We added more to our position in Merchant’s Bank (MBVT) today as the price dipped below our buy price of $26.85.
Merchant’s Bank is our largest holding by far as we find the price attractive, especially at $26.85/share, which put the PE around 10 and the dividend yield at 4.17%.
As stated in the past, Merchant’s Bank is very stable, risk-adverse with a great history of dividend payments. Even during the recent economic problems, Merchant’s continued to thrive as many of their larger banking peers floundered.
This make for a very reliable income-producing investment, which makes it a great core holding.
This particular purchase will most likely be sold once the price hits $28-$29/share as we already have so much in the stock and would like to still keep diversified, but when the price dips this low it will most likely not stay there very long, which makes for a great trade.
And if the price should stay down, then the worse case scenario is you hold it and make 4.17%.