In early December I decided to take money I received from Christmas and the distributions that I received so far from Dream REIT trade in my margin account and put it in a dividend growth stock. This stock that I have chosen is very safe to own and has paid dividend for a very long time.
On December 31, I purchased 18.090543 shares of BNS at a cost of $66.33 per share. This purchase is directly through their transfer agent, so for there is no commissions. This is the old way to buy stocks. I have no control over the price I will pay for these shares. I had to have my funds in early in the month. I currently have full drip on this stock. There was a discount of 2% of shares purchased with reinvested dividends, but was cancelled during the last year.
During the recent financial crisis, Bank of Nova Scotia did not reduce its dividend and kept it the same during 2009 and 2010. This company has paid dividends since its inception in 1832. In 2005, Bank of Nova Scotia annual dividend rate was $1.32 and has increased to $2.56 per share in 2014. That is a CAGR of 7.637 % over the last 10 years.
The dividend was raised twice over the last year. So the current annual dividend rate is $2.64 per share. This recent purchase adds $47.76 to my annual dividend income.
Note: My shares of BNS were purchased in Canada.
Do you own shares in Bank of Nova Scotia?
I will update my investing account tab spreadsheet in a few days to reflect this recent purchase.
Disclosure : Long BNS
Wednesday, December 31, 2014
Friday, December 26, 2014
Recent Sale
I recently wrote about a purchase of Boston Pizza Royalties Income Fund (BPF.UN) in my margin account. I also own 234 units in my Tax Free Savings account that I have owned since March 2010.
This fund pays a distribution monthly at the end of the month. In Canada, the rules for income trust were changed in 2011, after the announcement on Halloween 2006 by the finance minister at the time, Jim Flaherty. Companies that would remain as an income trust would have to pay a SIFT tax. The SIFT Tax stands for the Specified Investment Flow Through tax. You can read more about the SIFT Tax here. With income trust having to pay this tax, it meant it has less profits to pay out to unit holders. This was the reason why the distribution was reduced a few years ago. A lot of companies switched back to a corporation setup prior to this tax coming into effect.
My limit order of $21.55 was recently filled on Dec 22,2014. I also will collect the distribution payment at the end of the month in the amount $20.40 for the 200 units that I held .
Initial Purchase with commissions: 200 *21.23 + $4.95 = $4250.95
Distribution received = $20.40
Proceeds of Sale = $21.55*200 -$4.95=$4305.05
Profit =$4305.05-4250.95+20.40
= $74.50
Total Return on Investment = $74.50/$4250.95
= 1.753 %
Disclosure: Long BPF.UN inside TFSA still
DISCLAIMER
This fund pays a distribution monthly at the end of the month. In Canada, the rules for income trust were changed in 2011, after the announcement on Halloween 2006 by the finance minister at the time, Jim Flaherty. Companies that would remain as an income trust would have to pay a SIFT tax. The SIFT Tax stands for the Specified Investment Flow Through tax. You can read more about the SIFT Tax here. With income trust having to pay this tax, it meant it has less profits to pay out to unit holders. This was the reason why the distribution was reduced a few years ago. A lot of companies switched back to a corporation setup prior to this tax coming into effect.
My limit order of $21.55 was recently filled on Dec 22,2014. I also will collect the distribution payment at the end of the month in the amount $20.40 for the 200 units that I held .
Initial Purchase with commissions: 200 *21.23 + $4.95 = $4250.95
Distribution received = $20.40
Proceeds of Sale = $21.55*200 -$4.95=$4305.05
Profit =$4305.05-4250.95+20.40
= $74.50
Total Return on Investment = $74.50/$4250.95
= 1.753 %
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| Click to Enlarge |
Disclosure: Long BPF.UN inside TFSA still
DISCLAIMER
Sunday, December 21, 2014
Recent Trade
On October 8, my limit order that I had placed on Sherritt International Corp was filled at $2.42 a share for 1500 shares. I never got around to writing a post on it.
Sherritt is a world leader in the mining and refining of nickel from lateritic ores with operations in Canada, Cuba and Madagascar. The Corporation is the largest independent energy producer in Cuba, with extensive oil and power operations across the island. Sherritt licenses its proprietary technologies and provides metallurgical services to commercial metals operations worldwide. (Source www.sherritt.com )
As this was a trade, my exit strategy was to place a limit order to sell at $2.70 a share. With the recent announcement by President Barrack Obama that the United States improve relations with Cuba means possibly lower costs for the Sherritt's operations on the island and less restrictions traveling for its directors. This recent announcement by the US president plus the other details such announcing measures to possibly work with congress to the lift the full embargo lead to the huge rise in the share price.
Calculation of Return
Initial Investment with Commissions : 1500 *2.42 +9.95 = 3639.95
Proceeds of Sale : 1500*2.70-9.95 =4040.95
Profit = proceeds of sale - initial investment = 4040.95 -3639.95
= 400.10
Total Return = 400.10/3639.95
= 10.99 %
I am going to use this $400.10 to pay on my line of credit used for investing as the interest is high at 9.5%. The interest was initially around 7.6% but the bank raised it to over 10 %. I called about the increase and got it reduced to 9.5% awhile ago.
Sherritt is a world leader in the mining and refining of nickel from lateritic ores with operations in Canada, Cuba and Madagascar. The Corporation is the largest independent energy producer in Cuba, with extensive oil and power operations across the island. Sherritt licenses its proprietary technologies and provides metallurgical services to commercial metals operations worldwide. (Source www.sherritt.com )
As this was a trade, my exit strategy was to place a limit order to sell at $2.70 a share. With the recent announcement by President Barrack Obama that the United States improve relations with Cuba means possibly lower costs for the Sherritt's operations on the island and less restrictions traveling for its directors. This recent announcement by the US president plus the other details such announcing measures to possibly work with congress to the lift the full embargo lead to the huge rise in the share price.
Calculation of Return
Initial Investment with Commissions : 1500 *2.42 +9.95 = 3639.95
Proceeds of Sale : 1500*2.70-9.95 =4040.95
Profit = proceeds of sale - initial investment = 4040.95 -3639.95
= 400.10
Total Return = 400.10/3639.95
= 10.99 %
I am going to use this $400.10 to pay on my line of credit used for investing as the interest is high at 9.5%. The interest was initially around 7.6% but the bank raised it to over 10 %. I called about the increase and got it reduced to 9.5% awhile ago.
YouTube
I came across this video on your tube, I Fought the Fed, by Hit the Bid. The person singing has been on YouTube for years and some entertaining about the markets.
This guy is not Jason Fieber, aka Dividend Mantra, although he might look like him a bit.
DISCLAIMER
This guy is not Jason Fieber, aka Dividend Mantra, although he might look like him a bit.
DISCLAIMER
Saturday, December 13, 2014
Recent Buy
During the recent fall in the market, I was tempted to add to my energy positions but did not pull the trigger. Enerplus has fallen more than I would like so I decided not to average down at this time. Enerplus is a energy producer that operates in Canada and the United States. As the price of a barrel of crude continues to fall, the stock will remain low for the foreseeable future.
On Dec 1, Enbridge paid a dividend. I hold this stock in 2 accounts. The small position is directly with the transfer agent. I have a full drip on which allows for partial shares. So I averaged in with the recent dividend payment. Investing with the transfer agent, there are specific rules to follow for each company. The last time I bought shares, the rules say to have the money in by the 15th of the month prior to the month they pay the dividend. When the shares are actually purchased, it will be at the end of the month, these new shares are not eligible for the dividend as the shares are purchased after the ex-dividend date. The other account that I own 33 shares of Enbridge is a TFSA account, so the dividends are tax free.
I purchased 200 units of Boston Pizza Royalties Income Fund at $21.23 per share in my margin account on December 8. Boston Pizza Royalties Income Fund works as follows.
With the only expenses of the royalty fund is adminstrative expenses to run the fund, the fund is able to pay out all of its profits or close to 100% of its profits. As the price of oil continues to drop, I feel confident in continuing to hold this position going forward.
