Apparently I’m a lucky man, but I’m not entirely convinced yet. I recently returned from a vacation in Europe where a good deal of time was spent in Italy. It was there that I learned about a superstition about bird poop … yep, you heard right. Apparently if a bird poops on you, it will bring you good luck. I did some Googling and found some more info on the topic from this website:
“Many people the world over believe that if a bird lets loose on you, then good things are coming your way. One idea is that it’s a sign of major wealth coming from heaven, based on the belief that when you suffer an inconvenience (albeit a pretty gross one), you’ll have good fortune in return.”
The part about major wealth coming from heaven sounds alright to me, but you’ll understand why I’m still a bit skeptical that a bird shitting on you is “lucky”.
Anyways, so here I am doing my zombie walk to work, when I stop at the intersection and wait to cross the street. I’m standing there, minding my own business, when PLOP … a seagull lets loose right on top of my head. Who needs coffee, eh? Now wide awake, I had to decide whether to go home or deal with this situation at work. As I was about 2 minutes from work and could feel things starting to move in my hair, I opted for work. It made for an interesting start to the day with my head under the sink pumping hand soap and water into my hair. I survived, albeit with some interesting looks in the bathroom and an unorthodox hairdo for the day, lol.
You may be wondering at this point, what this has to do with dividend growth investing. Well … it just so happens that on the same day,a limit order I set up a few weeks ago to purchase Home Capital Group Inc. [HCG.TO Trend] at $41 was triggered. On June 16, 2015 I purchased shares of Home Capital Group Inc. for an average price of $41.02 when you include the commission. Here’s hoping that the bird incident is a good sign for my investment.
Home Capital Group Inc. is a Canadian alternate mortgage lender with most of its business in Ontario. I’m not going to go into too much detail about the company right now as I plan to post an in-depth dividend stock analysis in the next few days.
Related article: Home Capital Group Dividend Stock Analysis
For now here are some of the reasons why I purchased Home Capital Group Inc.
- They have increased their dividend for 16 calendar years in a row.
- Consistent earnings growth. Both revenue and earnings have increased year over year for the past decade.
- Return on equity has been over 20% for more than a decade.
- The dividend yield is low at 2.1%, but the dividend growth is very high. According the Canadian Dividend All-Star List the 5 and 10 year average annual dividend growth rates are 19.3% and 27.8%.
- The payout ratio is low. It’s currently around 20% of earnings.
- They currently have mid term targets to grow EPS by 8% to 13%. Analysts are predicting a similar level of growth. This coupled with a low payout ratio suggests that their history of strong dividend growth is sustainable.
- They have a history of increasing their dividend more than once a year.
The company does have its risks. It has a reasonable financial strength and enough for me to invest, but it could be better. Most of its business is in Ontario so a housing crash there would be rough on the company. They survived 2008 and 2009 relatively well, but it is still a valid risk.
There seems to be a mixed results out there right now. Some seem to think it is a good company with strong dividend fundamentals, others seem to think it’s a risky company because the Canadian housing market is over-valued and ripe for a crash.
What do you think of my purchase?
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