I bought 50 Tim Hortons shares in 2012 when it was trading around $47 and fast forward a little more than a year and a half, I have sold all my positions at $89.05 two weeks ago and locked the gain of little over 90% without dividends.
Tim Hortons stock was one of my best pick. Over the past five years the dividend grew at an annualized pace of more than 25 per cent, and we would have enjoyed this dividend growth trend for many years if Burger King had not bought this amazing Tims business.
As an income-oriented investor, I invest for long-term and aim to collect growing steam of passive dividend income for life. In other word, I don’t like to sell companies like Tims for a short-term gain. But, I made a tough decision and sold it.
Why I sold?
First, there are some uncertainties around the deal. If the deal is rejected or cancelled, the stock price would crash to the 60s or below. I don’t want to hang around with these uncertain situations.
According to TD and CIBC analyst, the deal is highly leveraged buyout. Thus, the money make from the combo deal will be used to pay toward the debts, in other words, we cannot expect any juicy dividend hikes from Burger King.
Also, if the merge companies have a tough time to establish around the world, they usually don’t have a financial flexibility with high debts, and trimming dividend is the only way to conserve cash.
I don’t want to move toward my finance journey with this uncertainty. So, I sold my positions and locked the profit little over $2000 in my non-registered account. I have to pay income tax for the capital gain.
Again, it was a tough decision and I might be wrong. But, I can’t eat the sweet with ketchup source.
Now I have around $4500 in my non-registered account. Recently, I made some purchases using the money, and will update the information in few days.
My projected yearly dividend income was down by $64 to $3440.
I have updated my dividend portfolio to reflect this trade.