This purchase adds $244.80 to my annual dividend income. I will add the recent purchase to my investment account tab above in early January.
Disclosure: Long BPF-UN
Photo Credit: www.bostonpizza.com
DISCLAIMER
On Dec 1, Enbridge paid a dividend. I hold this stock in 2 accounts. The small position is directly with the transfer agent. I have a full drip on which allows for partial shares. So I averaged in with the recent dividend payment. Investing with the transfer agent, there are specific rules to follow for each company. The last time I bought shares, the rules say to have the money in by the 15th of the month prior to the month they pay the dividend. When the shares are actually purchased, it will be at the end of the month, these new shares are not eligible for the dividend as the shares are purchased after the ex-dividend date. The other account that I own 33 shares of Enbridge is a TFSA account, so the dividends are tax free.
I purchased 200 units of Boston Pizza Royalties Income Fund at $21.23 per share in my margin account on December 8. Boston Pizza Royalties Income Fund works as follows.
"A key feature of the Fund is that it is a “top line” structure, in which
BPI pays the Fund a royalty equal to 4% of Franchise Sales from
restaurants in the Fund’s royalty pool. Accordingly, Fund unitholders
are not directly exposed to changes in the operating costs or
profitability of BPI or of individual Boston Pizza restaurants. Given
this structure, and that the Fund has no current mandate to retain
capital for other purposes, it is expected that the Fund will maintain a
Payout Ratio close to 100% over time as the trustees of the Fund
continue to distribute all available cash in order to maximize returns
to unitholders." - Earnings Release 11-07-14.
Please note that franchise Sales exclude revenue from the sales of liquor, beer, wine and approved national promotions and discounts.
Boston Pizza International is consists of casual dining restaurants that are operated by franchisees. The owners of Boston Pizza International are George Melville and Jim Treliving and they own 50% each. Jim Treliving is also a dragon on Dragon's Den since the show started. Dragon's Den is Canadian based. The United States version of Dragon's Den is Shark Tank.
On January 1 of each year, the new restaurants started during the previous year are added the the royalty pool. When you walk into the front doors of the restaurants, you can go through one of 2 doors. One door leads to the lounge, which is a sports bar, that has lots of big screen TVs and sometimes pool tables. The other door is the restaurant section. All the food of the restaurant section can also be ordered and eaten in the lounge part.
Right now the fund is buying back units in large amounts so has not been an increase in its distribution payment in a while.
I also own this fund in my Tax Free savings account since 2010. Their distribution was lowered in January 2011, as the Canadian tax laws were changed regarding income trusts. The fund decided to remain an income fund instead of converting to a corporation, so there profits are taxed with what is called the SIFT tax. SIFT stands for Specified Investment Flow-Through tax. The reduction in the distribution was approximately equal to the amount of tax they had to now pay. Boston Pizza Royalties Income Fund has raised their distribution since then.
A few highlights from the recent quarter are as follows:
- Franchise sales of restaurants in the royalty pool were 201.4 million in Q3 and 584.4 million YTD in 2014 compared to 191.5 million and 571.1 million in the same periods, respectively, in 2013
- Same store sales growth, SSSG, was 3.1 % in Q3 of 2014 and 0.5% YTD compared to 0.8% and 2.5% for the same periods, respectively, in 2013
- On a franchise sales basis, SSSG was 3.0% in Q3 of 2014 and 0.1% YTD, compared to 0.8% and 2.7% for the same period, respectively, in 2013.
With the only expenses of the royalty fund is adminstrative expenses to run the fund, the fund is able to pay out all of its profits or close to 100% of its profits. As the price of oil continues to drop, I feel confident in continuing to hold this position going forward.
This purchase adds $244.80 to my annual dividend income. I will add the recent purchase to my investment account tab above in early January.
Disclosure: Long BPF-UN
Photo Credit: www.bostonpizza.com
DISCLAIMER
Saturday, December 6, 2014
Recent Dividend Increase
On Dec 1, Enbridge paid out its last dividend under the old annual rate on December 1. On Dec 3rd, Enbridge announced that the annual dividend will be increased by 33% with the first quarterly payment on March 1, 2015. Enbridge has now raised their dividend 20 consecutive years which includes during the recent recession.
Formula
Formula for CAGR = (Ending Value / Beginning Value) ^(1/N) -1 where N is the number of periods.
The dividend rate was $0.415 per share in 2003 and, with the recent increase to $0.1862 for 2015 which represents a CAGR of 13.33% over the past 12 years. In 2005, the dividend rate was $0.52 per share which represents a CAGR of 13.61% over the past 10 years. In 2010, the dividend rate was $0.8500 which represents a CAGR of 16.98% over the past 5 years.
Why the Increase?
Enbridge has embarked on a 17 billion dollar restructuring plan. They plan on "Drop Down" its Canadian Oil Pipeline business that included its mainland pipeline system and the oil sands network. These assets will go into Enbridge Income Fund when all is said and done. Initially, this will go into a private company that Enbridge controls, in which Enbridge Income Fund will buys these assets from the private company. Enbridge then receives the money from the private company which they control. By doing this, Enbridge will lower costs and will not have to issue new shares or as many new shares to fund future projects. Enbridge might do the same thing with their US assets and Enbridge Energy Partners.
Enbridge plans to grow its dividend in 2016 to 2018 by an average of 15% per year.
This 33 % increase will increase by annual dividend income by $18.49. I will take the 33% as an early Christmas gift.
Disclosure: Long ENB
DISCLAIMER
 | |
| Enbridge's Dividend Rate from 2003- 2015 |
Formula
Formula for CAGR = (Ending Value / Beginning Value) ^(1/N) -1 where N is the number of periods.
The dividend rate was $0.415 per share in 2003 and, with the recent increase to $0.1862 for 2015 which represents a CAGR of 13.33% over the past 12 years. In 2005, the dividend rate was $0.52 per share which represents a CAGR of 13.61% over the past 10 years. In 2010, the dividend rate was $0.8500 which represents a CAGR of 16.98% over the past 5 years.
Why the Increase?
Enbridge has embarked on a 17 billion dollar restructuring plan. They plan on "Drop Down" its Canadian Oil Pipeline business that included its mainland pipeline system and the oil sands network. These assets will go into Enbridge Income Fund when all is said and done. Initially, this will go into a private company that Enbridge controls, in which Enbridge Income Fund will buys these assets from the private company. Enbridge then receives the money from the private company which they control. By doing this, Enbridge will lower costs and will not have to issue new shares or as many new shares to fund future projects. Enbridge might do the same thing with their US assets and Enbridge Energy Partners.
Enbridge plans to grow its dividend in 2016 to 2018 by an average of 15% per year.
This 33 % increase will increase by annual dividend income by $18.49. I will take the 33% as an early Christmas gift.
Disclosure: Long ENB
DISCLAIMER
Wednesday, December 3, 2014
Dividend Update - Nov 2014
The month of November 2014 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 month of November was another roller coaster in the financial markets as the price of a barrel of crude continues to drop. With investors waiting for the outcome of the OPEC meeting towards the end of October, the prices of stocks in the energy sector continued to fall. OPEC decided to not cut production even though we are producing 2 million extra barrels a day. With the increase supply and less demand, the price of a barrel of crude oil is likely to float between $55 and $75 a barrel.
Non-registered Account
- Emera (EMA) - $38.75
- Killam Properties (KMP) - $5.75
- Shaw Communications (SJR.B) - $18.33
- Enerplus (ERF) -$ 45.63
- Killam Properties (KMP) - $ 14.30
- Dundee REIT (D.UN) - $ 16.61
- Cominar REIT (C.UN) - $5.39
- Boston Pizza Royalties Fund (BPF.UN) - $23.87
- Claymore 1-5 yr Laddered Corporate Bond ETF (CBO) - $0.92
This total represents a 2.219% increase from 3 months ago and 16.49% decrease year over year. The increase over 3 months is due to my recent position in iShares Corporate Laddered Bond ETF, CBO, and an dividend increase. One of my positions, TD, paid a dividend this month but my purchase came after the ex-dividend date.
