Monday, August 7, 2017

Recent Purchase

      As we go about our lives day by day, we must look for opportunities that can be of benefit to us.  These opportunities can come in from different areas such as a new career, new business idea, new investment etc.  In some cases the opportunity may be there in front us, but we are totally blind to the opportunity.  In a lot cases, the individual must be in a position to take advantage of the opportunity.

      For investors, we are on the lookout for opportunities as this is the peak of earning season for publicly listed companies.  Some companies report before the opening bell, while others report during the trading session or after the market closes on a giving day. These date and time of these earning releases is known in advance as a company must announce on a prior date, the exact time and date they are going to release earnings and a possible conference call to discuss the results.

     Cineplex Inc. (CGX.TO) released its earnings on August 2.  The quarter was a lackluster one and investors sold off there shares.  The share price had fallen to $41.50 before rebounding.  Some of the highlights are as follows:
  • Earned $1.4 million (or $0.02 per share) in the last quarter, down from $7.2 million (or $0.12 per share) a year earlier
  • Revenue of $364.1 million, up from $338.0 million for the same period last year
  • Amusement Revenue was $45.7 million, compared to $24.6 million a year ago
  • Media revenue was $36.6 million for the quarter, compared to $40.2 million in the same quarter from last year.
  • Attendance was approximately 16.5 million, slightly down from 16.9 million from a year ago.
  • Food Service revenue was $101.4 million, compared to $96.8 million for the same quarter a year ago
  • Box Office revenue per customer was $10.86, compared to $9.89 a year ago
  • Concessions revenue per customer was $6.03, compared to $5.74 for the same quarter last year
Cineplex is mostly a theatre company, but the company is diversifying its business in other areas of entertainment.  These new venues are Rec Rooms complexes, which include eateries, live entertainment, and games. The have launched Rec Rooms in some locations already, and plan to expand across Canada.

A couple of weeks ago, CGX.TO announced an exclusive partnership with Topgolf Entertainment complexes, which combine a driving range with other entertainment options over the next several years.

Conclusion:

        The company has missed lower earnings for the past 5 quarters.  The struggling economy in Alberta for the last 3 years  has hurt their earnings.  When the economy of Alberta struggles, the rest of the country feels it. Some people avoid going to the movies due to the cost. These costs consists of the price of a ticket plus the price of concessions. The price of a ticket can be reduced depending on the day and time of the week an individual goes to watch a movie.

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  CGX.TO is down 17.08 % over the last month. I do believe people are not going to stop going to the movies.  I do believe movie goers , will not spend as much on concessions with the possibility of a recession around the corner.

   On August 4, I purchased a 100 shares of CGX.TO at $43.85 per share for a total cost of $4389.95 including commissions. 

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  Currently $CGX.TO pays an annual dividend of $1.68 per share per  year.  This purchase adds $168 to my annual dividend income.

   I will sell covered calls against this position in the future.  I will update my investment tab spreadsheet in early September to reflect this new purchase.

Disclosure:  Long CGX.TO
DISCLAIMER
I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.

Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk.

Saturday, August 5, 2017

Is The Dividend or Distrubition Safe?

     As an investor I am like most people, I want to get paid via a dividend or distribution.  Any investor loves dividend increases.

     Every time a company makes an announcement regarding their dividend or distribution, the result can be one of four things:  dividend or distribution can be increased, decreased, ssuspended, or remain the same.

     I recently wrote about a REIT that I owned has lowered its annual distribution.  Since writing that post, I received another distribution payment and increased the number of units via drip.  Going forward the drip will be turned off.  Dream Office REIT (D.UN.TO) reduced its annual distribution rate from $1.50 to $1.00 effective with the July 2017 distribution and corresponding August 15th. I currently own 631 units in my margin account and 168 units in my TFSA.  That means my annual dividend/distribution income will be reduced by $399.50.

      Another REIT that I owned, Cominar REIT (CUF.UN.TO) just released earnings in the past week. They also announced  a distribution cut from  $1.47 per unit per year to $1.14 per unit per year. This reduction will start with the August distribution to be paid out September 15th. I currently own 176 units in my TFSA.  This reduction will reduce my annual dividend / distribution by another $58.08

      Besides holding CUF.UN.TO inside my TFSA account,  I hold CUF.UN.TO in small savings account.  The interest rate for high interest rate savings account are so low that it is actually laughable.  So I started a small experiment with a few positions. These 2 positions are 26 units of HNY.TO and 152 units of CUF.UN.TO.  Horizon's Natural Gas Yield ETF has ticker symbol HNY.TO.  So for this savings account, my annual distribution is reduced by $50.16My adjusted cost base of CUF.UN.TO is $14.25 per unit.

