TD Bank is now a HOLD!

TD was one of my core holdings. I was content to hold TD and happy to add to my holdings when the price dropped. Adding to my holdings was a mistake. The market was onto something that I was not: TD was in deep legal trouble in the United States. The second biggest Canadian bank has now put aside hundreds of millions of dollars in anticipation of some damn big fines related to money laundering accusations in the States.

TD is still a core holding of mine. I cannot afford to sell it and as I had no intention to sell, the pain is mitigated. I will hold onto my stock and pocket the 5. 43% dividend. My guess is that the dividend is still safe. TD has gotten enough bad press. It does not have to soil its reputation with its first dividend reduction in its long history.

If you hold TD, as I do, your losses may be around a long time, and keep holding. If you are a value investor, move with care. TD may be facing fines of $1.5 billion U.S. plus annual remediation costs in the hundreds of millions stretched over about four years. The painful scenario appears to be already priced into the price of the stock but have both shoes dropped? I am not so sure.

TD is officially off my buy list.

Expert stock pickers can be wrong and often!

To avoid being sued, I blacked out the analyst's name but the important information is still here. This stock picker has a win-loss ratio of 8:32. Going by his recent picks, he was right only 20% of the time. This fellow should stick to coin-flipping.

His average return was in the red at -6.0%. This is really dismal.

Years ago I gave a few thousand dollars to London Life to invest for my retirement. London Life lost something in the neighbourhood of 75% of my savings. When I retired, because there was a maximum loss clause, London Life game me back 75% of my original investment.

Losers! And they took me down with them.

Invest in dividend-paying, blue-chip companies, spread your money around, in other words diversify, try to not time the market but keep some powder dry to buy when the bear is loose and you should easily best analysts like the one shown or the folks in charge of my London Life investment.

Playing B2 Gold to win

I find B2 Gold (BTO) appealing. Why? Because it is opening a gold mine in Nunavut come early next year. Gold mines are all too often found in iffy parts of the globe. Nunavut is a welcome change of pace.

I paid about $3.64 for my original 2750 shares. I saw it as a bit of a gamble but it is fun to gamble as long as the risk is not too high. I was comfortable with the risk/reward offered by B2 Gold. Shortly after buying BTO I received a dividend of about $150 Canadian.

A few weeks later I sold all my position for $3.88 a share. I made a capital gain of about $640. I immediately put $200 toward my 2025 income tax and used the remaining cash to fund a bid for 2900 shares of BTO at $3.60. It was another gamble. It took some days but the order was eventually filled.

B2 Gold then tumbled daily until it found support at about $3.45. On the surface, that represents a loss but after the dividend and my capital gains are factored in, I am still in the black on my B2 Gold purchase. I have another sell order sitting on the books. This time I am hoping for $4.20. I'm patient. I can wait.

The target value for BTO as shown by WebBroker as been climbing recently. Some analysts see BTO hitting $6.00 and even $7.00 within the coming year but it might be a volatile journey. If it is, I plan on being there to profit.

By the way, I am playing this game using my non-registered account. The CRA does not look kindly on investors using their registered accounts for anything resembling day trading. Gambling, especially when done repeatedly with one stock, is not for one's registered accounts.

Honest, Dr. Graham Brockley, I am not a "bot".

Recently I found an interesting Facebook page devoted to dividend investing: Canadian Dividend Investing. I'd post a link but because of a complaint, I believe, from Dr. Graham Brockley, of Ladysmith Urgent Care in British Columbia, I have been blocked. Why? I think it's because he thinks I am a "bot".

The good doctor is interested in the Frugal Dividend Portfolio created by Norman Rothery and carried by the Globe and Mail. I'm familiar with this portfolio as TD WebBroker reposts it in its News section. The portfolio is the result of a unique screening process devised by Rothery. I gather Dr. Brockley would like to emulate the Rothery screening system. I cannot say for certain as the doctor shut-down our conversation after accusing me of being a "bot".

I liked the direction the doctor was going. I decides to continue my investigation without him. The first thing we must know is how does Rothery structure his screening process? I turned to Andi. Andi is an Ai powered search engine. Andi told me:

 

Norman Rothery constructs his Frugal Dividend portfolio using a multi-step process that focuses on large, stable dividend-paying stocks trading at low valuations.