I also received another distribution payment of $56.00 for my swing trade in Dundee REIT in my non-registered account. This is not listed above since it is a trade, so I keep the money in the account and do not pay myself first with this payment. I have received $931.47 in distributions so far on this trade.
I will update my dividend income tab with the new amount. It is great to see money from passive income sources deposited into my brokerage account every single month.
Disclosure : Long all securities above.
Photo Credit: www.mipaq,co.za
DISCLAIMER
Sunday, November 30, 2014
Portfolio Update - November 2014
The month of Nov 2014 is now behind us. During the month of November, the price of a barrel of crude oil continued to drop. This drop in price has a big effect on my portfolio due to the weight on the energy sector in my portfolio. On November 27, OPEC met in Vienna and decided not to cut production. The price of crude kept falling after this and his roughly $66.00 a barrel.
I completed a trade in Precision Drilling early this month, which you can read about here. Since I exited my trade, the stock price of Precision Drilling has fallen a lot due to the falling price for a barrel of crude oil.
Shares added due to drip
2 shares of ERF @ $17.11 for a total of $34.22
1 share of KMP @ $10.74
My cash position is large right now, and I am actively looking to employ some of that cash in investments in December.
As of Nov 30, 2014, the value of my portfolio stands at $75950.89. This is an increase of 4.291% over last month. Although my energy stocks dropped, the other stocks I currently own have increase in value. I also contributed some cash to my portfolio.
I have updated my investment account tab above.
Disclosure: Long KMP, ERF
DISCLAIMER
I completed a trade in Precision Drilling early this month, which you can read about here. Since I exited my trade, the stock price of Precision Drilling has fallen a lot due to the falling price for a barrel of crude oil.
Shares added due to drip
2 shares of ERF @ $17.11 for a total of $34.22
1 share of KMP @ $10.74
My cash position is large right now, and I am actively looking to employ some of that cash in investments in December.
As of Nov 30, 2014, the value of my portfolio stands at $75950.89. This is an increase of 4.291% over last month. Although my energy stocks dropped, the other stocks I currently own have increase in value. I also contributed some cash to my portfolio.
I have updated my investment account tab above.
Disclosure: Long KMP, ERF
DISCLAIMER
Saturday, November 29, 2014
Weekend Reading - November 29 2014
Dividend Mantra recently published an article title Is Managing A Large Dividend Growth Stock Portfolio Time Consuming. I agree with Dividend Mantra, you need to do a lot of research up front for positions before you make an initial purchase. Depending on level of risk of an investment, an investor has to follow the news and financial reports when it comes to an investment with a higher level of risk.
Sharpe Trade published a few articles this week that I found were good. Sharpe Trade is a new website that aims to educate people about the capital markets. There are several people involved in this site, including 2 that are very active in social media over the years. Brad B, aka Pulling Myself Up, wrote an post on "Dividend Growth Rate: How Growing Income Beats Inflation". Dan Shy, wrote a educational post about the dividend payout ratio.
Asset-Grinder wrote about his 6 month anniversary with his blog. Asset-Grinder is making great progress in terms of page views and different visitors from all over the world.
Liquid, over at his Freedom Thirty Five Blog, wrote a post about Change. Newcomers need to become financially aware and learn about investments. The more they learn now, the better they are at making better financial decisions in there future. The past can not predict the future, but if you want to understand where you are at financially and where you want to go, a good starting place is to track your own finances to find out where your money is going.
My Own Advisor posted on his blog a post about titled, "Stop Worrying, Make Your Portfolio Safer, and Choose Better Investments. ". An investor can definitely sleep better at night if they have safer investments. I have a few high risk investments in Just Energy and Enerplus. These 2 companies are do struggle a lot and this is reflected in their share price. With the price of a barrel of crude now in the sixty-five dollar a barrel range this will greatly affected the bottom line for Enerplus. OPEC has stated that they will not meet again for 6 months after meeting this week. I do not worry about my investments in Emera or Scotia Bank.
Disclosure: Long JE, ERF, EMA, BNS
Photo Credit : www.cafepress.com
Saturday, November 22, 2014
Recent Trade
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| Image 1 |
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| Image 2 |
This last 2 week I made a quick trade. I did not expect to be in and out so quick. To be honest, I was surprised the trade moved in my favor.
I purchased 300 shares of Precision Drilling at $8.75 on November 13, whose ticker symbol is PD.TO Yahoo Finance.
Precision Drilling Corporation is Canada's largest
oilfield services company and one of the largest in the United States.
Precision also has a growing presence internationally. Precision
provides contract drilling, well servicing and strategic support
services to customers. Precision supplies on-the-ground expertise -
people, equipment and knowledge - to provide value to our customers on a
daily basis. - Investor Relations
The last quarter ended on Sept 30 and the also recently announced a dividend increase of 17% to their fourth quarter dividend. Some highlights of their recent earnings release are:
- Revenue in the 3 months ending Sept 30 increased from $488.45 million in 2013 to $584.59 million, which represents a 19.7% increase over last year.
- Revenue in the 9 months ending Sept 30 increased from approximately $1.463 billion in 2013 to $1.732 billion, which represents roughly an 18.4 % increase.
- Net earnings increased 79.4% from the 3 months ending Sept 30 as compared to the same time in 2013. Net earnings increased 19.4 % from the 9 months ending Sept 30 as compared to the same time in 2013.
- Diluted Earnings per share in the 3 months ending Sept 30, increased form $0.10 per share to $0.18 per share, which represents an increase of 80.0% increase. Diluted Earnings per share in the 9 months ending Sept 30 increased $0.43/ share in 2013 to $0.50/ share in 2014, which represents an increase of 16.3%
- Average contract drilling rig fleet in 3 months ending Sept 30, 2014 was 335 which represents an increase of 2.8 %. This is the same for the 9 month period ending Sept 30, 2013
I sold my shares at $9.02 on November 17, as my limit order was filled.
Summary of transaction
Cost of shares = 300* $8.75 +$4.95 commission
= $2629.95
Proceeds of Disposition = 300*$9.02 -$4.95 =$2701.05
Profits = $2701.05-$2629.95 = $71.10
Total Return = Profits / Investment
= $71.10 / $2629.95
= 2.703 %.
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| Click on image to enlarge |
Over the last few months, Precision Drilling as seen it's share price decline due to ongoing world events that cause people to fear certain types of companies. These events include such things as Ebola and what is going on in Ukraine and Iraq . The price of barrel of oil has dropped a lot and is currently as $76.72 a barrel, according to www.stockhouse.com. As the price of a barrel of crude oil drops it will eventually lead to a slow down in the oil and gas sector.
Photo Credit : Image 1 www.precisiondrilling.com
Image 2 www.calgaryherald.com
DISCLAIMER
Tuesday, November 11, 2014
Capital Gains or Cash Flow?
The average investor can investor for 2 things, which are capital gains or cash flow.
Capital Gain
If you own a stock and hopes it goes up in value to sell it at a higher price. When the investor sells at a higher price, that is considered a capital gain. If the investor sells the stock for less than what they paid for it, that would be considered a capital loss. The thing with this type of investing, is that when you sell, you MUST go out and buy another asset.
A good example of capital gain is the purchase of physical gold or silver. These two investments do not yield any cash. These investments must go up in value in order for the investor to make a profit when they sell. These precious metals are used sometimes by investors to hedge against the US dollar.
When an investor owns a mutual fund or ETF, they might end up with a capital gain to report on their tax returns, even if they never sold any units of the mutual fund or ETF. The reason for this is the mutual fund or ETF, might end up with a net capital gain for all their buy and sell transactions. The mutual fund or ETF pass this on to investor.
Cash Flow
When an investor invests for cash flow, they want to get paid. This payment of income can be interest, dividends, option premiums, or distributions. Interest payments come from bonds, bond ETFs or bond mutual fund. Dividends are payments that come from equity ownership in a company. Distributions is a form of payment that can come from things such REITs, mutual funds, and ETFs. Option premiums are paid to the sellers of options up front.
