Hey guys hope your week is going well. I had a little bit of activity on the investing front that I thought I would share with you. Before that though does anyone know what is going on with the market?? We were in a bear market and now at the time that I write this we are back in a bull market. So much craziness going on that I haven’t done anything since Monday.
I decided to combine the dividend cut and stock purchase because they involve the same company.
Dividend Cut
On Monday March 23rd NFI Group (ticker: NFI) released a statement regarding the state of the business in regards to the impact covid-19 is having on the business. In this statement the company said that they would be laying off permanently 300 workers and idling their plants for two weeks beginning March 30th if not sooner. The other big thing was that they were “temporarily” going to reduce the dividend by 50% beginning with the April payment. The dividend was $0.425 before this news and now sits at $0.2125. I held 53 shares at this time and so my income is being reduced by $45.05.
Normally I would sell a stock once they cut their dividend, however in this environment I am going to hang onto my shares. I believe in this pandemic environment it is better to be prudent with your cash especially if your closing your facilities and no money coming in.
The Purchase
By Monday afternoon the stock was being hammered for cutting the dividend it was down by 30%. I thought this was too much and decided to buy more shares at this reduced price and average down my costs. Purchase was made in my TFSA account.
I bought an additional 25 shares at a cost of $11.92 per share. I now hold 78 shares of the company. These additional shares will increase my income by $5.31 quarterly and $21.24 annually.
This is the only buying I’ve done this week, I actually thought like a lot of people I believe that the market would have continued to drop, however we have seen three days of gains. I will continue to sit on the sidelines and watch this market for the time being.
Thanks
Matthew
Nice move, Matt! The temporary cut in dividend is very understandable and prudent in my opinion. Companies need to preserve cash, especially the ones whose cash flow is affected. I’m keeping an eye on NFI. They will continue to build buses once this mess is over.
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Thanks German, hope you and the family are well! In fact NFI received a bus order either today or yesterday from SAN Diego 😁
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We are doing fine, thank you. I mostly work remotely now, but still need to go to the office twice a week. Montreal is becoming a new epicenter in Quebec. I live far from badly affected areas.
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You sure have been busy on the buy front!
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Hey Bob I sure have lol. I’m slowing down though just the one purchase this week. I still have some cash on the sidelines, going to wait and see what the market does in the next week or two. Have you been buying?
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Matthew,
Interesting choice after the dividend cut! It will be interesting to see how long this cut is “temporary.” Right now, it seems like it is anyones guess!
Bert
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Hi Bert I’m thinking that this will last hopefully for April and July’s payments then if everything is better the October dividend will be back to where it was. But like you said it is anyone’s guess!
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