     This distribution cuts are proof it is best to diversify. A reasonable portfolio should be around 15 to 20 positions with their weights more equal to each other. When there is a cut to a major holding and not many positions, you will feel it more as a greater percentage of your income is lost. 

DISCLAIMER
I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.

Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk.

Wednesday, August 2, 2017

Dividend Income Update - July 2017




      The month of July is another month of dividend income landing in my accounts. This money is used to help pay my expenses if it is needed. If the money is not needed, it is ALL used to purchase new investments to further increase my cash flow.

        The price of barrel of crude oil continues to channel between $45 to $50 per barrel of WTI crude oil.

        Emera Inc. reported its earnings and there was no dividend increase announced.  This payment on Aug 15th will be the 5 quarter of a quarterly dividend of $0.5225 per share. Emera Inc. (EMA.TO) is a utilities company involved with the transportation and distribution of energy.  Emera Inc. is a partner in the controversial Muskat Falls project. The Muskrat Falls project is a Hydro Electric Project the will create electricity from the falls to supply Newfoundland and Nova Scotia. The electricity will come to Nova Scotia via a subsea cable and land on the Eastern shore of Nova Scotia. This project is currently over budget.
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      One thing for sure, is that I was paid dividends and distributions for being a shareholder or unit holder in  various companies or funds. In  Sept 2016, the Dream Office REIT in the margin account will be counted as dividend income  for the first time.

 Non-registered Account

  • Bell Canada Enterprises (BCE) - $71.75
  • Bank Of Nova Scotia (BNS) - $15.20
  • Canadian Imperial Bank of Commerce (CM) - $35.56
  • Enerplus (ERF)  -$ 5.58
  • Dream Office REIT   (D.UN)  - $78.50
  • Roger's Communications Class B (RCI.B) - $96.00
  • Shaw Communications (SJR.B)    - $19.75
  • Bank Of Nova Scotia (BNS) - $25.21  (Transfer Agent) 

    TFSA
    • A&W Royalties Income Fund (AW.UN) - $5.05
    • Boston Pizza Royalties Income Fund   (BPF.UN) - $26.91
    • iShares 1-5 yr Laddered Canadian Corporate Bond ETF (CBO) - $0.62
    • Cominar REIT (CUF.UN) - $21.44
    • Dream Office REIT   (D.UN)  - $ 20.88
    • Horizons Natural Gas Yield ETF (HNY)  - $5.83
    • Killam Properties REIT (KMP.UN) - $  15.60
    • TFI International (TFII) - $9.50


    Total = $453.38
        
        As the amount of distribution from D.UN inside my margin account, will have a large impact on the comparison of dividend income from 12 months ago. This dividend income total of $453.38 represents an increase of 1.455% from 3 months ago.

         Dream REIT has reduced the amount of distribution they pay monthly which was announced in February 2016.  Dream Office REIT again reduced their annual distribution again and will take effect with the July 2017 distribution to be paid on August 15.  Recently, I wrote about purchasing more units of D.UN inside a margin account.  Starting in September, the distribution from this D.UN inside the margin account will be included in my dividend income.

        I received $68.05 in July  2017.

         I will update my dividend income tab with the new amount I will include my option premium income also.  It is great to see money from passive income sources deposited into my brokerage account every single month.

    How was your dividend income for July?

    Disclosure : Long all securities above.

    Photo Credit: www.mipaq,co.za

    DISCLAIMER
    I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.

    Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk.




    Portfolio Update - July 2017

            The month of July 2017 is now behind us.  We have seen the markets hits new all time highs a few times, usually the results of strong earnings from selective companies.

         We have seen strengthening of the Canadian dollar, equivalent of a decrease in the US dollar.  The price of a barrel of crude oil continues to channel for the most part between $45 and $50.  As a result of the low oil prices, the province of Alberta continues to struggle with its finances and it's overall economy.  Alberta is the only province in Canada that does not have a sales tax, as the GST of 5% is a federal tax. Alberta government receives royalties from the oil and gas activity, which greatly affects the government's revenue.