The process begins with the 300 largest stocks on the Toronto Stock Exchange (TSX) by market capitalization. It then narrows in on the roughly 200 stocks that pay dividends.

From there, it selects the 50 dividend stocks with the lowest volatility over the prior 260 days.

Finally, it picks the 10 stocks with the lowest positive price-to-earnings (P/E) ratios from those 50 low-volatility dividend payers.

The portfolio is typically re-balanced monthly or quarterly. When re-balanced monthly, it has historically replaced about two stocks per month on average.

Rothery's Frugal Dividend approach aims to build a concentrated portfolio of undervalued, stable dividend stocks to deliver market-beating returns over the long run. However, investors should be prepared for volatility.

 

Has his approach worked? Amazingly well if the Ai search engine Andi is correct. According to Andi backtesting has shown the Frugal Dividend portfolio gained an impressive 17.4% annually from 1995-2022, assuming monthly rebalancing. Even with just annual rebalancing, it returned 16.9% per year on average over that period.

A caveat, be aware that while the portfolio has generated strong long-term returns, it can still decline significantly during market downturns. For example, it fell 35% in the 2008 financial crisis and 28% during the 2020 COVID-19 crash.

As of March 2023, the Frugal Dividend portfolio had a median dividend yield of 4.4% and median earnings yield of 12.5%. The latest version of the Frugal Dividend Porfolio that I could find is posted below.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Norman Rothery, PhD, CFA, is the founder of StingyInvestor.com. His ideas on investing are published regularly in the Globe and Mail and reposted by TD WebBroker in their News section. Rothery is a man worth following.

If, like the good doctor who inspired this post, you would like to do your own screening for the the perfect income portfolio, there are a number of screening programs available online. Sadly, many only allow limited access to the screening tool unless a payment, often monthly or annually, is made.

Screens available on the Internet

• Stock Rover - Best for fundamental investors, offering robust screening and research features to help investors make informed decisions and find undervalued stocks. According to the information I found, Stock Rover offers the following pricing plans:

• Free Plan: Completely free
• Essentials Plan: $7.99/month or $79.99/year or $139.99/2 years
• Premium Plan: $17.99/month or $179.99/year or $319.99/2 years
• Premium Plus Plan: $27.99/month or $279.99/year or $479.99/2 years

The search results also mention that Research Reports can be bundled with any yearly or 2-year Stock Rover plan for $49.99/year, otherwise they cost $99.99/year.

• Trade Ideas - Best for technical traders, with its AI-powered stock screener "Holly" that uses machine learning to provide stock recommendations. 10 day test period. According to the search results, the cost of using Trade Ideas depends on the subscription plan: Trade Ideas offers both free and paid subscription plans. 

• The free plan provides access to basic stock scanning and screening tools. 
• The paid Premium subscription plan offers more advanced features like backtesting, auto-trading, and access to the AI trading assistant "Holly". 
• The specific pricing details for the Trade Ideas Premium subscription are not provided in the search results. However, it is mentioned that the Premium plan is designed for active, short-term traders and provides access to institutional-grade trading tool.

• Finviz - Best free stock screener, with a user-friendly interface and the ability to filter stocks based on various fundamental and technical criteria.  

• StocksToTrade - Best overall low float stock screener, with a highly customizable desktop app and an algorithm-based chart analysis tool called Oracle. 

• StockFetcher - Best customizable low float stock screener, allowing users to code their own complex filters using a coding-like language.
  

• ChartMill - Most versatile stock screener for low float stocks, offering a combination of technical and fundamental parameters. 

• Yahoo Finance - Offers a free and advanced stock screener with a wide variety of filters, including the ability to screen for sustainable ESG stocks. 

• TradingView - Has a user-friendly stock screener interface, and also offers forex and cryptocurrency screeners.

• StockFetcher - Supports over 125 indicators to build unique stock filters, though the interface may be overwhelming for beginners.

• Fidelity - Brokers often provide their own free stock screeners, which may be a good option if you already have an account with them.

