Saturday, November 24, 2007
Comedic quip steers investor to bank shares

TONY MARTIN

ALAN WHITTON

AGE: 47

OCCUPATION: Telecom product manager

PORTFOLIO: Toronto-Dominion Bank, Bank of Montreal, American Eagle Outfitters Inc., Power Corp., TD Canadian Bond Fund.

HOW HE GOT STARTED

Four children - and pondering his eventual retirement - were more than enough to get Alan Whitton thinking about investing. And when it was announced his company pension was being capped, he says, "I realized I had to do something."

But having suffered along with many other Ottawa-based telecom workers when the tech sector crashed, Mr. Whitton began looking for a new investment direction. He found it thanks to a comedian, who quipped that given how much the banks were making, rather than depositing money with a bank, it was smarter to use that money to buy its shares. Mr. Whitton ran the idea by a money-smart friend, who said: "Yes, that sounds right."

So he bought shares in two banks -TD and BMO - in 2000. "Thanks to my experience in high tech, I'm almost conservative beyond belief," he says. "If someone came up to me and said 'Do this and you'll make a fortune' I'd tell them to go to hell."

WHY HE LIKES DRIPS

He's since added a few more dividend-paying stocks, always enrolling in the company's DRIP, or dividend reinvestment plan. Instead of receiving his dividends in cash when they are paid out to other shareholders, the money is used to automatically purchase more shares. WHAT HE LOOKS FOR

Mr. Whitton looks for companies that are growing, and have been profitable over the last five years or so. He doesn't mind if the dividend hasn't been increased, though, as long as the company has been consistent in paying it out over the last few years.

WHAT HIS WIFE CONTRIBUTES

His more interesting ideas, he says, come from his wife.

"Last year she noticed that all the kids at basketball practice were wearing outfits from Lululemon," he says. They bought shares in the chic athletic clothing maker shortly after it went public at the end of the summer. The shares were sold recently when they fell below $50 after hitting a record high of $58.77 in late October. Lululemon (LLL-TSX) closed yesterday at $38.02. Mr. Whitton says his wife's eye is also the reason they hold shares of dividend-paying, hip clothing retailer American Eagle Outfitters (AEO-NYSE).

BEST MOVE

Buying the banks, and sticking with them. "The service gets worse and they charge you for everything," he says. When the banks start treating their customers better, I'm getting out."

WORST MOVE

Just after graduating from university with his wife, Mr. Whitton bought some whole life insurance. "When I told my Dad, he said 'You did what?' "The sage advice is to not buy whole life insurance, but "Buy term and invest the rest."

ADVICE

"Talk to your friends, but ... don't take their advice."

Want to be in Me and My Money? E-mail tony.martin@sympatico.ca