Depending on the form of payment, the tax treatment of the income varies. A payment of interest is taxed as ordinary income, or at your marginal tax rate. Dividends can be taxed differently depending on a couple of things. For Canadians, if they own a Canadian company's stock, the dividend will be taxed more efficiently than interest income. If Canadians own a foreign stock, the dividend is taxed the same as interest income. When distributions are paid out, the payments can consist of interest, dividends, capital gains, and return of capital.
Option premiums that are collected are basically capital gains. I am not going to get into options here as it can be more complex than the other types of cash flow.
Capital Gains or Cash Flow? What is better?
For me, I invest for cash flow mostly. Every month or quarter, I receive a payment. If I do not sell the position, that asset will continue to pay me unless the company, fund or ETF's stop paying dividends, distributions or interest. I will use stock ownership as an example here. Some companies will increase their dividend over time. These increases are usually higher than the rate of inflation. I can choose to do what ever I want with these payments. When the cash flow from my investments are greater than my expenses, then I will be be out of the rat race and financially free.
For capital gains, I trade a stock or option in the hopes of making a profit. I then have to turn around and purchase another position, buy an option, or sell an option.
A good example of dividend growth investing is Grace Groner. Grace bought 3 shares of Abbott Laboratories in 1935 and reinvested all the dividends. With capital appreciation, dividend increases and stock splits, this investment grew to over 7 million dollars. You can read about Grace Groner here.
Note: Currently, I sell put options only on stocks I want to own at a lower price. The option premium I receive is a way to make money why waiting to see if the stock falls in value or not. If the stock does not fall below the strike price, I let the option expire. I get to keep the option premium.
DISCLAIMER
Capital Gain
If you own a stock and hopes it goes up in value to sell it at a higher price. When the investor sells at a higher price, that is considered a capital gain. If the investor sells the stock for less than what they paid for it, that would be considered a capital loss. The thing with this type of investing, is that when you sell, you MUST go out and buy another asset.
A good example of capital gain is the purchase of physical gold or silver. These two investments do not yield any cash. These investments must go up in value in order for the investor to make a profit when they sell. These precious metals are used sometimes by investors to hedge against the US dollar.
When an investor owns a mutual fund or ETF, they might end up with a capital gain to report on their tax returns, even if they never sold any units of the mutual fund or ETF. The reason for this is the mutual fund or ETF, might end up with a net capital gain for all their buy and sell transactions. The mutual fund or ETF pass this on to investor.
Cash Flow
When an investor invests for cash flow, they want to get paid. This payment of income can be interest, dividends, option premiums, or distributions. Interest payments come from bonds, bond ETFs or bond mutual fund. Dividends are payments that come from equity ownership in a company. Distributions is a form of payment that can come from things such REITs, mutual funds, and ETFs. Option premiums are paid to the sellers of options up front.
Depending on the form of payment, the tax treatment of the income varies. A payment of interest is taxed as ordinary income, or at your marginal tax rate. Dividends can be taxed differently depending on a couple of things. For Canadians, if they own a Canadian company's stock, the dividend will be taxed more efficiently than interest income. If Canadians own a foreign stock, the dividend is taxed the same as interest income. When distributions are paid out, the payments can consist of interest, dividends, capital gains, and return of capital.
Option premiums that are collected are basically capital gains. I am not going to get into options here as it can be more complex than the other types of cash flow.
Capital Gains or Cash Flow? What is better?
For me, I invest for cash flow mostly. Every month or quarter, I receive a payment. If I do not sell the position, that asset will continue to pay me unless the company, fund or ETF's stop paying dividends, distributions or interest. I will use stock ownership as an example here. Some companies will increase their dividend over time. These increases are usually higher than the rate of inflation. I can choose to do what ever I want with these payments. When the cash flow from my investments are greater than my expenses, then I will be be out of the rat race and financially free.
For capital gains, I trade a stock or option in the hopes of making a profit. I then have to turn around and purchase another position, buy an option, or sell an option.
A good example of dividend growth investing is Grace Groner. Grace bought 3 shares of Abbott Laboratories in 1935 and reinvested all the dividends. With capital appreciation, dividend increases and stock splits, this investment grew to over 7 million dollars. You can read about Grace Groner here.
Note: Currently, I sell put options only on stocks I want to own at a lower price. The option premium I receive is a way to make money why waiting to see if the stock falls in value or not. If the stock does not fall below the strike price, I let the option expire. I get to keep the option premium.
DISCLAIMER
Saturday, November 8, 2014
Enerplus Earnings Release
Enerplus was established in 1986. This company is an energy producer in North American that currently has a portfolio of high quality oil and natural gas assets. The company tries to develop their properties which they hope, in turn, create values the their many investors.
Enerplus is headquartered in Calgary, Alberta and trades on both the Toronto stock Exchange and the New York Stock Exchange. The company used to be a Canadian Royal Land Trust, but changed their corporate structure to a corporation. In 2006 on Halloween, Canadian Finance minister Jim Flaherty changed the tax rules for the income trust model. The rules would change in 5 years where income trusts would be taxed more after 2011. The income trust did not have to pay taxes by paying out 90% of their earnings to shareholders, who paid the taxes at the individual level. So Enerplus, along with most income trusts, switched to a corporation setup.
When I started my investment in Enerplus, it was paying $2.16 annual dividend. The yield on this high. The price of Natural Gas has fallen a lot shortly after I owned the stock. As Enerplus is a producer, this greatly affected their bottom line. The company was losing as Natural Gas fell in value. On April 19, 2012 the price of Natural Gas closed at $1.93 on the NYMEX, which is the New York Mercantile Exchange. As the company was not as profitable, Enerplus felt it was in there best interest to cut the dividend by 50% to $1.08 per year.
Now to the Earnings Release
Some Operational Highlights
- Daily production averaged near 104000 BOE, which was on par with their previous quarter.
- Averaged increase of 700 barrels per day over the second quarter
- Natural gas production was roughly the same despite low natural gas prices and maintenance on pipeline in the Marcellus region
- Looking for full year production to come in around 103000 BOE per day.
Financial Highlights
- Funds flow quarter over quarter at $213 million or $1.04
- Dividends paid out represented 26% of funds flow during the quarter.
- Average realized price on crude oil sales was $86.49 per barrel in Canadian dollars, which is down 9% from the second quarter.
- Average selling price for natural gas was $3.22 per Mfg in Canadian dollars, which represent a 20% reduction quarter over quarter.
At the current price, I will not be averaging down my shares. I would consider averaging down my shares if the price of Enerplus falls near or below $15.00 a share. I currently have the DRIP turned on, but missed it last month. So this month I will start to averaging down via DRIP when Enerplus pays their monthly dividend.
Note: BOE stands for Barrel of Oil Equivalent
Disclosure: Long ERF (Toronto Stock Exchange)
DISCLAIMER
Tuesday, November 4, 2014
Dividend Income - Oct 2014
The month of October 2014 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 month of October was a roller coaster in the financial markets as the price of a barrel of crude drop a lot. The major drop in the price of oil has been linked to the Ebola epidemic and the issues going on in Iraq. If an investor was able to follow the markets as they were open during the day could of took advantage of the pullbacks in certain sectors.
Non-registered Account
- Bank of Nova Scotia (BNS) - $7.67
- Bell Canada Enterprises (BCE) - $61.75
- Killam Properties (KMP) - $5.75
- Shaw Communications (SJR.B) - $18.33
- Enerplus (ERF) -$ 45.63
- Roger's Communications (RCI.B) - $45.75
- Killam Properties (KMP) - $ 14.25
- Dundee REIT (D.UN) - $ 16.61
- Cominar REIT (C.UN) - $5.39
- Boston Pizza Royalties Fund (BPF.UN) - $23.87
- Claymore 1-5 yr Laddered Corporate Bond ETF (CBO) - $0.91
This total represents a 23.77% increase from 3 months ago and 7.155% increase year over year. The increase over 3 months is due to my recent position in Roger's Communications Class B stock. This has replaced roughly my monthly dividend in Just Energy which is around the same amount prior to Just Energy switching to a quarterly dividend and a smaller annual rate. The small increase from 12 months ago is due mostly to Just Energy and its dividend as explained here. Some stocks have increased dividends payments due to DRIP also.
