Bought : National Bank of Canada

After mentally preparing a blog post about how difficult of a time I was having finding quality Canadian dividend growers to purchase with the cash in my TFSA, I pulled the trigger and bought some National Bank shares today. Between this purchase and a recent one of IPL for my TFSA, I've basically used up my 2013 contribution (and the proceeds of my disposal of shares of Power Financial Corporation). However, since I'm still planning to sell my TFSA holdings in SNC Lavalin and Dundee REIT, there will likely be one or two more purchases within my TFSA in 2013.

Already owning some shares in Royal Bank, TD Bank, Bank of Montreal, Scotiabank, and Canadian Western Bank, I've discovered long ago that buying and holding shares in Canadian banks is a formula for slowly accumulating wealth, and collecting rising dividends. Looking at the 5-year track record of National Bank, and earnings estimates going out to 2015, I saw a company that has managed to grow revenue and EPS at an impressive rate, while boosting dividends by a 10% average over the last 5 years, and a 12.5% average over the last two years. Management has also maintained a conservative payout ratio, an adequate level of capitalization, and a good risk management system. Additionally, with a dividend yield of about 4.25%, and a P/E of 8.9X, I felt comfortable buying this bank at a reasonable price.

While looking at National Bank today, I also consider adding shares of Laurentian Bank to my portfolio. Instead, I added it to my watch list portfolio, to keep an eye on going forward.

Sold Power Financial Corporation

After collecting a dividend payment from Power Financial Corporation ("PWF") on February the 1st, and watching the stock price run up to near it's 52-week high, I decided to sell my shares of PWF earlier this week. As stated in a previous post, PWF had not increased their dividend in the past 4-years, which was my main reason for selling.  Another contributing reason to the sale decision was my belief that Canadian retail investors will no longer tolerate the high-cost mutual funds sold by PWF's sub Investor's Group, and will instead switch to low-cost index funds.

I'll also admit to seriously considering selling my shares in SNC Lavalin earlier this week, as the share price rebounded to a position where I was above water on both of my holdings (in my TFSA and non-registered account). I decided to wait until SNC releases their FY12 year end results, as I feel the market will irrationally push SNC's stock up even further given projected revenue growth. I'm also wondering if the company might decide to reward shareholders with an increased dividend for sticking with them through a scandal-filled year. Fingers crossed!

Inter Pipeline Fund Added to my TFSA

As noted in my last post, one of the companies I was looking to add to in my Tax-free savings account ("TFSA") was Inter Pipeline Fund ("IPL"). When IPL dipped earlier this week to $22.60, I was able to act quickly, adding to my position in the company.

I was very comfortable adding more IPL to my TFSA holdings for several reasons. Over the last five years, the company's stock price has more than doubled, while they've been able to grow their distribution by an average of 6.4% per year. Adding to IPL on its recent dip allowed me to acquire the stock when the dividend yield was 4.9%. The company's debt is investment grade rated by both Moody's and S&P. There's also the fact that the recent slip in the share price was caused by IPL's large 2013 Capital Expenditure projections. Being a dividend growth investor, with a long-term investment horizon, I'm confident the company will be able to fund their 2013 CAPEX program, and that these initiatives will allow the company to keep increasing their distributions in the long-term. Lastly, given management's past performance, and their commitment to undertake projects that add value for unit holders, I'm comfortable that they will continue these actions going forward.