the moneygardener

Telus fails to raise dividend

themoneygardener@gmail.com (MG (moneygardener)) — Fri, 06 Nov 2009 13:51:00 +0000

Canadian telecommunications firm Telus (T.A) has failed to raise it's dividend for the first time in several years. Telus left it's quarterly dividend at $0.475/share for payment on January 4, 2010, the fifth straight quarter of this payment amount.

Some analysts believe that Telus is viewing 2009 as a year of investment in their business and they will resume dividend growth in 2010. Telus is striving to get ahead of the competition as they compete with Bell (BCE) and Rogers (RCI.B) among others including new potential entrants in Canada.

Telus announced earnings today that beat analysts estimates but were still virtually flat from last year at $0.88/share. They also lowered their full year sales and earnings outlook. The best analysts can say is that things don't seem to be getting any worse in the wireless area.

Rogers results look good

themoneygardener@gmail.com (MG (moneygardener)) — Tue, 27 Oct 2009 12:46:00 +0000

Given the slow advertising market lately the results reported today from Canadian telecommunications company Rogers Communications (RCI.B) (RCI (NYSE)) looked pretty good.

Earnings per share were up 12%
Wireless revenue up 7%
Overall revenue up 2%

Roger's Canadian exclusivity on the Apple iPhone helped these results. This tailwind will be taken away now as competitors get the phone as well. Once advertising picks up again Rogers earnings should continue to grow. They are well positioned in the Canadian market and have gobbled up a lot of Bell Canada's customers over the last few years. I think this is a good company to hold for the long term as they have pretty consistent cash flow coming from a stable product. They have also been friendly to shareholders in the past with stock buybacks and dividend increases.

My wife owns Rogers shares in her RRSP.

Inter Pipeline raises distributions

themoneygardener@gmail.com (MG (moneygardener)) — Wed, 21 Oct 2009 14:17:00 +0000

Inter Pipeline Fund (IPL.UN) has announced a 7.1% increase to their distribution level. They are raising their pay out from $0.07 per unit per month to $0.075. They have a confident outlook for their business.

This bodes very well for shareholders, me included, especially as their forced conversion to a tax paying corporation looms in 2011. They previously stated that they would keep the distribution level constant going into this conversion. I guess they have one upped that today.

bought ADP

themoneygardener@gmail.com (MG (moneygardener)) — Fri, 09 Oct 2009 12:46:00 +0000

This week I started a position in Automatic Data Processing (ADP) within my wife's RRSP. I've had my eye on ADP shares for a few years and I decided to take the plunge now, even though the shares are not at bargain basement levels.

I wrote about ADP last year here.

My reasoning for buying into this company for the long term:

ADP is the dominant industry player and the class of their field
They have a great earnings and dividend growth history
They earn a high ROE and have low debt
The company is experiencing a flat earnings period due to a sharp drop off in jobs and economic activity, but I believe they will accelerate out of this well
I like their potential to grow outside of the US, Canada, and Europe in the coming years
Feels like a good time to buy this company when unemployment is high, even though the stock has had a bit of a run from it's March lows

ADP is due to to raise their dividend, however their current pay out ratio sits at 50% of earnings.

why McDonalds is a good investment

themoneygardener@gmail.com (MG (moneygardener)) — Tue, 06 Oct 2009 20:00:00 +0000

Grab some shares of McDonalds (MCD) now and you might not have to work there in retirement.

You can say what you want about how morbidly unhealthy the food is, or how they market to kids, but they do know how to grow the value of your investment. The fast food icon, which is actually the world's sixth most valuable brand, and the second most valuable food related brand, second only to Coca-Cola, has been around forever and is showing no signs of going away. What makes McDonalds shares such a good place to have your money invested? Let me count the ways...

1. The Food Tastes Good
Ok, I happen to believe that Brussels sprouts taste good as well but you can't pull up to a shiny window and order a 6 pack of sprouts with dipping sauce. The taste of McDonalds food appeals to many convenience seeking people, and they adapt their menu well to cultural tastes in any country they operate. It's quick, it's predictable, it's convenient, and it satisfies.

2. They Market To Kids & Adults Don't Really Mind
Oh, what a bonus for a two year old to get a free toy out of a drive through trip to the golden arches. Perhaps Mom & Dad will feel better getting the optional apple slices instead of fries with their happy meal. They have play gyms inside their stores, they sponsor kids sports, they give loads to charity, they are armed with a team of on-staff cartoon characters including Ronald and whatever movie Disney is pumping this month. McDonalds is basically a well-honed marketing machine that neither 'Super Size Me' nor 'The Subway Diet' can stop.