I also received another distribution payment of $56.00 for my swing trade in Dundee REIT in my non-registered account. This is not listed above since it is a trade, so I keep the money in the account and do not pay myself first with this payment. I have received $875.47 in distributions so far on this trade.
I will update my dividend income tab with the new amount.
Disclosure : Long all securities above.
Photo Credit: www.mipaq,co.za
DISCLAIMER
Saturday, November 1, 2014
Portfolio Update - October 2014
The month of October 2014 is now behind us. During the month of October, the overall market dropped. With the world events of what is going on in Iraq and the health epidemic of Ebola weighed heavily on the markets. We have seen huge drops in energy stock prices over the course of the month. This has heavily impacted my portfolio has one of my stocks, Enerplus, is a major holding for me. Enerplus is directly involved in the production of crude oil and natural gas. Enbridge is involved in the transportation of crude oil and natural gas by pipelines and other forms of energy. The price of crude oil over the last two months had dropped from approximately $96.00 to near $80.00.
Other stocks have pulled back as well. This market pull back does provide opportunities, especially in the energy sector. Energy is a big part of my portfolio right now, so I am hesitant to add to any positions in the sector at the moment.
In August, I sold two put options in different stocks on the Toronto Stock Exchange. These options had an October 18, 2014 expiration date. The put option in TD Bank was assigned as it was trading bellow the strike price at expiration. The second put option in Roger's Communications did not get assigned as it traded above the strike price at expiration time. I currently own 100 shares of Roger's Communications Class B stock. You can read more about these two trades here.
Besides the option assignment of TD Bank stock (TD.TO), I also acquired 1 more share of Killam properties in my TFSA via DRIP at a cost of $10.27. I acquired 0.113401 shares of Scotia Bank (BNS.TO) through a full DRIP directly with the transfer agent.
As of Nov 1, 2014, the value of my portfolio stands at $72826.21. This is an increase of 1.309% over last month. Although my energy stocks dropped, the other stocks I currently own have increase in value. I also contributed some cash to my portfolio.
I have updated my investment account tab above.
Disclosure: Long KMP.TO,TD.TO, RCI.B.TO
DISCLAIMER:
Other stocks have pulled back as well. This market pull back does provide opportunities, especially in the energy sector. Energy is a big part of my portfolio right now, so I am hesitant to add to any positions in the sector at the moment.
In August, I sold two put options in different stocks on the Toronto Stock Exchange. These options had an October 18, 2014 expiration date. The put option in TD Bank was assigned as it was trading bellow the strike price at expiration. The second put option in Roger's Communications did not get assigned as it traded above the strike price at expiration time. I currently own 100 shares of Roger's Communications Class B stock. You can read more about these two trades here.
Besides the option assignment of TD Bank stock (TD.TO), I also acquired 1 more share of Killam properties in my TFSA via DRIP at a cost of $10.27. I acquired 0.113401 shares of Scotia Bank (BNS.TO) through a full DRIP directly with the transfer agent.
As of Nov 1, 2014, the value of my portfolio stands at $72826.21. This is an increase of 1.309% over last month. Although my energy stocks dropped, the other stocks I currently own have increase in value. I also contributed some cash to my portfolio.
I have updated my investment account tab above.
Disclosure: Long KMP.TO,TD.TO, RCI.B.TO
DISCLAIMER:
Monday, October 20, 2014
Option Assignment
Oct 18, 2015 was option expiration date for the month of October. I wrote recently on the two companies that I recently sold put options on, which you can read about here and here. My put option in Roger's Communications Class B stock with a $42.00 strike price was not assigned.
When I sell a put option in company "A", I am obligated to BUY 100 shares of Company "A" before or at option expiration. The buyer of a put option is the choice to sell 100 shares of Company "A" at the strike price on or before expiration day.
My naked put option was assigned for TD Bank, which has ticker symbol TD on the Toronto Stock Exchange. The premium I received for the put option was $71.05 after commissions. My broker has an option assignment fee of $24.95.
Adjusted Cost Base = 100 shares *strike price - (option premium with commission ) + option assignment fee
= 100*$56.00 - $71.05 + $24.95
= $5553.90
Yield on Cost = annual dividend / ACB =$1.88/55.5390 = 3.385%
As of writing this post, TD trades at $53.67 a share. The option assignment adds $188.00 to my annual dividend income.
TD Bank has grown its dividend at a CAGR 6.5 % over the 5 years between 2008 to 2013. In 2009 and 2010, TD Bank did not increase its dividend due to the financial meltdown and the recession that happened. The other 5 major banks did not raise there dividend during this time as well. TD Bank also increased its dividend in 2014 already. The other Canadian banks have a CAGR of only 3.3% over the same 5 year span.
Disclosure: Long TD
EDIT: Feb 16, 2015 My option premium is now correct above. The premium was $0.82 per contract and not $1.00 per contract. So with commissions the premium including commissions is $71.05.
DISCLAIMER:
When I sell a put option in company "A", I am obligated to BUY 100 shares of Company "A" before or at option expiration. The buyer of a put option is the choice to sell 100 shares of Company "A" at the strike price on or before expiration day.
My naked put option was assigned for TD Bank, which has ticker symbol TD on the Toronto Stock Exchange. The premium I received for the put option was $71.05 after commissions. My broker has an option assignment fee of $24.95.
Adjusted Cost Base = 100 shares *strike price - (option premium with commission ) + option assignment fee
= 100*$56.00 - $71.05 + $24.95
= $5553.90
Yield on Cost = annual dividend / ACB =$1.88/55.5390 = 3.385%
As of writing this post, TD trades at $53.67 a share. The option assignment adds $188.00 to my annual dividend income.
TD Bank has grown its dividend at a CAGR 6.5 % over the 5 years between 2008 to 2013. In 2009 and 2010, TD Bank did not increase its dividend due to the financial meltdown and the recession that happened. The other 5 major banks did not raise there dividend during this time as well. TD Bank also increased its dividend in 2014 already. The other Canadian banks have a CAGR of only 3.3% over the same 5 year span.
Disclosure: Long TD
EDIT: Feb 16, 2015 My option premium is now correct above. The premium was $0.82 per contract and not $1.00 per contract. So with commissions the premium including commissions is $71.05.
DISCLAIMER:
Sunday, October 19, 2014
Weekend Reading - October 19, 2014
Dividend Mantra recently published a post titled Create Your Own Miniature Berkshire Hathaway. Berkshire Hathaway is the investment holding company that is run by Warren Buffett as CEO and business partner Charlie Munger. Dividend Mantra currently has partial ownership in over 50 companies through the stock market.
Liquid Independence, over at Freedom Thirty Five Blog recently published a post about averaging down his position in Avigilon Corporation during the recent market pull back.
Mark, over at My Own Advisor, posted about it catching up with Canada's "youngest retiree" Derek Foster. Derek Foster left the rat race at the age of 34. A lot of people say Derek is not retired because he writes books and does speaker engagements. He is financially free and can choose to write books, do speaking engagements, or do whatever he wants with his time. That is what we are all after in the long run in having the CHOICE to do what we want with our time.
Aileron recently posted a video on his You Tube page titled, "It's Never Enough of a Good Fight". Aileron discusses why he loves the capital markets and the challenge of why things happen in the markets. Please note that Aileron is a dividend investor and trader.
Photo Credit : www.cafepress.com
Saturday, October 11, 2014
Recent Option Trades - Part 2
This is a follow up post on my two recent naked put option trades that I recently did. You can read about the 2 trades here.
For the TD put, there are 3 outcomes.
