Success through simplicity entails buying the right companies and holding them a long time. This reduces stress and workload managing investments, and leads to better outcomes. But do I follow my own advice?
My first decade of stock investing was unsuccessful so when I transferred my RRSP into a stock account in 1993, I began a new approach. I’ll share examples from this approach, both good and bad.
My longest holding is Bank of Nova Scotia (BNS), held since early 1993 valued at $5.59 per share. Its dividend was 5.0 per cent at the time. Over the 26 years I have received about $39 per share in dividends, almost seven times my original investment. I added to the position in 2016 at $55.33. BNS is currently worth $73.09, and yielding 4.8 per cent.
I purchased shares in three other companies 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 per cent at the time and paying out $32 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 $58.92 with 5.4% yield. I have held BCE for all but one of those 26 years.
I purchased shares in three other companies almost 20 years ago, including Power Corp bought for $12.75 in 1999, yielding 1.9 per cent. The dividend has increased to the current rate of 5.4 per cent, paying me a total of $19 per share or 1.5 times my original investment. I added to the position in 2015 at $29.05. They are currently $29.50.
I added Royal Bank in 2000 at $16.01 per share, yielding 3.6 per cent 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 $103.54, yielding 3.9 per cent.
To round out the long-term success examples, I added TransCanada Corp in 2000 at $10.95, yielding 7.3 per cent. 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 $60.20, yielding 5.0 per cent.
Stock investing isn’t possible without a few blemishes. I 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 $17.43. It has paid a small dividend adding up to about $6. 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 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.