Recent Buy – Magna International

Magna InternationalOne of my favorite series of posts is when I add more capital to work and introduce a new stock to my portfolio. Here is my recent buy: I initiated a position in Magna International Inc (MGA) (MG.TO). Magna is a globally diversified automotive supplier headquartered in Aurora, Ontario, Canada.  In 2012 it was the largest automobile parts manufacturer in North America by sales of original equipment parts. Its operating groups include Magna Steyr, Magna Powertrain, Magna Exteriors, Magna Interiors, Magna Seating, Magna Closures, Magna Mirrors, Magna Electronics and Cosma International. Customers include General Motors (GM), Ford Motor Company (F), Chrysler LLC, Tesla (TSLA), BMW, Mercedes-Benz, Audi, Volkswagen, Land Rover, Toyota, and Honda to name a few (the customer list is too long from different divisions to include all names).

The company was founded by the Austrian-Canadian businessman and politician Frank Stronach. As of last year, he was ranked 19th wealthiest Canadian with a net worth of CAD $3.12B. Stronach founded the company in a Toronto garage in 1957, was chairman and CEO for decades and began the transition process to hand over the reigns in 2010 after a controversial $860M buyout of the multiple voting shares with which he controlled the company. In 2013, Magna paid him $52M (2.25% of Magna’s pre-tax profit) for consulting work and has indicated that 2014 will be the last year they will have him on the payroll. The company is now headed by Donald Walker, who has been in the industry for 34 years and with Magna  for 27 years.

Because all numbers reported by Magna Internatonal are in US$, this article unless otherwise specified uses US$. However, for my investment, I bought the Canadian listed stock (MG.TO) to avoid currency conversion hits.

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Recent Sell – Rogers Communications Inc

Rogers Communications Inc

Although not common, there are times when dividends growth investors have to sell and exit a position. This post details my Recent Sell – Rogers Communications Inc (RCI.B.TO) (RCI). Rogers is a diversified communications and media company with operations across Canada. It is Canada’s largest provider of wireless voice and data communication services and also one of the leading providers of cable television, high-speed internet and telephony services. The company was founded in 1920 and headquartered in Toronto, Canada.

Reason for Buying

  • initiated the position in Rogers in Feb 2014. The company had just released its quarterly earnings, which were terrible and the market punished it with a drop of 5% in share price. I initiated a position as it was a well known company and I lacked much exposure to the telecom sector. I only owned BCE at the time.
  • The company has been paying dividends since 2000 and has a five year dividend growth rate of 11.7%.
  • The company had been investing in the media business to grow and looking for more avenues with better profitability.

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Rogers Communications Inc – Attractively Valued But Challenges Remain

Rogers Communications IncRogers Communications Inc (RCI) (RCI.B.TO) is a diversified communications and media company. It is Canada’s largest provider of wireless voice and data communications services and also one of the leading providers of cable television, high-speed internet and telephony services. The company is a component of S&P/TSX 60 and has paid dividends since 2000. A dividend grower for 9 years, the company boasts a five-year dividend growth rate of 11.7%. Rogers has been facing challenges of flatlining revenues and declining earnings. To counter the trend, the company is focusing its efforts on growing its media business segment and attempting to make it more profitable. The analysts and investors remain cautious and skeptical and due to this reason the stock price remains subdued.

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Chatter Around the World – 70

Chatter Around the World is a curated weekly update of articles related to economics, investing, dividends and personal finance. In these weekly updates, I also capture my blog updates and news related to my portfolio holdings.

Canada Trade Surplus

Canada’s Trade Surplus

New Blog Posts

Let’s dive into the links that caught my attention this week.

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Cancelling My DRIP

As mentioned in my Outlook for November 2014 post, I have been contemplating cancelling my DRIP. There are advantages and disadvantages to owning a DRIP program and I have discussed the details in the post To DRIP or Not To DRIP. But I have come to the conclusion that the benefits do not outweigh the drawbacks anymore, hence the move.

Cancelling My DRIP

For the last couple of years, I have owned a DRIP plan for investing in Bank of Nova Scotia (BNS). While the benefits existed when I started the DRIP program, the biggest pull for me was the discount rate. BNS was offering a 2% discount for the dividend reinvestment, which was cancelled in March 2014. Considering that I still have plenty of room in my tax sheltered accounts to take advantage of and avoid paying the tax man, I have decided to move my BNS shares over to my discount broker and take a tax shelter. All the rest of my holdings are already in tax-sheltered accounts and once the BNS DRIP is moved, I will not be paying a single penny in withholding dividend taxes (or capital gains taxes).

Bank of Nova Scotia (BNS) is still a great long term investment and is currently 15% undervalued to fair price. Read my stock analysis here.

If you are unfamiliar with DRIPs, the website DRIP Primer is one of the best resources available.