3. The Fundamentals
Mmmm, the dividend growth, just makes my mouth water. They've raised their dividend each and every year since 1976. They just recently raised it by 10%, at a time when other company's CEO's are eating Quarter Pounders and liking it, to cut costs wherever they can. McDonalds annual sales growth has been very consistent, their EPS growth over the long term has been great, and they generate returns on equity in excess of 15% most years. All this while maintaining a moderate debt level of $0.76 per $1.00 of equity.

4. The Future
The key to this companies future lies in management and adaptation. They've proven in the past that they are able to adapt to changing tastes and customer preferences. As they move through the developing world I am confident that quality of life improvements will go hand in hand with the need for convenient food that the kids like too.

Buy McDonalds in any economy. This is not a recession stock. Don't let that analyst with Big Mac sauce on his tie fool you.

Walgreen recovering from the flu

themoneygardener@gmail.com (MG (moneygardener)) — Mon, 05 Oct 2009 19:53:00 +0000

From the moment that I saw Dr.Oz receiving a flu shot from a Walgreens representative on his new daytime show, I knew that only good could come of it.

A combination of cost cutting, the H1N1 flu, and the recession coming to an end in the US seems to have Walgreen (WAG) up and at 'em again. The US drugstore chain beat expectations handily in their fiscal fourth quarter thanks in part to $0.07/share in savings from their Rewiring For Growth initiative.

Their September sales report also looked very strong as sales came in over 10% higher and sames store sales clocked in at an increase of 5.3%. Those are very strong numbers and probably reflect the extra emphasis on flu season this year in addition to the cost initiatives.

2009 turned out to be an extremely rare year for Walgreen, as they failed to grow their earnings per share. Walgreen has grown their EPS each year smartly from $0.76/share in 2000 to $2.17 in 2008 and it fell to $2.02 in 2009. Analysts are expecting great things from this stock in 2010 as the average estimate is for $2.32, which is a 15% rise. Applying a P/E of 16x, which is more than warranted due to Walgreen's stellar history and current market presence, you get a share price of around $37, which is about one dollar below where the shares trade today.

The street has made an about face on Walgreen stock as the shares change hands for almost twice what they went for back March. Ah.....opportunity missed.....

portfolio update Q4 2009

themoneygardener@gmail.com (MG (moneygardener)) — Fri, 02 Oct 2009 00:31:00 +0000

It has been quite a while since I updated my progress with my non-registered stock portfolio. the moneygardener blog was really born as a journal for this portfolio, so I like to summarize every now and again. Here are some of the key metrics that I track:

*All results to October 1, 2009
Return, (including dividends) Year To Date = +16.9%
S&P 500 Return To Date (no dividends) = +14.0%
XDV (Canadian Dividend ETF) (no dividends) = +26.5%

Current Yield = 4.4% ($8.75 per day)
Yield On Cost = 3.9%
One Year Dividend Growth Rate = 24.7% (includes purchases)

My one year dividend growth rate is in serious risk of going negative on November 1 as I am now starting to have tough comparables. Husky Energy (HSE), Yellow Pages Income Fund (YLO.UN), Manulife Financial (MFC), and General Electric (GE) have all cut their dividends over the past year. This will put pressure on my one year dividend growth rate from November 1 to at least May 1, assuming no more cuts come.

Average Portfolio Savings Per Month Last 12 Months = $893
Portfolio Value = $73,264
Leverage Ratio = 24.5% (percentage funded by HELOC)

My goal is to grow this portfolio to $175,000 with a leverage ratio of 0% by February, 2014. This will be very difficult, but not impossible, given the credit crisis' impact as well as another upcoming maternity leave. We are currently not meeting our goal of saving $1,000 per month but we are coming close.

Top Performing Stock Versus Cost = Royal Bank of Canada (RY) +28%
Worst Performing Stock Versus Cost = Bank of America (BAC) -53%

Overall this portfolio is still underwater including dividends, although there is a good chance that I could poke my head above water sometime in late 2009 or early 2010.

dividends, a love story

themoneygardener@gmail.com (MG (moneygardener)) — Mon, 28 Sep 2009 16:33:00 +0000

They're a bird in the hand, and they're worth fussing over. Although they don't require getting your hands dirty.

