Outlook for September 2015

What a volatile market! August saw some insane movements – from a 1000-point Dow Jones Industrial Average (DJIA) drop at market open on Aug 24th, to a stunning recovery a couple of days later. Market volatility has been expected for a while now and with the Fed on the verge of raising interest rates, it provides a great opportunity for long term investors to initiate/add to positions in the midst of the panic. There are equal number of proponents and opponents for interest rate hikes by the Fed. One thing for sure is that even if they do raise the rates, it will be a small token 25 basis points raise and the rates are not going to shoot up anytime soon. The world still stares deflation in the face with a strong US$ and collapse in the commodity markets, coupled with a weak demand from China.

On the Canadian front, after having two 25-basis points rate cuts in Jan and Jul of this year, some economists are already predicting another rate cut to take effect during the September meeting. The interest rates are already at record low at 0.50% and any rate cut will continue fueling the housing market bubble in Canada in an effort to prop up the economy, now that Canada is in a recession.

Outlook for September 2015

In February, we started putting together an index-based ETF portfolio for my wife’s portfolio. In order to avoid buying at a market top, we started off with a modest amount of funds put to work. We will continue building our position over the course of the year. The portfolio details are shared here. As for my portfolio, I hold a decent amount of cash as discussed in my 2015 goals post. I am well above the 3-5% of cash position target to take advantage of market corrections.

Portfolio Considerations

I have added some companies to my portfolio in the last couple of months and I am spread thin. For the remainder of the year, I intend to add and build on the positions instead of adding new names (unless something un-passable comes up). A lot of the companies are attractively priced and the following table details my portfolio holdings and some metrics associated.

Outlook-Sep2015

Dividend Increases

I am expecting dividend increase announcements from the following companies in my portfolio.

  • Realty Income (O) – last increase was 0.26% in Jun 2015.
  • Ventas Inc (VTR) – last increase was 8.97% in Dec 2014. After the recent spin-off of Care Capital Properties (CCP), Ventas has promised a combined dividend increase between the two companies will be 10% higher. An official dividend increase announcement is expected soon.

What are your thoughts on the stocks mentioned here? Do you own them or are they on your watchlist? What do you think of the current market levels and buying here? Make sure to leave a comment below as I value reading your questions and comments.

Disclosure: My full list of holdings is available here.

Photo Credit: mendhak

9 thoughts on “Outlook for September 2015

  1. A lot of good names there. I am interested in Apple, BNS, CVX, GE, OHI and REI.UN to purchase near future. Hopefully I build up sufficient cash position to jump into the market. Thanks for sharing!

    BeSmartRich

    • BSR,
      I think those are good names to pick up. I am contemplating dumping REI.UN from my portfolio since they do not raise their dividends and the stock has been stagnant for 4-5 years now. But I got in at the lows of the 2008/09 crisis, so I have quite a nice unrealized capital gain. The only thing stopping me is the fact that the stock appears undervalued and trading well under fair price.

      R2R

  2. I would love to add more US oil & gas companies like CVX, XOM. Too bad we’re running out of US cash and RRSP contribution room. That’s a good problem to have I suppose. May focus on Canadian market for the next few months.

  3. Hi ,

    I did go on a buyingspree last month so I don’t have much left in the warchest but I hope to add JnJ to my portfolio. A dividend increase from Realty income would be nice to.

    Cheers,
    Geblin

    • Same here, Geblin. Lots of new positions taken up in July and August over at my end and my cash reserves are running low. Would love to add JNJ if it drops again like last week.

      cheers
      R2R

  4. You’ve got a nice diversified portfolio there. I’m not too big a fan of ETFs, but I guess you can’t truly go wrong with them for the most part.

    I’m trying to avoid the energy sector right now to avoid becoming over-overweight there (I’m already overweight). That’s not stopping me from picking up BBL, though they aren’t really energy per se. NOV is at some compelling prices right now, but I have so much of it that I’m trying to resist. HSY is also at a good………decent………..less ridiculously expensive price than usual. And of course, there’s the Canadian banks that all the dividend investors love. There are branches of TD Bank all over where I am; I would like invest in that to compliment my WFC holdings. And then there is OHI. Health care REITs are nice.

    I’m buying EMR, UNP, BBL, and MMM right now (MMM is a company that I’ve been checking lately to see if it drops below a P/E of 20, and it FINALLY did). After that, I don’t think I’ll have the capital to invest until January. I need to find a second job.

    Oh, as for the Fed raising the rates, they’ve been saying that for years. They will, then they don’t, then they will, then they don’t. I’m not saying they will or won’t, or that they should or should not, but I’ll believe that the rates are going to be raised when they are raised. Not that it matters anyway from an investment perspective. I personally care more about whether KO is going to be selling more soda and whether CL is going to be selling more toothpaste than where the interest rates will be. Except at work, when customers come in demanding to know why the HELOC rates went up. Fun.

    Sincerely,
    ARB–Angry Retail Banker

    • I hear you avoiding the energy sector – I think I have quite a chunk of my investments in that sector and am avoiding adding too much there. I think your picks for the banks are spot on – with TD and WFC – both are part of my holdings and couldnt be happier with owning these two banks.

      Thanks for sharing your industrial sector names – the industrials are looking very attractive indeed and I am looking at them as well. Some great finds that is usually hard to find – I need to add more there.

      Fed raising rates has been quite a drama, hasnt it? A few basis points here or there wouldnt matter – like you mentioned, what really matters is how the businesses perform going forward. Sounds like fun – explaining to clients why their rates went up 🙂

      Thanks for stopping by and sharing your thoughts. Always appreciate the input.
      R2R

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