Option Premium : $82.00
Commission : $10.95
Net Option Received = $71.05
If the stock goes up, I make money with the option premium of $71.05.
If the stock goes sideways, I still make money with the option premium if $71.05
If stock goes down and put is assigned.
Adjusted Cost basis = $56.00*100+$24.95-$71.05
= $5553.90
ACB per share = $55.5390 / per share
Yield = annual dividend rate / ACB = 1.88/55.5390 = 3.385%
Buying the stock with no option
Cost = $5600+$4.95=$5604.95
Yield = annual dividend rate / ACB =$1.88/$56.0495 = 3.354%
I currently do not own this stock, but with the recent chaos in the market this option will likely be assigned as the price of the stock is less than the strike price. I also have the choice to buy back the put for a loss to close the transaction. As is shown above, the yield with the put option is higher than just buying the stock at $56.00. The option assignment fee is $24.95.
For RCI.B put option
Option premium = $70.00
Commission = $10.95
Net Option premium = $59.05
I can make this money regardless if the money goes up, down or sideways.
If stock goes up, I keep the $59.05/
If stock goes sideways, I keep the $59.05.
If the stock goes down:
Adjusted Cost basis = $42.00*100+$24.95-59.05
= $4165.90
ACB per share = $41.6590 / per share
Yield = annual dividend rate / ACB = 1.83/41.6590 = 4.393%
Buying the stock with no option
Cost = 4200+4.95=4204.95
Yield = annual dividend rate / ACB =1.83/42.0495 = 4.352%
I currently own 100 shares of RCI.B, so if this put is assigned it will lower my cost basis for this stock. Currently, RCI.B is trading higher than the strike price so there is a chance the put will not be assigned at expiration.
Note: Selling puts can be risky as the stock can fall a lot in value. As I plan on holding these stocks for the long term, I did not have insurance on these transactions.
Disclosure : Long TD, RCI.B
DISCLAIMER:
For the TD put, there are 3 outcomes.
Option Premium : $82.00
Commission : $10.95
Net Option Received = $71.05
If the stock goes up, I make money with the option premium of $71.05.
If the stock goes sideways, I still make money with the option premium if $71.05
If stock goes down and put is assigned.
Adjusted Cost basis = $56.00*100+$24.95-$71.05
= $5553.90
ACB per share = $55.5390 / per share
Yield = annual dividend rate / ACB = 1.88/55.5390 = 3.385%
Buying the stock with no option
Cost = $5600+$4.95=$5604.95
Yield = annual dividend rate / ACB =$1.88/$56.0495 = 3.354%
I currently do not own this stock, but with the recent chaos in the market this option will likely be assigned as the price of the stock is less than the strike price. I also have the choice to buy back the put for a loss to close the transaction. As is shown above, the yield with the put option is higher than just buying the stock at $56.00. The option assignment fee is $24.95.
For RCI.B put option
Option premium = $70.00
Commission = $10.95
Net Option premium = $59.05
I can make this money regardless if the money goes up, down or sideways.
If stock goes up, I keep the $59.05/
If stock goes sideways, I keep the $59.05.
If the stock goes down:
Adjusted Cost basis = $42.00*100+$24.95-59.05
= $4165.90
ACB per share = $41.6590 / per share
Yield = annual dividend rate / ACB = 1.83/41.6590 = 4.393%
Buying the stock with no option
Cost = 4200+4.95=4204.95
Yield = annual dividend rate / ACB =1.83/42.0495 = 4.352%
I currently own 100 shares of RCI.B, so if this put is assigned it will lower my cost basis for this stock. Currently, RCI.B is trading higher than the strike price so there is a chance the put will not be assigned at expiration.
Note: Selling puts can be risky as the stock can fall a lot in value. As I plan on holding these stocks for the long term, I did not have insurance on these transactions.
Disclosure : Long TD, RCI.B
DISCLAIMER:
Friday, October 3, 2014
Dividend Income - September 2014
The month of September 2014 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.
Non-registered Account
- Killam Properties (KMP) - $5.75
- Shaw Communications (SJR.B) - $18.33
- Enerplus (ERF) -$ 45.63
- Just Energy (JE) - $86.38
- Tim Horton's (THI) 's $32.00
- Enbridge (ENB) - $2.43
- Killam Properties (KMP) - $ 14.20
- Dundee REIT (D.UN) - $ 16.61
- Cominar REIT (C.UN) - $5.39
- Boston Pizza Royalties Fund (BPF.UN) - $23.87
- Enbridge (ENB) - $11.55
- Claymore 1-5 yr Laddered Corporate Bond ETF (CBO) - $0.73
This total represents a 17.69% increase from 3 months ago and 48.05% increase year over year. Just Energy used to pay a monthly dividend. It was since reduced the dividend and switched to a quarterly dividend. This past month of September was the first time they paid there dividend quarterly. Some of my stocks I DRIP, so these companies paid slightly larger amount of dividends than before.
I also received another distribution payment of $56.00 for my swing trade in Dundee REIT in my non-registered account. This is not listed above since it is a trade, so I keep the money in the account and do not pay myself first with this payment. I have received $819.47 in distributions so far on this trade.
Another form of income I received was in the form of option premiums. I sold put options in Rogers Communications Class B stock and TD Bank. The net premium paid from these two put options is $130.10.
I will update my dividend income tab with the new amount.
Disclosure : Long all securities above.
Photo Credit: www.mipaq,co.za
DISCLAIMER:
Thursday, October 2, 2014
Portfolio Update - September 2014
The month of Sept 2014 is now behind us. The stock market keeps shown a bit of a pullback. The TSX composite index is down 5.50% over the last month as compared to the S&P 500 which was down
going higher and the S&P 500 which decreased 2.81 %. During the month I did a few transactions.
I sold my shares in Tim Horton's Inc after the news of the leveraged buyout by Burger King. Although this acquisition has not occurred as of today, the likelihood of it in the future is very high. I recently wrote a post on this sale. I also purchased shares in Bombardier Inc. Class B stock .
I sold 2 put options this past month of September. The first one was in Toronto Dominion Bank and the second one in Rogers Communications Class B stock. I currently own 100 shares of RCI.B. You can read about these put options here.
I made a small purchase in my TFSA with the small amount of cash that was sitting in the account. I decide to put it too work and took advantage of free commission ETF offered by my broker. I purchased 3 shares of Claymore 1-5 Yr Laddered Corporation Bond ETF on the Toronto Stock Exchange.
I also acquired 1 more share of Killam properties in my TFSA via DRIP at a cost of $10.41. Just Energy paid its first-time quarter dividend at the end of September. I acquired 16 shares at $5.23 of Just Energy though DRIP. Both of these DRIPs lowers my cost basis.
As of Oct 2, 2014, the value of my portfolio stands at $71885.58. This is an decrease of 4.376% over last month.
I have updated my investment account tab above.
Disclosure: Long KMP.TO, CBO.TO, RCI.B.TO, BBD.TO
DISCLAIMER:
 | |
| Click to enlarge |
I sold my shares in Tim Horton's Inc after the news of the leveraged buyout by Burger King. Although this acquisition has not occurred as of today, the likelihood of it in the future is very high. I recently wrote a post on this sale. I also purchased shares in Bombardier Inc. Class B stock .
I sold 2 put options this past month of September. The first one was in Toronto Dominion Bank and the second one in Rogers Communications Class B stock. I currently own 100 shares of RCI.B. You can read about these put options here.
I made a small purchase in my TFSA with the small amount of cash that was sitting in the account. I decide to put it too work and took advantage of free commission ETF offered by my broker. I purchased 3 shares of Claymore 1-5 Yr Laddered Corporation Bond ETF on the Toronto Stock Exchange.
I also acquired 1 more share of Killam properties in my TFSA via DRIP at a cost of $10.41. Just Energy paid its first-time quarter dividend at the end of September. I acquired 16 shares at $5.23 of Just Energy though DRIP. Both of these DRIPs lowers my cost basis.