         As earnings are reported on a daily basis in the short term, is going to affect the markets positively or negative.


    Shares Acquired Through DRIP


    3 Unit of D.UN.TO @ $19.84574 for a total cost of $59.54 (Margin Account)

    1 units  of CUF.UN @ $13.12431 for a total cost of $13.12 (TFSA)

    1 unit of D.UN @ $19.84574 for a total cost of $19.85 (TFSA)

    0.324878 shares of BNS.TO @ $77.5984 for a total cost of $25.21 (Transfer Agent)           

        I have turned off all DRIPs in my margin and TFSA accounts. They only drips turned on will be for BNS.TO and ENB.TO directly with the transfer agent.  These 2 positions are shown in the investment tab spread sheet with the color orange.

    I recently wrote about Dream Office REIT after they made an announcement. They are once again, cutting their annual distribution by around 33% starting with July's distribution which will be paid on August 15.  There annual distribution will be cut from $1.50 per unit to $1.00.  So, my annual dividend income will be cut by approximately $400.00.


    As of August 1,  the value of the portfolio is $104451.57. This is a 1.148%  increase over last month's total.  The spreadsheet in the investment tab above has been updated.

    Note:  I do  have 2 short put option contracts currently in my portfolio as of Aug 1.

    Disclosure:  Long D.UN, ENB.TO, CUF.UN, BNS.TO

    Please Note:  All stocks are from the Toronto Stock Exchange except TTR which trades on the Venture Exchange.
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    DISCLAIMER
    I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.

    Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk.



    Sunday, July 30, 2017

    Benefits Of The Rate Hike For Investors

            The FED and the Bank of Canada have recently raised their interest rate by 25 bps each.  What does that mean?  It meant the cost of borrow money will increase and payments on variable rate mortgages and lines of credit will be increased immediately. Consumers and businesses will have their expenses increases due to the cost of borrowing increasing.  Shortly after the Bank of Canada raising their rate by 25bps, the big 5 banks in Canada followed suit within 24 hours.

             A way for banks to make money is too have savings accounts.  The bank then takes the money savers deposit and lend it out at a higher interest than they pay the saver.  The bank "promises" the saver that for the use of the saver's money, they will be paid interest.

             A lot of banks have not raised their rates on the savings accounts along the rates on their lines of credit, loans and mortgages.  So that means the bank will make more money. Therefore the shareholders of the banks will likely be rewarded with increased profits and therefore possible larger dividend increases than the banks have recently done.

    Conclusion

         I am a shareholder in 4 of the 5 big banks.  Currently, the only bank stock I do not own is Royal Bank.  So, if North America does no go into recession in the near future then the banks will do well.  I always hear people complain how profitable the banks are each quarter.  My response to them if they are talking directly to me is "With them being so profitable, do you own any shares in any of them?".  I will often get a snarl or " I am too poor to invest!!" response.

         There are ways to invest with very little money.  A person can buy stocks the old way directly through the transfer agent.  How this works, at least in Canada, is that you go to a website like www.dripprimer.ca and try to buy a share of a company.  I will talk about the way I have done through this site.  I posted a message on the share board looking for a share of Enbridge (ENB) and BNS.  Eventually, some will respond and agree to sell you a share.  You then send the person a check with that amount agreed upon. In return, you will get an actual share certificate with your name and I believe your new account number will show up.  The transfer agent sends you the share certificate and not the individual.  The seller as to follow steps outlined by the transfer agent to make their transaction to go smoothly. Once the share certificate is received the buyer can make purchases directly with the transfer agent for that particular stock operating within the guidelines outlined in the company's DRIP program.  Most of the times, investing this way you get to purchase shares at a discount with reinvested dividends.  The downside you do not know the price of shares when you make purchases of additional shares directly with a check or a debit from your bank account.  When buying stocks this way, you directly own the shares in your name.  When you purchase the shares in a brokerage account, you do not own the shares directly but are given all the rights of shareholder ownership  such has voting, dividends, distributions, buyouts, and interest.

        In United States, Capital One (formerly Sharebuilder) allows you purchase fractional shares and the entire dividend gets reinvested. I believe if you put in the order Monday night, to invest X amount of dollars into "ABC", then the shares are purchased the following day.  With Capital One, you can also buy shares like any other brokerage and pay a commission of around $7.00.  Also, with Capital One, you can turn the drip on or off with a click of the mouse.  Most brokerages you have to call or e-mail the brokerage to tell them to turn the drip on or off for each stock in the account.

