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bank stock question
April 21, 2020
5:33 am
cruzinalong
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Doug said

For context, I bought 50 shares of TD at ~$20-21 per share in December 2008 or March 2009, somewhere around there, purchased another 50 a few years later, and TD subsequently paid a stock dividend equivalent to a 2-for-1 stock split. With the reinvested dividends purchasing some additional shares, I now have ~250 shares of TD at an adjusted cost of ~$30/share. Despite the significant correction, I've still nearly doubled my money. Prior to the correction, at one point, it was a near tripling. Times like this are rare and when you want to purchase normally fairly valued, reliable large cap stocks like this. 🙂

Don't forget, if you have no other sources of income (employment, pension, or interest), you can earn up to something like $45,000 in Canadian dividend income per year,* in a non-registered account, and pay no Canadian income taxes due to the generous dividend tax credit. sf-cool

Cheers,
Doug

* Based on British Columbia provincial and federal income tax rates.  

$45,000 in dividend income is a staggering amount. Assume an average of 4% and you need over $1,000,000 to get this income.

April 21, 2020
5:42 am
cruzinalong
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Norman1 said

Doug said

… Despite the significant correction, I've still nearly doubled my money. Prior to the correction, at one point, it was a near tripling. Times like this are rare and when you want to purchase normally fairly valued, reliable large cap stocks like this. 🙂

The total return is actually higher. Don't forget about the dividends during all those years!

Around the same time, a relative asked me about Bank of Montreal shares in 2009 when they were trading around $28 and bought. Today, the shares closed at $73.44. He has been very happy with the results. Price appreciation of 162% in just over 10 years.

Dividend was around 7% of cost back then. So, over 70% of the purchase price has been returned in dividends during those 10 years.  

A friend of mine purchased 100 shares of BMO back in 1991 for $34 per share. He reinvested the dividends in a DRIP plan. Last count 800 shares. Value 800 * $70 = $56,000. He has nothing to complain about. Life is a learning experience. Every day.

April 21, 2020
5:55 am
cruzinalong
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Norman1 said
Just ignore the noise.

So what if some banks are forced by a government to artificially suspend their dividends for a year or two. It's not like that dividend money will go bad in 90 days and the banks will have to toss it out in the garbage.

Once the dividends resume, that money will be paid out. Just look at what happened to the dividends of the Canadian banks after the government no longer objected to them raising their dividends.

The Bank of Montreal dividend, for example, is double what it was around 2009. A relative who bought the shares around that time initially received dividends each year of around 7% of cost. I just checked and he is now receiving dividends of about 15% of cost each year.  

There are many industries that increase the dividends on a regular basis. I would say 10-12 years to double is quite common. If you have 10% of portfolio in stock that suspends dividend no dramatic effect on yourself. One friend says 5-6 stocks in portfolio. Another 8-12. I am between their extremes.

April 23, 2020
12:01 pm
cruzinalong
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Norman1 said

Doug said

… Despite the significant correction, I've still nearly doubled my money. Prior to the correction, at one point, it was a near tripling. Times like this are rare and when you want to purchase normally fairly valued, reliable large cap stocks like this. 🙂

The total return is actually higher. Don't forget about the dividends during all those years!

Around the same time, a relative asked me about Bank of Montreal shares in 2009 when they were trading around $28 and bought. Today, the shares closed at $73.44. He has been very happy with the results. Price appreciation of 162% in just over 10 years.

Dividend was around 7% of cost back then. So, over 70% of the purchase price has been returned in dividends during those 10 years.  

I have a friend that purchased BMO a long time ago. He reinvested the dividends automatically. He paid $34. He bought 100 shares. They have had 2 for 1 stock splits. They have done well. Personally I picked a different bank stock. I sold some in July. I wanted to purchase something.

August 27, 2020
10:53 am
Bud
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What damage do really low interest rates do to the big banks? How bout insurers its the reverse for them?

August 27, 2020
8:06 pm
savemoresaveoften
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Bud said
What damage do really low interest rates do to the big banks? How bout insurers its the reverse for them?  

Banks make good money when the yield curve is positive and steep (meaning short term rates much lower than long term rates).

Insurance companies got hurt when rates are low (both short and long term, esp long term) as the PV of their liabilities go up. Same for pension plans, etc

October 1, 2020
12:00 pm
maxb
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There are websites that post stock names that have never cut dividends... Search "canadian dividend aristocrats"

I recall there are quite a few with 20yrs of uninterrupted dividends.

Other lists also for companies that have increased their dividends.

But, still do your research!!!

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