Each week you'll learn how to be a better dividend investor and follow the journey of a welder with a passion for passive income to $1,000,000 and beyond.
TD set aside an extra $2.6B to cover expected fines, selling 40.5 million Charles Schwab (SCHW) shares to do so.
The allegations? Chinese drug traffickers used TD to launder at least $650 million from 2016 through 2021, and an employee took a bribe to facilitate this mess.
The cherry on top is potential "non-monetary penalties," which could restrict future growth and operations for TD in the United States, which accounts for about 25% of revenue.
My Response
I threw in the towel, selling all 157 TD shares for a total return of +1.6%.
🎉Congratulations, TD; you're the first recipient of my Mr. Yuk sticker!
The "Safe" Canadian Banks Myth
Everyone raves about the "Big Six" Canadian banks' safety and nearly two centuries of uninterrupted dividends.
TD hasn't reduced its dividend in 167 years and has a 13-year growth streak. Impressive, right?
Source: SimplySafeDividends.com
But I had a "come to Jesus" moment. Do I REALLY understand this bank? Or am I just justifying my investment because of its long dividend history?
The Complexity of Modern Banking
TD's business spans checking accounts, savings, loans, credit cards, mortgages, investing services, insurance, etc.
It's a complex financial ecosystem that takes time to grasp fully.
I've listened twice to every Berkshire-Hathaway annual meeting.
In 2013, investing legend Charlie Munger said he thinks big banks' financial statements are way harder to understand than they used to be.
He said they do so many different things and have so many footnotes and gobbledygook that it's hard to understand.
If Charlie freaking Munger has difficulty understanding big banks that do more than simple deposits and loans, what chance do I have?
The Danger of Complacency
I'd think, "They're too big to fail" because the Canadian government monitors its biggest banks closely, and they're so important to the country's economy that if one fails, it could cause serious problems for everyone in Canada.
But is that a good reason to invest?
Lessons Learned
Only invest in what you understand
A long dividend history isn't reason enough to own a stock
Sometimes, it's ok to admit you're in over your head
What's Next?
We now have $10K cash in our self-directed IRA, which is earning a measly 0.45% APY at Schwab.
Source: Schwab.com
I'm eyeing some REITs we own, like Agree Realty (ADC) and VICI Properties (VICI), but they seem pricey.
The Silver Lining
This lesson cost us nothing (we even made a 1.6% return).
The future value of this experience? Priceless.
Your Turn
Are you investing in TD or any other bank? Hit REPLY and let me know. I'd love to hear your thoughts!
😁THANK YOU to everyone who responded to the last newsletter!!
Co-founder and former CEO of Yum! Brands (YUM) David Novak was on the Afford Anything podcast for an excellent interview that has something for everyone, including the story behind Crystal Pepsi!
Crystal Pepsi
🎦If you missed it, this is a SUPER niche video for those who invest and play dynasty fantasy football!
🤑Rick Stambaugh from Orange Mountain Financial brings you ‘Grow Retirement Income.' He’s a seasoned pro with over 30 years in trading and a passion for guiding folks to a prosperous retirement.
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Each week you'll learn how to be a better dividend investor and follow the journey of a welder with a passion for passive income to $1,000,000 and beyond.
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