In November I decided to put just over $2,000 into 2 different Marijuana stocks, knowing full well this was a short term play/gamble.
I purchased 7100 shares of LGC Capital ($LG) for .14
I purchased 4000 shares of National Access Cannabis ($NAC) for .20
I had also previously purchased 2500 shares of Nutritional High ($EAT) for .25
Total cost of purchasing all 3 including commission: $2448.85
This week I liquidated all 3 holdings for a total of $7816.41 after commission.
Total Gain after 2 months of holding: $5367.56
Although these are obviously great gains especially in such a short period of time – I actually got a bit greedy and should have sold earlier – as I could have made an extra $3000 if I had sold LG a few days prior. I was originally very interested in holding LGC Capital for the long haul, but after reading a bit more about their chairman, as well as seeing his antics on twitter, I ultimately decided against it as he seemed to be more worried about the stock price, and less worried about the future of the company.
Now I have almost 8k I can put towards some long term holdings, specifically ones that will add to my yearly dividend income. Over the past few weeks I’ve been doing some research on a few different stocks, and narrowed it down to the following 5:
Northview Apartment Reit ($NVU.UN)
I have had my eye on this stock for about 3 years. I first started looking at this stock when it was trading around $14-15 dollars and thought it was attractively valued. It is now trading over $24 and I still think it is cheap. With a P/E of 7.4 and a payout ratio of under 50% I feel both the stock price and the dividend still have room to grow. The other REIT’s in my portfolio are commercial/industrial so I’ve been looking to add a residential REIT as well. The stock currently yields 6.58%.
Interrent Real Estate Investment Trust ($IIP.UN)
This is one of the cheapest residential REIT’s I have been able to find. With a stock price under $10, this is currently trading with a P/E of 4.4. The yield is very low for a REIT (2.84%) and has a very low payout ratio as well which makes me think we will see some dividend increases over the next couple of years. One concern I have with this stock is the lack of diversification (all properties are in Ontario). Due to its extremely low valuation – this stock seems like a prime candidate for a buyout by one of the larger REIT’s.
This company reminds me of one of my recent purchases (Intertape Polymer). It is a boring, reliable company that continues to show strong profits, but has recently been beaten down by the market for no real reason. The yield on this one is extremely low(1.17%), as is the valuation. The 52 week high is $18.20 and it is currently trading just under $14.00.
Western Forest ($WEF)
The lowest priced stock on my list (trading at $2.68) this is a B.C wood producer that has shown consistent profits and has increased revenue over the previous 3 years. The dividend hasn’t grown in 5 years which is a slight concern, although with a payout ratio under 40% there seems to be some room to grow it in the future as long as revenues keep increasing and they can control their costs.
Power Corp ($POW)
This is another one of those buy and hold forever type of stocks, and also another I’ve had on my watch list for some time. Currently trading at a P/E under 10, while also paying a generous 4.45% yield makes this especially attractive right now. Power corp is the holding company of Great West Life (one of the largest insurance companies in Canada and I believe the largest employer in my hometown of Winnipeg). Power Corp has also maintained a dividend for 20 years, and has increased it’s dividend for 3 consecutive years.
When purchasing stocks for the long haul, I like always ensure that I DRIP any dividends and like to have enough shares so that I can at least DRIP a full share each dividend payout. To ensure I could reinvest 1 full share at the current prices, I would need to invest the following into each of the stocks above:
NVU.UN = $4583
IIP.UN = $4181
CAS = $4685
WEF = $356
POW = $2877
So What did I buy?
In the end I decided I liked the idea of set it and forget it. I purchased 200 shares of Power Corp which should give me enough to drip at least 2 shares every quarter. With the remaining cash I only had enough to ensure I could reinvest in full shares of Western Forest so I purchased 522 shares of Western Forest which should allow me to repurchase 3-4 shares each quarter. Another reason I leaned towards these 2, is that I already have about 10% of my TFSA invested in REIT’s, and I recently purchased a similar packaging company to cascades (Intertape Polymer). I feel like all of these would have been good buys, but these 2 specifically help with diversification.
These purchases will add $328.56 to my yearly dividend income (purchased in my Tax Free Account).
I am still very interested in adding the other 3 stocks on my list to my portfolio, but unfortunately it will have to wait until I can inject some more cash into my TFSA.
Curious what the rest of you think with these choices – do you think I made the right choice? Would you have purchased one of the others on my list instead (or some different stocks altogether)?