They're a friend when you're in trouble, and they'll give you a raise.

Why not get paid while you're sleeping?

are you overweight real estate?

themoneygardener@gmail.com (MG (moneygardener)) — Wed, 23 Sep 2009 15:13:00 +0000

Thicken My Wallet posted an interesting piece today on asset allocation. I contributed to his article and he used my concept of tracking the ratio house value / total assets.

You can find the article here.

the herd is never right

themoneygardener@gmail.com (MG (moneygardener)) — Thu, 17 Sep 2009 12:58:00 +0000

Why is it that the contrarian point of view seems to always be the correct one when it comes to the stock market?

For almost a solid 6 months everyone and his dog has expected the stock market rally to falter, and falter hard. Supposed pundits from every echelon of the financial system, including analysts, money managers, reporters, bloggers, and individual investors have all sung the same tune for the better part of 2009. The conventional wisdom was that the rally was weakly based and we should all get ready for another dip. I don't know if it was because people had just seen one of the largest collapses in confidence and the markets ever, and people tend to get cautious after an event like this, or just downright pessimism. We all should have known that whenever this many people agree that they can foresee a drop in the markets, the indices are headed higher.

The rally party pooper who sold in April of 2006 after the rally accelerated has missed a nice 26% charge in the S&P 500 since then.

net worth update, Sept 09

themoneygardener@gmail.com (MG (moneygardener)) — Sat, 12 Sep 2009 16:49:00 +0000

It's time to report my bimonthly net worth. I report my net worth on the moneygardener or around the 15th of May, July, September, November, January, and March.

Net worth results for the 2 Months Ended September 13, 2009:

Debt/Asset ratio dropped to 0.48 from 0.50 (record low)
Net Worth gained a huge 9.3% (record high)
Total Assets rose 4.2% (record high)
Total Liabilities shrunk by 1.0%
House Value/Total Assets fell to 63.4% (record low)
Non-Registered Portfolio grew 11.4% (record high)
Net Worth Calendar Year to Date Gain/Loss: +23%

As I type this update I am extremely pleased with our financial progress, as we look forward to March when our second child arrives. Everything is moving in the right direction and the moves are substantial. Our non-registered portfolio grew by a very strong 11.4% over two months and our net worth is up a staggering 23% since January 15. Our house value is now making up only 63% of our total assets, meaning that we are riding the roller coaster of the equity markets to a greater degree. Running against the wind was difficult over the past year, however the wind has been at our back lately. Home improvements are on the horizon and will eat into our potential savings as we move toward another maternity leave period.

lowered my cost of borrowing

themoneygardener@gmail.com (MG (moneygardener)) — Wed, 09 Sep 2009 01:18:00 +0000

As I've previously mentioned, last year I began borrowing money inside a line of credit and investing the funds in dividend paying stocks as the market took a nosedive. I deployed the majority of the money between October 6, 2008 and February 26, 2009. I should have instead invested all of the money in early March, 2009, but I'm just not that good...

The only piece of this strategy that continued to bother me was the fact that I was paying an interest rate of prime + 3% on an unsecured line of credit from a major bank. Even though I am able to claim this interest on my taxes, I was still unhappy with this rate. After attempting to negotiate a lower rate with a few banks on an unsecured line of credit, I decided to go instead with a home equity line of credit secured against our home.

I've just completed the process of opening a home equity line of credit with President's Choice Financial (CIBC Bank). The process was fairly easy and I was quite pleased with PC's price of $150 to open this loan. This option compared very favourably to the fees asked for by two other banks. On the eventual occasion that I close out this loan with PC I will be required to pay a $225 closing fee. The rate on this loan is prime + 1%, currently 3.25%.

Overall this dramatically decreases my cost of borrowing and I will make up the total fees of $375 in mere months. Writing off this interest at 3.25% makes this pretty close to free money.

doubled Husky holding

themoneygardener@gmail.com (MG (moneygardener)) — Fri, 21 Aug 2009 14:15:00 +0000

Today I doubled my position in Canadian oil firm, Husky Energy (HSE), just in time for the hurricane season.