As of Oct 2, 2014, the value of my portfolio stands at $71885.58. This is an decrease of 4.376% over last month.
I have updated my investment account tab above.
Disclosure: Long KMP.TO, CBO.TO, RCI.B.TO, BBD.TO
DISCLAIMER:
Tuesday, September 30, 2014
Recent Option trades - Part 1
In my recent sale of Tim Horton shares that I owned, I decided to receive some cash flow from the market. This cash flow is via option premiums which is another way to receive cash flow in the financial markets.
On September 25th, I sold a put option in Toronto Dominion (TD) for $0.82 per contract. The strike price is $56.00 and the option expires Oct 18, 2014. When you sell a put option, you receive payment immediately in the form of option premium. The premium is the money you receive for being obligated to purchase 100 shares of TD on or before October 18, 2014 if the option is exercised. The buyer of the put option has the right but not the obligation to sell 100 shares of TD before or on Oct 18, 2014. The net option premium is $71.05 after commissions.
On September 29, I sold a put option in Roger's Communications Class B stock (RCI.B) with an Oct 18, 2014 expiration date. I was paid a premium of $70.00 excluding commissions. The strike price is $42.00. I currently own 100 shares of RCI.B and if this option is exercised than my ACB will be reduced. The net option premium received was $59.05.
Disclosure : Long TD, RCI.B
DISCLAIMER:
On September 25th, I sold a put option in Toronto Dominion (TD) for $0.82 per contract. The strike price is $56.00 and the option expires Oct 18, 2014. When you sell a put option, you receive payment immediately in the form of option premium. The premium is the money you receive for being obligated to purchase 100 shares of TD on or before October 18, 2014 if the option is exercised. The buyer of the put option has the right but not the obligation to sell 100 shares of TD before or on Oct 18, 2014. The net option premium is $71.05 after commissions.
On September 29, I sold a put option in Roger's Communications Class B stock (RCI.B) with an Oct 18, 2014 expiration date. I was paid a premium of $70.00 excluding commissions. The strike price is $42.00. I currently own 100 shares of RCI.B and if this option is exercised than my ACB will be reduced. The net option premium received was $59.05.
Disclosure : Long TD, RCI.B
DISCLAIMER:
Friday, September 26, 2014
Recent Dividend Increase
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| banjanreporter.com |
Friday, September 26th, Emera Inc. came out with an announcement. Emera announced they are increasing the annual dividend to $1.55 a year, or 0.3875 per share. This represents a increase of 6.9% over the old annual dividend of $1.45 a year. Emera target goal when it comes to the annual growth of the dividend is 6% for the next 5 years.
What is Emera and what does the company do?
Emera Inc. is an energy and services company that is headquartered in Halifax, Nova Scotia. The company currents has over $9.07 Billion in assets. The company is involved in the electricity generation, transmission and distribution as well as gas transmission and utility energy services. Emera owns 100% of Nova Scotia Power. They basically have a monopoly in that province. The distribution of power in the province is over their transmission lives. So if another company
generates energy in Nova Scotia they must sell it to Nova Scotia Power as they own all the transmission lines in the province. Emera Inc also has other companies in the power field such as Bangor Power and places in the Caribbean.
People need electrically to live their lives such as to cook, television, phones, cell phones, and the other comforts of life. So this company will do well in good times and bad times as electricity is a "necessity" of life. So I feel comfortable owning this stock going forward.
Disclosure: Long EMA.
DISCLAIMER:
Sunday, September 21, 2014
Recent Buys
Recently, I made 2 new purchases. As I recently sold off my Tim Horton's shares as I feel the new company will not be as shareholder friendly. The acquisition by Burger King will be heavily financed with borrowed money. So I believe that most of the profits from Tim Horton's will be used to pay down the debt instead of rewarding shareholders with dividend increases by the new created company, which is yet to be named.
On September 19, I purchased 1000 shares of Bombardier Inc Class B at $3.60 per share. The total cost was $3613.45. The commission is quite high at $13.45. I e-mailed my brokerage firm to find out why I am charged $3.50 extra in fees. I am usually charged a small amount extra for ECN fees but never that much.
I recently traded Bombardier Inc Class B within the last couple of months, which you can read about here .
Inside my TFSA, I added to my holding in CBO.TO on Sept 17, 2014. CBO is Claymore's iShares 1-5 year laddered coporate bond etf. The purchase of certain ETFs have free commission whereas the investor only has to pay additional ECN related fees. I purchased 3 mores shares of CBO.TO at $19.52 per share for a total of $58.57 including the fee charged of $0.01. I now have 14
shares of CBO.
I will update my investment tab in early October with the new purchases.
Disclosure: Long BBD.B , CBO
DISCLAIMER:
On September 19, I purchased 1000 shares of Bombardier Inc Class B at $3.60 per share. The total cost was $3613.45. The commission is quite high at $13.45. I e-mailed my brokerage firm to find out why I am charged $3.50 extra in fees. I am usually charged a small amount extra for ECN fees but never that much.
I recently traded Bombardier Inc Class B within the last couple of months, which you can read about here .
Inside my TFSA, I added to my holding in CBO.TO on Sept 17, 2014. CBO is Claymore's iShares 1-5 year laddered coporate bond etf. The purchase of certain ETFs have free commission whereas the investor only has to pay additional ECN related fees. I purchased 3 mores shares of CBO.TO at $19.52 per share for a total of $58.57 including the fee charged of $0.01. I now have 14
shares of CBO.
I will update my investment tab in early October with the new purchases.
Disclosure: Long BBD.B , CBO
DISCLAIMER:
Friday, September 12, 2014
Resent Sale
Over the last two to three weeks, one of the major stories was the purchase of Tim Horton's by Burger King. Under the new ownership structure, the new company will be a Canadian Corporation owned as follows: 3G Capital 51 %, Burger King 27% and Tim Horton's 22%. So, all current Tim Horton shareholders could combine to own 22% of the new formed company. I recently wrote a post about the possible purchase of Tim Horton's by Burger King . This post also tells you what choices the Tim Horton's investor have.
I recently sold my 100 shares in Tim Horton's in the last week. This buyout by Burger King is highly leveraged. So as I hear more and more people talk about this, I feel it would be better to sell the shares. For some reason the sale does not go through, the Tim Horton's stock price will drop probably in to the low $60's or high $50's. Currently, as Tim Horton's is near saturation in Canada, they are basically a "cash cow". I believe the cash from Tim Horton's will be used to help pay down the massive debt incurred to finance this transaction. With the cash going to pay down the debt, then the dividend, if any, with the new company will no grow quickly.
Purchase Price: $59.70
Commission on Purchase: $4.95
Sale Price : $89.25
Commission on Sale: $4.95
Total Dividends received: $96.00
Profit= 100*($89.25-$59.70)-2*4.95+96
= $3041.10
Return = Profit/investment
= $3041.10 / ( $5970+$4.95)
= 50.90 %
I will continue to follow the news on the possible buy out of Tim Horton's by Burger King.
DISCLAIMER:
I recently sold my 100 shares in Tim Horton's in the last week. This buyout by Burger King is highly leveraged. So as I hear more and more people talk about this, I feel it would be better to sell the shares. For some reason the sale does not go through, the Tim Horton's stock price will drop probably in to the low $60's or high $50's. Currently, as Tim Horton's is near saturation in Canada, they are basically a "cash cow". I believe the cash from Tim Horton's will be used to help pay down the massive debt incurred to finance this transaction. With the cash going to pay down the debt, then the dividend, if any, with the new company will no grow quickly.
Purchase Price: $59.70
Commission on Purchase: $4.95
Sale Price : $89.25
Commission on Sale: $4.95
Total Dividends received: $96.00
Profit= 100*($89.25-$59.70)-2*4.95+96
= $3041.10
Return = Profit/investment
= $3041.10 / ( $5970+$4.95)
= 50.90 %
I will continue to follow the news on the possible buy out of Tim Horton's by Burger King.
