OPTIMISM #9 - July 3, 2020

Hello Clients and Friends,

It’s been an interesting week or two since my last commentary.

News has been positive.

1.The New York Times report Wall Street’s best quarter since 1998:


2.Canada’s TSX had the best quarter in more than a decade:


3.A dividend site I like (dividend growth and investing.com) reported no dividend cuts in June.

4.In today’s Globe and Mail, I see that smart, wealthy people continue to buy through the market price dip.  On June 17th, Sandra Greer, an insider at Emera (a large Nova Scotia based utility) bought 3340 shares for over $175,000.)

5.Love or hate them, pipelines are being built, which is good for Canada’s economy.

6.I learned from Tom Connolly that to get a sense of a stock’s value in comparison to its price, it is wise to look at the amount of income you can get buy buying today, versus how much income the stock has historically paid on average over the previous ten years. 

Retirement after all, is about income, so the real goal is to buy a top-quality and hopefully rising income stream as cheaply as possible and live on that income forever.

When yield is high, share prices are low.  The opposite is true as well. 

Take TD bank for example. For the past two decades, its yield has averaged 3.2%, or $3.20 per 100$ of shares that you own.

Its average annual yield has been as follows:

From the year 2000: 2.31%, 2.71, 3.19, 3.05, 2.94, 2.85, 2.83, 2.99, 4.27, 4.77, 3.52% in 2010, 3.37, 3.58, 3.60, 3.49, 3.84, 3.73, 3.44, 3.58, 3.98 and 4.9%.

Yield today is $3.16 per share, per year, and the shares are selling for $60.75 as I write.  $3.16 / $60.75 = 5.2%.

We can see that it was high (4.77%) in 2009, the low after the 2008 housing crash.  It was an incredible buying opportunity that most, including me, missed out on. 

Today, it’s higher, meaning greater opportunity.


7.Austria borrowed money by issuing bonds in June.  They are repayable in 100 years, paying 0.88%.

Can you imagine locking in your money for 100 years at less than 1%?  Or you can buy TD stock and get 5.2%.  Bizarre.


8.Rob Carrick’s interesting article two days ago about concentrated top quality stocks beating their diversified competitors:


9.If you have extra cash to invest, contact your Portfolio Manager about buying more top-quality dividend stocks that regularly raise their dividends. 

I feel like a used car salesman saying it, but this sale won’t last forever.  Yes… we may get a second dip in prices, but that is not for certain.  As Sandy Riley so famously said, “the market climbs a wall of worry”.  When life gets back to something more normal, you will not regret it.

Happy Canada Day.  Have a great week. Summer is here.

Derek Moran R.F.P.