Canadian Western Bank

Recent Purchase: Canadian Western Bank (TSE: CWB)

Purchases

On January 8th, I purchased 70 shares of Canadian Western Bank (TSE: CWB) at $25.25 with a trading cost of $6.95 for a total investment of $1,564.45. CWB has been completely hammered the last 52-weeks falling 33.68% in total; 7.78% of which happened since this new year January 2016. CWB has a 52-week range of $21.04 – $31.67, signifying a steep sell-off due largely to fears reverberating due to the oil glut, and the resource-based Canadian economy.

Sporting a 4.13% at my purchase price, CWB adds $64.40 to my 12-month forward dividend income; representing 6% of my total 12-month forward dividend income which has been pushed to $1,122.78. This averages out to $93.57 a month in dividends. I’m so close to an average of $100 a month and it’s getting very exciting. Only one or two purchases away from crossing that incredulous milestone. 

CWB actually follows all 5 rules of the Dividend Beginner’s stock picking strategy.

5 Rules of The Dividend Beginner’s Stock Picking Strategy

1.The company must have paid increasing dividends for a minimum of 10 years

According to the Canadian Dividend All-Star List, CWB has increased their dividends for 24 calendar years. If we look at fiscal years, CWB kept their dividend steady from 2009 – 2010, but quickly got back to increasing it as they were in better standing than the Big Five.

In fact, their most recent quarterly cash dividend of $0.23 being paid (which I, unfortunately, will not collect) is a 5% increase over the previous quarter and is 9% higher than the quarterly dividend declared one year ago. Since 2011, CWB has increased their dividend twice a year. CWB is not stopping!

2. The stock must yield a minimum of 2.00%

CWB currently yields 4.27%, far, far above the minimum 2%.

3. The stock must have a P/E (TTM) no higher than 20.

CWB is trading at an incredibly low P/E of 5.6. The 5-year average P/E is 12.8; that means in relation to the trailing P/E, CWB is trading at a 56% discount!

4. The stock must have a 10 year YOC of at least 6.00% 

The 10-year yield on cost of CWB (if we use the 10-year dividend growth rate of 15.68%) is 17.59%. Now that’s amazing!

5. The company’s dividend payout ratio must be below 80%.

CWB pays out 33.24% of their earnings to shareholders through dividends. This payout ratio is lower than all of the Five Big Banks of Canada.

If you’d like more details on Canadian Western Bank and whether it could be a right fit for your portfolio, you can check my two decision-making posts:

  1. Stock Watch List for January 2016
  2. Bank of Nova Scotia (BNS) vs Canadian Western Bank (CWB)

 

Dividend Beginner

A 22 year old Canadian dividend growth investor striving for early financial independence; building as many passive income streams as early as possible.
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Bank of Nova Scotia (BNS) vs Canadian Western Bank (CWB)
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  • Nice purchase, DB. Your article from last night caught my eye and Ive been thinking about CWB. Definitely a strong investment case can be made for it. Now that Canada is in recession/coming out of recession and things still looking just as bad if not worse for the comign months. Probably a good time to pick up the banks in current situation.

    Best
    R2R

    • Hey R2R,

      Glad to have given you an investment idea. I agree with you that it’s a good time to pick up some bank shares and would like to invest further into BNS, or initiate positions in RY or TD next. Of course, if I fall below 10% on my new CWB investment I’ll be adding to that as well.

      Thanks for visiting and commenting
      DB

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