Stock Unlock: worth a look

Here is what Perplexity had to say about Stock Unlock.

Stock Unlock is an investment education and analysis platform that helps both novice and experienced investors research and evaluate stocks. Based on the search results, the key things Stock Unlock does are:

• Provides detailed fundamental analysis and data on stocks, including financial metrics, analyst data, insider trades, and ownership information. This allows users to thoroughly research and evaluate companies before investing.1234
• Offers investment education and guidance to help users, especially beginners, learn how to analyze stocks and make informed investment decisions. The platform has over 200 pages of custom educational content.3
• Allows users to easily compare the fundamentals of multiple stocks side-by-side, which helps identify good investment opportunities and avoid poor ones.23
• Offers portfolio tracking and monitoring tools to help users manage their investments, including features to visualize and analyze dividend income and returns over time.4

In summary, Stock Unlock aims to empower both novice and experienced investors by providing comprehensive stock research, analysis, and educational resources all in one platform, streamlining the investment decision-making process.1234

Create a portfolio and backtest your creation

Recently I joined the Facebook group Canadian Dividend Investing. Someone expressed interest in the Frugal Dividend Portfolio created by Norman Rothery. The question piqued my interest and I turned to the Ai search engine Perplexity. It returned the following:

There is a way to create and back-test a portfolio of Canadian stocks and ETFs. How? Use the Portfolio Visualizer tool. It lets you construct one or more portfolios based on selected mutual funds, ETFs, and stocks. You can then analyze and backtest the portfolio returns, risk characteristics, style exposures, and drawdowns over a specified time period. To create and back-test a portfolio of Canadian stocks and ETFs using the Portfolio Visualizer:

1. Go to the Portfolio Visualizer website at https://www.portfoliovisualizer.com/backtest-portfolio
2. In the "Portfolio Allocation" section, you can add the Canadian stocks and ETFs you want to include in your portfolio. You can search for and select the specific funds you want to use.
3. Set the time period you want to backtest, such as the past 3 years.
4. The tool will then analyze the historical performance of your portfolio and provide detailed metrics like returns, risk, and diversification.

This allows you to see how your selected mix of Canadian investments would have performed over the past 3 years, which can help you evaluate and refine your portfolio before investing real money. The Portfolio Visualizer is a useful tool for building and testing investment portfolios.

There are three versions of the Portfolio Visualizer and one is free. As is to be expected, it does not deliver all the bells and whistles of the other two but it is amazingly good. It is certainly worth a look. I wonder how long the free version will remain available online.

Sometimes investing is gambling and its fun!

B2 Gold (BTO) is a Canadian gold mining company with its offices in Vancouver, British Columbia, and it's a penny stock on the TSX. Recently, I read that B2 Gold is opening a mine in Nunavut early in the coming year. With my interest piqued, I did a little research.

On one hand many of the target values for the stock are being re-evaluated downward. In WebBroker, I clicked on News and read "RBC Cuts Price Target on B2Gold to $3.50 From $4." This was but one of the bulletins announcing a lowered target.

On the other hand, when I clicked on Analysts I discovered that B2 Gold in rated a Strong Buy with a price target of $5.66. That is down from the $6 plus target that B2 Gold held recently but it is still well up from my $3.60 entry point. A check with Morningstar showed that Morningstar saw B2 Gold as fairly valued. No clear cut direction here as to whether one should buy BTO.

Finally, as a dividend investor, the 5.9% dividend was a magnet or would have been if it were not for the published payout ratio of 1,981.94%! That is just a crazy number. How is that even possible?

Did I buy? Yes. Why? Just for the fun of it. For the excitement. Yes, the money invested in BTO might disappear but it also might return a very nice profit. This is a "do you feel lucky" moment and I felt lucky. So far, I've been lucky.

I bought a few thousand shares at $3.64, kept them long enough to collect a nice dividend, and then sold all for about $3.85. Including the dividend I was now up more than $700. I placed an offer to buy but a low ball offer. Yesterday, I picked up all the shares I sold and then some at $3.60 a share. Today BTO is selling for $3.77. 

The game is not over but I may well make more than a thousand dollars gambling on B2 Gold.