
    I bought D.UN as one of the first stocks when I started investing and personally regret it, but it at least pays out a very high yield, just hoping they can maintain it. I’ve lost over 40% on this stock in the past nine months. I much prefer it’s German counter-part DRG.UN. The point is you know what’s best for you! Looks like it will be paying you a great monthly distribution though. Don’t gotta worry about that cell phone bill, Dream Office’s got you covered!

    I like the Thomson Reuters screenshots. Didn’t think to do that myself as I wasn’t sure it was legal since they sell for about $25.00. Love that I get them free through CIBC.

    DB

    • monsterid
      Be Smart Rich Post author

      Dream office REIT has been an unfortunate bet for investors from 2011 until now. 40% of loss isn’t good but you know the cycle eventually will revert back sooner or later. Love the Dream Office REIT for now and probably for a while unless the fundamentals change significantly which I don’t see happening anytime soon. I am interested in the German counter part DRG.UN. I just need to wait and see how it plays out next little while. Thank you for stopping by Dividend Beginner. Hope everything goes well!

      Cheers!

      BeSmartRich