Something exciting happened this past week.
Incase you missed it, Walmart’s stock jumped approximately 10% to $ 99.6 US per share on November 16, 2017. According to online sources, this jump was most accurately connected to Walmart’s third-quarter press release which showed how the company has performed from August to November.
Wal-Mart Stores, Inc. employs approximately 2.3 million people across the globe through Walmart US, Walmart International and Sam’s Club. The company has certainly grown from its humble beginnings in Arkansas under the entrepreneurial direction of Sam Walton. Today, Wal-Mart Stores, Inc. earns well-over $400 billion USD in revenue annually through their stores and online platforms.
According to the company’s third-quarter annual report, the company earned over $100 billion USD over the course of three months. Compared to last year, this is a performance improvement of approximately 4.2%.
Should investors buy stocks in Wal-Mart Stores, Inc? Well, the traditional advice is to buy low and sell high. Is Wal-Mart at a ‘high price’? Probably, given that the recent 10% climb has brought Walmart to its highest stock price ever. However, the dollar-cost-averaging approach would encourage investors to buy the stock anyways, even though it is likely to correct. The company is probably a sound investment because it earns hundreds of billions of dollars each year and has increased its dividend payout each year since 2012.
Thanks for reading & happy investing,
Your team at CanadianDough.
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It came as a pleasant surprise when I saw on my iPhone that Nike’s shares have jumped up 11% today. All of the companies that I track don’t move up or down more than 1% on a typical day.
Of course I was curious about what lead to the 11% climb. A quick Google search shows that Nike recently published its 2017 full year result earnings. It must have been a good report.
According to Nike’s investor relations, Nike earned revenues totalling $34.35 billion USD, which is 6% higher than what it earned throughout 2016. To save the confusion, Nike’s financial year ran from June 1 2016 to May 31 2017. After deducting all of the company’s expenses and taxes, Nike was able to retain $4.2 billion USD, which is 13% higher than last year’s performance.
Is it a good time to buy Nike stocks? Who knows, maybe the stock will continue to climb, or maybe it won’t. Hopefully the first quarter of the 2018 financial year will start off on the right foot.
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I’ve been fortunate enough to have some extra spending money left over from a trip to New York City. I suppose I could cash the American dollars at the bank and receive Canadian dollars, or I could use the American dollars to buy American stocks. I like that option a lot because the greenback has been appreciating in value and American stocks continue to go strong.
I’m deciding on buying an ETF this time around. I think an ETF is great, especially one that tracks the S&P 500, because they would let me ride the wave that is the American stock market. Over at least the past 30 years, the S&P 500 has managed to grow at an average rate of 12% per year. Plus investing in an ETF that tracks this index is like investing in the whole stock market. I have faith in what major investors have said in the past, that the American stock market will continue to grow over time. I would expect some years to be better or worse than others, but if I can find a way to make extra money without having to touch my stock portfolio, it should pan out well.
I’ve narrowed my search of ETFs to three: OEF, SPY and IVV. I like OEF because it is the most affordable ETF out of the three, but it also has the highest expense ratio, which I think, means it actually costs the most to own. However, IVV and SPY are close in their price, but they’re expense ratios are slightly different even though they seem to have the same holdings. Also, they both pay dividends every three months (roughly $1 USD per share). The expense ratio of SPY is about 0.09% and the expense ratio of IVV is 0.04%. According to online sources, this means that 0.09% or 0.04% of the funds total assets will be used to cover expenses. So when you buy $100 worth of shares, a percentage of that will be used to cover expenses. If that’s accurate, I suppose that means an investor only pays the expense ratio when they buy their shares. Correct me if I am wrong.
Since the IVV and SPY seem very close but only differ in their expense ratios, I will likely move forward with IVV. Wish me luck!
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Today I received Royal Bank’s 2016 Annual Report in the mail. I skimmed over the CEO’s letter to the shareholders, which seemed optimistic yet admitting to the various economic challenges the company faces.
Then I got to the financial reports. According to the financial highlights, RBC managed to earn roughly 8.7% more in 2016 than it did in 2015. Totalling $38.4 billion dollars in revenue, RBC can surely call itself an economic powerhouse. Of that $38.4 billion, RBC manages to retain $10.4 billion in profit, which is good news for shareholders. With profit increasing from 2015 to 2016 by 4.3%, investors can hope for a continuing increase in dividends in 2017. Impressive as their earning power is, their ability to attract and sustain wealth is even more impressive. As of 2016, RBC has $526 billion in assets under management.
Part of the reason why RBC is able to earn such an enormous amount of money is surely because of the people they employ. My own experience at RBC has always been pleasant, with courteous service at every branch I’ve visited. With 1,400 branches and 75,510 employees RBC is surely making a lasting impression on North America and beyond.