    Friday, July 21, 2017

    Turning Off The Taps A Bit

    Over the past couple of years I have had DRIPs turned on for a few positions. I haved DRIPped shares and units of Boston Pizza Royalties Income Fund (BPF.UN), Cominar REIT (CUF.UN), Dream Office REIT (D.UN), Killam Properties REIT (KMP.UN), Enbridge (ENB.TO) and Bank of Nova Scotia (BNS.TO). Some of these positions are through the brokerage while others are directly with the transfer agent. The latter is the basically the "old" way of buying stocks where you get actual stock certificate. The downside of the "old" way of purchase stocks is that you do not have control over the purchase price or sell price as you just send in a check and the shares or units are purchased on a certain date. Also the purchase prices could be averages of the last few days or some other criteria that would be often spelled out in the documentation.

    Recently, I have had DRIPs turned on the Enerplus Corporation (ERF.TO), D.UN, CUF.UN, BNS.TO, and ENB.TO. The DRIPs for BNS.TO and ENB.TO are directly with the transfer agent and these positions are in the investment tab spreadsheet and have partial shares. Some brokerages off partial shares, but they are few and far between.

    I have turned off my DRIPs for D.UN, CUF.UN, and ERF.TO. The dividend payout for ERF.TO is no where close to being able to purchase 1 whole. D.UN was dripped in both my TFSA and margin accounts. I have turned off the DRIPs due to my current financial situation. I would prefer to keep the DRIPs on for both D.UN and CUF.UN as these positions are trading above my average cost basis per share.

    I am keeping the DRIPs on for ENB and BNS with the transfer agents. For disclosure, I also have positions in ENB in my TFSA and BNS in my margin account.

    The benefits of DRIPs, is that it is a way to acquire more assets for doing basically nothing. Also, a lot of DRIPs have discounts on the shares purchased with re-invested dividends. Does this apply to DRIPs by brokerages? Some brokerages pass the discounts along while others do not. My brokerage, Questrade, does not pass the discount along.

    There is also some posts on DRIPs in my DRIP tab above.

    DISCLAIMER
    I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.

    Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk.




    Friday, July 14, 2017

    What Happened to Big Banks After The Rate Hike?

             I recently wrote about the recent rate hike by the Bank of Canada.  On July 12th, the Bank of Canada announced that they are increasing the interest rate from 0.75% to 1.00%.

            Shortly afterword the rate hike, the big banks raised their rates.  Royal Bank of Canada even raised the rate prior to the rate hike on their 1,3, and 5 year terms by 0.20%.

            The chart below compares how the big banks on the Toronto Stock Exchange have done this week.  The announcement was 10am Eastern Standard Time on Wednesday.  As we can see from the chart, the Canadian Imperial Bank of Commerce was the leader over the last week.

    Click to Enlarge



             As you can see, the investors and trades liked the rate increase.  Royal Bank (RY.TO) went up the morning of the rate increase but dropped  back down.  As state above, RY raised their 1,3, and 5 year term rates by 0.20% prior to the rate hike, and the rate hike was likely factored in. When people go get a mortgage or renew their fixed rate mortgage will have higher payments.

         After the rate hike, Royal Bank was the first to raised there prime rate from 2.70% to 2.95%.  The other 4 big banks followed suit.  The increase in the prime rate affects loans, variable rate mortgages and line of credit. Anybody with variable rate loans, lines of credits, and variable rate mortgages will see an immediate increase in their payments due to higher interest rates.

          Why is the rate hike good for the banks?  The rate hike means more profits for the big 5 banks. The big 5 banks do not immediately increase the rates on their savings accounts, therefore the spread of interest paid to savers and the interest the banks received from payments of individuals or companies is larger.

           The banks offer very low interest rates on their respective savings accounts.  This makes savers to look elsewhere for yield, and they usually turn to the stock market for dividends and interest. This is why the stock market is trading near all time highs as their is more buyers than sellers for majority of blue chip stocks.

           Currently I own shares in 4 of the big 5 banks. I do not own RY.TO as of this date.  The big 5 banks in Canada are known around the world to be some of the best run banks in the  world.

          How do you like the rate hike by the Bank of Canada?

    Disclosure: Long TD.TO, BNS.TO, CM.TO, BMO.TO

    DISCLAIMER
    I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.

    Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk.