On June 24th, I added 30 shares of Magna International (NYSE: MGA) to The Dividend Beginner’s portfolio. Brexit managed to completely cave the stock as the corporation had just recently announced plans to build a 225,000-square-foot aluminum casting facility in Telford, U.K., that it said would create up to 295 jobs.
I purchased the shares at a $48.63, with a trading cost of $6.95 for a total cost basis of $1,465.85. The stock has pushed lower since then but I believe it’s a fantastic opening for a long-term position in this high-quality company which has been one of the top stocks in our monthly stock lists for a few months in a row.
My position in MG accounts for 3.08% of my portfolio value, and increases my exposure to the Industrials sector to 11.4%, which is about where I’m satisfied with it being as opposed to a few months ago where it was a pittance. If I were to increase my Industrial exposure at this point, I’d probably add to EIF.TO for the high yield in monthly payments and incredible metrics.
I still have no positions in Basic Materials, Consumer Staples, Healthcare, or Technology. This needs to be remedied soon as I’ve missed a humongous run up in precious metals (basic materials) for the year, after dropping Goldcorp Inc. after their latest dividend cut – I was fed up with their lack of shareholder appreciation.
My exposure to the Financial sector has finally fallen below 30%, as I continue to try my best to find stocks outside of this sector (it is one of the largest proponents of the TSX).
Dividend Income Up 1.44%
Unfortunately, the reason I’ve been avoiding purchasing Magna International stock is because of the low dividend in comparison to my original investments. However, Magna’s dividend is one of the safest I’ve ever seen – with a payout ratio of only 18.15%. In addition to this, their 5-year dividend growth rate is a whopping 33.18%. In these metrics, it’s similar to Canadian National Railway – without the incredible track record that CNR can boast.
Magna International pays a quarterly dividend of $0.25 USD, which is $1.00 USD annualized. In CAD terms, this is a dividend of $1.29, and makes my initial yield on cost 2.65% (almost makes me want to cry).
Magna International adds $30.00 USD to my annual dividend income, or $2.50 USD per month. MG has increased their dividend consecutively for the past 6 years and have a very open pathway to continuously increasing it for years ahead.
My 12-month forward dividend income has risen from $2,088.86 to $2118.86, and my monthly dividend income is now $176.57… Nothing special at all this month in terms of income. I’m happy to have been able to resist investing in a high yielding stock and instead invested in this solid long-term company. Despite dividends coming in in USD, I do not convert the cash into CAD when calculating my yearly and monthly dividend income (CAD and USD are a 1:1 ratio for simplicy).
|Annual Dividend Income||$2,088.86||$150.72||$2118.86|
|Monthly Dividend Income||$174.07||$2.50||$176.57|