The reasons I added to Husky here are many:

The dividend was recently cut, sitting now at a conservative $1.20 per share on 2009 estimated trough earnings per share of $1.80
Given the growth in China and emerging economies, I like the outlook for oil post banking crisis
Husky has very little debt and a great balance sheet
Given the company's ties with China, capital position, smaller size, and aggressive management, a takeover may not be out of the question
As mentioned previously, if I'm investing in a commodity that fluctuates wildly, I like to get paid regularly, instead of trading in and out; Husky provides this
If earnings snap back even close to 2006-2008 levels, Husky should be quick to prop the dividend back up
I also considered an investment in Crescent Point Energy (CPG), however I think Husky offers a better valuation at these levels

SYSCO & P&G still look good

themoneygardener@gmail.com (MG (moneygardener)) — Tue, 18 Aug 2009 13:17:00 +0000

With the run up the market has had since the March lows, it has become difficult to find stocks with attractive valuations. Many of the more cyclical stocks, as well as financials have really run up and I'm not sure that future earnings will justify the current prices in some cases.

Luckily there are still a few good buys out there. For dividend growth investors, it's a nice bonus when a company is still raising it's dividend through thick and thin. These two firms have solid balance sheets and fit that bill. They have stable product offerings and they've navigated through tough times before. Their dividends are growing and very secure. I've added to my positions in both companies over the past 6 months, and I am considering doing so again at these valuations.

Food distributor SYSCO (SYY) is yielding 4%, and trading at a P/E of 13.6x.

Consumer products giant, Procter & Gamble (PG) is yielding 3.4%, and trading at a P/E of 14.7x.

There are headwinds afoot for both of these firms, but I believe that as long term investments they may be ripe for the picking right now. I may put my money where my mouth is in the near future. For my further thoughts see the posts below.

Added More P&G

Took a Helping of Sysco

crisis takes it's toll on Manulife's dividend

themoneygardener@gmail.com (MG (moneygardener)) — Thu, 06 Aug 2009 13:31:00 +0000

The credit crisis has taken it's toll on the dividend of Canadian-based insurance giant Manulife Financial (MFC). Manulife's decision to cut its dividend by 50% to $0.13/share is part of an effort to build a strong capital position for what is sounds like are future acquisitions.

The CEO made the following statement today:
While we recognize the importance of the cash dividend to many of our common shareholders, we believe that retaining more of our earnings is the most effective means of building capital, while still providing an attractive yield for our shareholders who will benefit as we deploy our capital for growth. We believe that companies that build fortress levels of capital will benefit their policyholders and shareholders and be recognized favourably by regulators and ratings agencies."

This move was mildly expected, however I believe it will still come as a shock to many dividend investors, as Manulife has long been viewed as a stalwart on the Canadian and global financial scene.

Saputo pushes dividend up

themoneygardener@gmail.com (MG (moneygardener)) — Tue, 04 Aug 2009 19:56:00 +0000

Dairy producer Saputo (SAP) has increased it's quarterly dividend by a meagre 3.6% to 14.5 cents per share after reporting a flattish quarter on the earnings front.

Saputo shares are up 5% today and the stock now yields 2.3%. The pay out ratio on the actual quarter's EPS was 35%.

The company was hit by lower cheese prices in the US placing downward pressure on earnings and revenues, which were still up by 6.2%. This was the first quarter for inclusion of the acquired Neilson Dairy business which was the reason for the revenue increase.

This company is always strongly affected by cheese prices as well as US/CAD exchange. They seem to be focused on growth and I think the investment provides a nice mix between growth and stability; having a staple-type product.

a new use for dividends

themoneygardener@gmail.com (MG (moneygardener)) — Fri, 31 Jul 2009 01:44:00 +0000

Wow, the markets have been flying lately. The S&P 500 index is up 13% over the past 3 months. XDV (and ETF that tracks Canadian dividend paying stocks) is up 21% over the same period.

All this jubilation has caused me to begin to perform a behaviour that is out of character for me. It feels different from my normal long term, more savings = more investment = more dividends = more investment strategy but lately I've been letting the dividend tap run into my line of credit. That's right, I've been taking the money from dividends and interest that builds up in our investment account and using it to chip away at our investment line of credit.

Maybe it is the fact that stocks seem to go up everyday and therefore they get less attractive to me, or maybe it is because I like what it does to our net worth statement, but I'm going with my gut on this one for the time being. It's boring, it's conservative, but it feels good to reduce debt a little bit at a time.

fixing the moneygardener tech. problems

themoneygardener@gmail.com (MG (moneygardener)) — Thu, 23 Jul 2009 02:39:00 +0000

I've lost 125 subscribers and your old blogspot bookmarks won't work!

