OPTIMISM #6 - June 3, 2020Dear Clients and Friends,
Reading the morning news, I find it ironic that there is very little to be optimistic about and yet it’s better than what’s on TV. However, if you look at share prices of our beloved dividend growth stocks, quite a different picture emerges.
Bank of Montreal shares are up over 5% to 74$, in one day. That is twice the annual gain of the best high interest savings accounts.
Scotia shares are up nearly 3% to 59$, still cheap. Even if you missed buying under 50$ recently, it’s still a good deal.
Yield, the amount of cash we get per year, is $3.60 / ~59$ = 6.1%. Plus, the shares will eventually go back up to their true value of about 77$. Who knows when, but if you get 6.1% income while you wait, who really cares?
There is a gravity-like force, pulling shares towards their true value. It happens every time.
We will all wish we bought more.
Since my last email, we have received dividends from BMO, RBC, Enbridge, Canadian Utilities, Canadian Tire. Power Corp and Brookfield paid earlier in May.
Thank you for your patience through such trying times and hats off to those who bought when your emotions told you to sell.
Keep leaning on your Portfolio Managers to buy more great names at discount prices. It’s the closest thing you’ll ever see to free lunch.
Enjoy the rest of your week.
Derek Moran R.F.P.