Canadians are able to invest in American companies. Before taking the plunge into the American stock market, one should consider the current Canadian/American exchange rate. One American dollar can buy approximately $1.31 Canadian dollars- this means the Canadian dollar is relatively affordable for Americans. Where does this leave Canadians? From an investment perspective, it would seem as though Canadians are at a disadvantage. However, this may not be the case. If a Canadian investor habitually saves American dollars, say $50 per month, and invests it in an American company, such as Visa, they may be earning money as the currency continues to appreciate.
Investing in an American, dividend paying stock could yield multiple benefits for the Canadian investor. First, an investor could be collecting dividends. Dividends are additional cash-flows created when a stock is owned. Dividends are often monthly, quarterly or annually paid out to investors. Second, investors can be rewarded through capital appreciation which occurs when the stock’s price increases. Finally, a Canadian investor can be rewarded when the American dollar continues to appreciate in value. Once a Canadian has bought American dollars and then invested those dollars into an American stock, those dollars are gaining value when the exchange rate continues to appreciate.
Although no one can really say for certain whether the American currency will continue to appreciate or depreciate, Canadian Dough has learned of an economic theory that explains that an exchange rate is connected to a country’s exports. As a country exports goods, the importing country naturally demands the exporting country’s currency. This increased demand in a country’s currency leads to an increased value in the exporting country’s currency. Its essentially a theory of supply and demand. Therefore, as a country exports more, its currency is demanded more and its currency increases in value. Although this is only one of many economic theories, it certainly demystifies theories of the American dollar’s projection.
If you’re thinking about investing in a particular stock, or just looking to get started and not too sure about what kind of stock to invest in, a stock that pays dividends may be the answer for you.
A dividend is a payment made to you, a shareholder, by the company that you bought shares from. Although you may not have bought your shares from the company itself, but instead from another shareholder, you may be eligible to collect a dividend. Collecting dividends are easy! You don’t need to sign up or register for them; they simply get transferred to you from that company you own!
Dividends can be paid monthly, quarterly (every 3 months), bi-annually (twice per year) or even annually. The amount you can collect depends on the number of shares that you own as a shareholder. For example, RBC pays a quarterly dividend. According to publicly available information on RBC’s website, their last dividend was $0.83 per share. This means for every share you own you would get paid $0.83. It doesn’t sound like much, but these small dividend payments may be enough to cover your transactions fees, plus more if you hold on to them long enough. Additionally, by continuing to contribute to your investment on a consistent basis, that dividend payment will grow, which will add to your overall cash flow. Ideally, it would be great to invest enough money to be able to survive off of dividend payments. On a smaller scale but still sizeable, if you own enough shares you may qualify for a DRIP, which is a direct reinvestment plan. The idea here is to buy shares with the dividends collected.
Using a hypothetical situation, if someone has invested approximately $3,300 in the stock market within dividend paying stocks and exchange traded funds, they would have collected approximately $46 in dividends after one year. This number is based on an investment portfolio invested in the following stocks and exchange traded funds: 7 shares of RBC, 17 shares of VRE, 17 shares of CDZ, 46 shares of XSP and 10 shares of ZDJ. Before buying a stock or exchange traded fund, it would be smart to look at how often a dividend is paid and in what amount when making your informed decision.
The Royal Bank of Canada, or RBC, is Canada’s largest bank with seventy-eight thousand employees and twelve-hundred branches that are serving approximately ten million Canadians. According to the Globe and Mail, RBC is Canada’s largest company by market capitalization (total value of shares outstanding) and revenue (total sales). RBC is a seriously big company.
RBC shares are traded on the Toronto Stock Exchange, New York Stock Exchange and Swiss Exchange under the symbol RY. According to publicly available information, RY is currently trading at $89.25. Over the past 52-weeks, RBC’s highest stock price has reached $90.00 and its lowest price has dipped to $64.52. If an investor would have bought RBC closer to it’s lowest point, they would currently be enjoying handsome returns. The rise in the price of a stock is called capital appreciation; although an investor may have the opportunity to enjoy capital appreciations, RBC offers more.
A dividend is a payment made by a corporation to its shareholders, usually from their profits. RBC currently offers a dividend of $0.83 per share and it is paid four times per year, or quarterly. This means that for every share of RY that an investor owns, they will be paid $0.83 this November 24th, 2016. RBC’s dividend payments have increased over the years and throughout this quarter. For example, in November 2000, the dividend payment was $0.15 per share. In November 2010, the dividend payment was $0.50 per share. Throughout 2016 the dividend payment has increased. In February 2016, the dividend was $0.79 per share; in May 2016 it was $0.81 per share. Now, it’s $0.83 per share. Investors like to see an increase in the dividend as it shows that the corporation’s profits have been increasing over time.
My experience with RBC over the past three months has been fortunate. I bought RY when it was listed around $82.27; now it’s listed at $89.25. I have earned a return of approximately 8.48% which is a growth rate that is nearly 17-times stronger than RBC’s High Interest eSavings account which gives investors a return of 0.500%.