I'm not really sure what happened but the old themoneygardener.blogspot address is no longer redirecting to the new themoneygardener.com site. Also as of July 9 or so our feed was not updating regularly.

Please update your bookmarks to the new domain name and re-subscribe to the feed. The feed seems to be updating now. Hopefully this will resolve the problem.

Also bloggers and other linksters.....I would appreciate it if you would update your link to the moneygardener to the new .com address at http://themoneygardener.com.

Thank you for reading the moneygardener.

Shoppers Drug Mart should increase their dividend

themoneygardener@gmail.com (MG (moneygardener)) — Wed, 22 Jul 2009 16:52:00 +0000

Hey Shoppers Drug Mart (SC)!

You just reported an earnings increase of 7.5% amid one of most difficult Canadian retail operating environments in a long time. How about throwing shareholders a bone and giving them a little boost to the dividend?

The quickly growing Canadian drugstore chain's dividend has been the same 21.5 cents per share since the first quarter of 2008. The company is paying out a modest 33% of earnings and the stock yields 1.8%. Could Shoppers being hoarding cash for a take over of some kind? Either way, I would urge them to continue to raise the dividend on a regular basis, to not only reward current shareholders, but to build themselves a history of strength through dividend growth. A lot of investors, whether looking into the past or the future, like to see regular dividend increases and view the incremental hikes as a sign of stability.

Shoppers has raised their dividend regularly since 2005 and is now at risk of paying out an equivalent amount in 8 straight quarters. This would mean that if they don't raise in November despite recent growth in earnings, Shoppers would essentially pay out the same dividend in 2008 and 2009. What a shame, especially for a firm that I included as part of my future of Canadian dividend growth along with Rogers Communications (RCI.B) and Tim Hortons (THI).

market barometer

themoneygardener@gmail.com (MG (moneygardener)) — Tue, 21 Jul 2009 18:35:00 +0000

What an interesting time to be following the stock market, economic and business news, as well as corporate earnings this earnings season. This is my take on what is occurring broken down into smiles and frowns.

Smiles

Recent results from companies like Caterpillar (CAT), CN Rail (CNI/CNR), and others showed positive signals of stabilization of the economy as well as a pick up in emerging economies.
Many companies are really blowing away analyst earnings estimates including industrials and technology firms. Forward earnings guidance is also being raised.
The S&P 500 index is up 42% from its March lows
New economic estimates are indicating growth is right around the corner and the recession has ended.

Frowns

Funny thing is that earnings coming in 'not as bad' is almost always attributed to cost cutting, which can't go on forever.
Earnings are beating estimates, but have you noticed how low estimates are? For example Caterpillar's second quarter profit was down a whopping 66% from last year.
Unemployment continues to ramp up in the US and Canada and some estimates are indicating that jobless rate could top 10% soon.
The market is getting sick of 'not as bad' and 'stabilization' and is now searching for more in the form of growth, which may or may not come as quickly as Mr.Market wants.

Interesting stock moves lately:

Caterpillar (CAT) up 24% in the last five days
IBM (IBM) up 12% in the last five days
CSX Corporation (CSX) up 11% in the last five days

vancouverites are richest canadians

themoneygardener@gmail.com (MG (moneygardener)) — Mon, 20 Jul 2009 17:47:00 +0000

An interesting article appeared on today's Globeinvestor.com: Vancouver Ousts Calgary as Canada's Highest Net Worth City

For Canadians as whole household net worth dropped 6.2% in 2008. Our net worth dropped by pretty much that exact percentage during calendar 2008; I guess that makes us average. We live in Brantford, Ontario. In Calgary, Alberta net worths actually dropped on average by 12.3% and in Vancouver wealth dropped by only 3.1%.

Vancouver real estate prices are holding up pretty well making them the richest Canadians with an average net worth of $575,826 per household versus Calgary's $569,926 and Ontario's $354,968. British Columbians are also piling back into the stock market faster than elsewhere while Quebecers and Ontarians are socking money away in safe places.

the pricing of stocks

themoneygardener@gmail.com (MG (moneygardener)) — Thu, 16 Jul 2009 00:18:00 +0000

It is time for another question from the Personal Finance Clinic mailbag. By the way, thank you to all who submitted questions for The Personal Finance Clinic. Please visit Canadian Capitalist and Triaging My Way to Financial Success to view the balance of the Q&A.

Ellen asked;
Does it matter whether the value of my stock investments increases because of earnings or increase in value? If so, is there a rough and ready way for me to tell how much of the increase is due to earnings and how much due to price increase?

