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Success through simplicity entails buying the right companies and holding them a long time. This significantly reduces stress and workload managing investments, and leads to better outcomes. But do I follow my own advice?
My first decade of stock investing had been unsuccessful so when I transferred my RRSP into a stock account in 1993, I began a new approach. I would like to illustrate this approach with examples, both good and bad. I used my records and dividend details on the brokerage website, to portray the examples as accurately as possible.
My longest holding is Bank of Nova Scotia (BNS), held since early 1993 valued at $5.59 per share. Its dividend was 5.0% at the time. Over the 26 years I have received about $39.00 per share in dividends, almost seven times my original investment. I added to the position in 2016 at $55.33. BNS is currently worth about $70.00, and yielding the same 5.0%. Its dividend has increased similarly to the share price.
Shares in three other companies were purchased at the same time: Noranda, London Life, and BCE Inc. I added to the Noranda position in 1995 and 1997. Noranda spun off stakes in two smaller companies and merged with Falconbridge, with the combined company being acquired by Xstrata in 2006. I sold at this time, parlaying about $7,000 into $37,000, also collecting dividends for 13 years.
I purchased London Life for $10.06 and sold in 1997 for $34.00, when they were acquired by Power Financial. BCE was purchased at $41.87 and sold in 2000 for $168.05. BCE owned a large stake in Nortel, which was exploding upwards during the tech speculation of the late 1990’s. While my M.O. is to buy value and rarely sell, that doesn’t mean never sell. Nortel carried BCE to a ridiculous valuation so I sold. It subsequently spun off Nortel, separating itself from the debacle to come.
I repurchased BCE in 2001 for $34.69, yielding 3.5% at the time and paying out $32.00 per share of dividends to-date. I added to the position in 2013 at $42.62 and in 2017 at $60.68. They are currently about $61.00 with 5.2% yield. Thus I have held BCE for all but one year of those 26 years.
Three other companies were purchased almost 20 years ago, including Power Corp bought for $12.75 in 1999, yielding 1.9%. The dividend has increased to the current rate of 5.6%, paying me a total of $19.00 per share or one and a half times my original investment. I added to the position in 2015 at $29.05. They are currently about $28.50.
I added Royal Bank in 2000 at $16.01 per share, yielding 3.6% and have collected over $38.50 in dividends to-date, almost two and a half times my purchase price. I added it to my wife’s RRSP in 2004 at $30.51 and in 2008 during the financial crisis, at $35.25. It is now about $103.00, yielding 4.0%.
To round out the long-term success examples, I added TransCanada Corp in 2000 at $10.95, yielding 7.3%. I have collected over $30.00 per share of dividends, almost three times my original investment. I added to my position in 2011 at $37.17 and in 2015 at $41.84. It is currently about $65.00, yielding 4.6%.
Stock investing isn’t possible without incurring a few blemishes. I originally purchased Barrick Gold in 1999 and Placer Dome in 2001. Barrick bought Placer in 2006, making my average cost $19.15. I sold part of the stake in 2017 for a measly $20.83 and still own part currently valued at about $16.00. It has paid a small dividend adding up to about $6.00. In 1999 gold was about $400 per ounce and today it is $1,300. I hit the bottom of the gold market when I bought these gold companies, but haven’t made money on them. That’s what bad management can do.
In 2000 I purchased a small technology company called Kasten Chase. It was a highly touted software security company with supposed lucrative government contracts. What’s not to like, tech, government, security? It went broke taking all $1,600 invested, more appropriately speculated. Fortunately I didn’t speculate in a big way.
There have been other successes and blemishes contributing to the 11% annual returns. Adding to the position especially after a price decline also contributed to the long-term success. In the future, I will discuss the US side of the RRSPs.
During a 35+ year career in agriculture, Herman VanGenderen became an active investor in stocks and real estate. He writes a monthly newsletter and his book “Stocks for Fun and Profit: Adventures of an Amateur Investor” is available at internet book sites. Visit his website at www.you1stenterprises.com, or email him at email@example.com.