The simple answers to these two questions are 'No' and 'No'. Let me explain...

First off, you must understand that there is no value without earnings. Any increase in stock value that one might think is unrelated to earnings is a misnomer because it always comes back to earnings and earnings growth. Stock prices will always reflect investor sentiment about the future over the short term. Over the long term a stock's value should come back to reflect the true measure of a company's success, which is earnings per share (EPS). Broken down to it's bare bones, the only thing that really matters to a stock's value is earnings per share, however obviously several other factors will dramatically influence the price. If a food manufacturer just earned a great EPS number for the year but lost two major contracts due to a deadly contaminant in their product, the high EPS will matter very little as the stock is sold off hard.

For example, let's say Gusher Oil & Gas earned $4.00 per share in 2009. You might think the stock should trade for at least $32 per share or so (8x earnings), if the firm was in decent shape and was expected to grow earnings at a moderate pace. In reality Gusher could trade at $16 per share if oil prices are expected to plummet and Gusher had taken on too much high interest debt. On the flip side, Gusher could trade at $80 per share if they just discovered a new oil deposit and oil was expected to rise dramatically in the short term.

A good way to understand why stocks are priced the way they are, and why they move the way they do is to understand the sum of investor's thoughts about the company's future earnings growth potential. This is a complicated mish mash of predictions, anticipated industry trends, past performance, and expectations. At the end of the day every stock price is a guess at future earnings growth.

net worth update, july 2009

themoneygardener@gmail.com (MG (moneygardener)) — Wed, 15 Jul 2009 00:57:00 +0000

Debt/Asset ratio dropped to 0.50 from 0.51 (back to $1.00 for every $0.50 of debt - a record low)
Net Worth gained 1.7% (to a record high)
Total Assets rose 0.6% (to a record high)
Total Liabilities shrunk by 0.4%
House Value/Total Assets fell to 66.0% (a record low)
Non-Registered Portfolio grew 7.4%
Net Worth Calendar Year to Date Gain/Loss: +12.5%

Steady as she goes, as our net worth continues to grow to record highs. The S&P 500 index was up about 2.5% during the period and our net worth grew by 1.7%. Our savings rate has slowed lately as we had some lingering planned household expenses. I expect our savings rate to pick up over the next few months and the money will go toward debt reduction unless I see an irresistibly priced stock to add to. It is very encouraging to see our debt/asset ratio back down to meet the record low we achieved back in September of 2008.

Walgreen nearly doubles dividend since 2006

themoneygardener@gmail.com (MG (moneygardener)) — Thu, 09 Jul 2009 00:44:00 +0000

the moneygardener darling, US drugstore chain Walgreen Co. (WAG) has increased it's quarterly dividend by 22%. This is the 35th consecutive year that Walgreen has raised it's dividend. Walgreen has been growing it's dividend at a torrid pace over the past few years. In fact, since 2006 WAG has roughly doubled it's dividend.

The stock is now yielding only 1.8%, however a purchase during the depths of March, 2009 would have yielded 2.6% on cost. It is interesting that the company is choosing to increase the dividend at such a high rate given the current slowdown in earnings growth. Walgreen's last quarterly earning report was actually down 9% from 2008. The pay out ratio is rising and the company's traditional objective of rewarding shareholders with growth, may be shifting to include paying out cash in the form of dividends.

The company is currently largely focusing on cutting costs and driving productivity. 2009 earnings look like they will come in lower than 2008 after much expense due to cost-cutting restructuring. I remain very bullish on the company long term due to their strong brand, their market position, and US demographic trends. WAG currently makes up about 6% of my portfolio.

Last year in July, Walgreen increased their dividend by about 18%.

added caterpillar

themoneygardener@gmail.com (MG (moneygardener)) — Wed, 08 Jul 2009 14:25:00 +0000

I bought some shares of Caterpillar (CAT) today for my wife's RRSP. The basic thesis for this purchase is that for a long term hold, Caterpillar offers exposure to a leader in building out the infrastructure of the world. The short term may look very gloomy for this company, which presents a buying opportunity as the shares are down 65% from their all time high.

Caterpillar's CEO is actually predicting a return to 2008 sales levels within five years. This may or may not occur, but it is interesting to note that CAT was trading at $63-$85 during 2008 before the crisis hit.

Incidentally the stock actually yields a surprising 5.5% and is maintaining the dividend for now in the face of the downturn.