DISCLAIMER:
Wednesday, September 3, 2014
Dividend Income - August 2014
The month of August 2014 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.
Non-registered Account
- Killam Properties (KMP) - $5.75
- Shaw Communications (SJR.B) - $18.33
- Enerplus (ERF) -$ 45.63
- Emera (EMA) - $36.25
- Killam Properties (KMP) - $ 14.15
- Dundee REIT (D.UN) - $ 16.61
- Cominar REIT (C.UN) - $5.28
- Boston Pizza Royalties Fund (BPF.UN) - $23.87
This total represents a 22.35% decrease from 3 months ago and 9.28% decrease year over year. The decrease from 3 months ago is that one of most monthly payers, Just Energy, changed their dividend payment schedule to quarterly with the first quarterly payment starting in September. Just Energy also reduced their dividend also to try to get the companies finances in order and to lower its dividend payout ratio. Some of my stocks I DRIP, so these companies paid slightly larger amount of dividends than before.
I also received another distribution payment of $56.00 for my swing trade in Dundee REIT in my non-registered account. This is not listed above since it is a trade, so I keep the money in the account and do not pay myself first with this payment. I have received $763.47 in distributions so far on this trade.
Since Jan 2014, I received $1716.25 in dividends not including the distributions I receive in for 300 units of Dundee REIT in my margin account. The amount distributions that I received for 300 units of Dundee Real Estate Investment Trust since Jan 2014 equals $448.
I will update my dividend income tab with the new amount.
Disclosure : Long all securities above.
Photo Credit: www.mipaq,co.za
DISCLAIMER:
Monday, September 1, 2014
Portfolio Update - August 2014
The month of August 2014 is now behind us. The stock market keeps going higher and the S&P 500 went over 2000. I try to sell a put option in Roger's again by placing a limit order with a September 20th , 2014 expiration date and a $42 strike price. This was not executed.
I made a small purchase in my TFSA with the small amount of cash that was sitting in the account. I decide to put it too work and took advantage of free commission ETF offered by my broker. I purchased 11 shares of Claymore 1-5 Yr Laddered Corporation Bond ETF on the Toronto Stock Exchange, which you can read about here. The ticker symbol is CBO. I didn't purchased before the ex-dividend date so I did not receive a distribution for the month of August.
I also acquired 1 more share of Killam properties in my TFSA via DRIP at a cost of $10.60.
The big news for the month of August is the announcement of Burger King purchasing Tim Horton's for 12.5 Billion. I currently own 100 shares of Tim Horton's. I recently wrote a post on the 3 options of current shareholder of Tim Horton's have on the table.
As of Sept 2, 2014, the value of my portfolio stands at $75175.32. This is an increase of 5.761% over last month. This increase in mostly due to Tim Horton's going up from $65.00 to over $87.00 a share due to the announcement of being bought by Burger King.
I have updated my investment account tab above.
Disclosure: Long KMP.TO, THI.TO, CBO.TO, RCI.B.TO
DISCLAIMER:
I made a small purchase in my TFSA with the small amount of cash that was sitting in the account. I decide to put it too work and took advantage of free commission ETF offered by my broker. I purchased 11 shares of Claymore 1-5 Yr Laddered Corporation Bond ETF on the Toronto Stock Exchange, which you can read about here. The ticker symbol is CBO. I didn't purchased before the ex-dividend date so I did not receive a distribution for the month of August.
I also acquired 1 more share of Killam properties in my TFSA via DRIP at a cost of $10.60.
The big news for the month of August is the announcement of Burger King purchasing Tim Horton's for 12.5 Billion. I currently own 100 shares of Tim Horton's. I recently wrote a post on the 3 options of current shareholder of Tim Horton's have on the table.
As of Sept 2, 2014, the value of my portfolio stands at $75175.32. This is an increase of 5.761% over last month. This increase in mostly due to Tim Horton's going up from $65.00 to over $87.00 a share due to the announcement of being bought by Burger King.
 |
| Click to Enlarge (Tim Horton's Toronto Stock exchange) |
I have updated my investment account tab above.
Disclosure: Long KMP.TO, THI.TO, CBO.TO, RCI.B.TO
DISCLAIMER:
Sunday, August 31, 2014
Tim Horton's and Burger King
On Tuesday August 26, Burger King and Tim Horton's announced a take over of Tim Horton's by Burger King for a tune of 12.5 Billion dollars. The shares of Tim Horton's have went up over 20% when this deal was announced but have fallen a little since then.
The new company, which will be headquartered in Canada, is planning to operate Tim Horton's and Burger King as separate restaurants and not sell each other products. Currently, Burger King is headquartered in Miami, Florida and majority owned by 3G capital. With the combined company becoming a Canadian Corporation, there will be tax savings as Canada's corporate tax rates are lower than the US. This is a hot topic right now in the media. When a US corporation takes over a company in a foreign country, they can become a corporate entity in that foreign country and therefore not pay US corporate taxes. There are various people in the media say that the savings will not be that noticeable.
Burger King has struggled over the years with competition from other restaurants in the fast food industry and the trend towards people choosing to try to eat more healthy food choices. I have noticed over the last decade that the quality of Burger King food as gone down hill from what it used to be. Burger King has also struggled in the breakfast part of their business competing for customers who like their morning coffee and such. Tim Horton's always as long line ups in the morning inside the store and the drive thru as people must have their morning coffee.
Tim Horton's has struggled over the years to gain traction in the United States. Their attempt to expand in the north eastern part of the United States did not go as well as planned. Tim Horton's has to compete with various competitors like Starbucks and Krispy Cream Donuts who were already thriving in this marketplace. Tim Horton's have stated that there is not much room for growth for them in Canada as they are saturated coast to coast. I believe Tim Horton's would due better if their donuts were made fresh from scratch in their stores like they use to be prior to 1995. 1995 is the year Wendy's acquired Tim Horton's , who later divested themselves of Tim Horton's in the mid 2000's.
With Burger King and Tim Horton's merger, both companies say this is a win win for both of them. This gives Tim Horton's access to a network of franchisees who might decide to open Tim Horton restaurants also. This will allow expansion into the US at a more faster pace. With the merger, this allows Burger King to gain traction in the breakfast part of the restaurant .
"3G Capital will purchase the company at $65.50 per-share; existing
shareholders will receive $65.50 in cash and 0.8025 shares in the new
holding company per-share—all-cash ($88.50) and all-shares (3.0879)
options will also be available. 3G Capital (which currently holds a 71%
majority stake in Burger King) will hold a 51% majority stake in the new
company, Tim Hortons' existing shareholders will own 22%, and Burger
King's will own 27%" - source Wikipedia
As a shareholder of Tim Horton's, which you can read about here, I could sell my shares now or wait. If I decide to wait, there are 3 options available to me as a a shareholder. These options as follows:
- $65.50 in cash and 0.8025 shares in the new holding company.
- All cash at $88.50 per share
- All shares option of 3.0879 shares in the new company.
Photo Credit: www.canadianbusiness.com
DISCLAIMER:
Sunday, August 24, 2014
Recent Purchase
I have not put money into my TFSA in quite a while. I had slightly over $200 in cash sitting in this account and not making money off it. So I decide to put it to work while taking advantage of commission free ETFs offered by my broker.
I purchased 11 shares of Claymore 1-5 Yr Laddered Corporation Bond ETF, with ticker symbol CBO on the Toronto Stock Exchange. I just had to pay $0.04 in fees. The commissions are free to buy but ECN fees still apply. The distribution of the ETF is almost entirely interest, which means it is taxed at the marginal rate. There might be some capital gains. Since it is in my TFSA, it will not be taxed.
The entry yield on my purchase is approximately 4.28%. The distribution yield will fluctuate month to month but I should receive approximately $0.75 per month. This is nothing to write home about but not the money is working for me instead of sitting there collecting 0 % interest.
Disclosure: Long CBO
DISCLAIMER:
I purchased 11 shares of Claymore 1-5 Yr Laddered Corporation Bond ETF, with ticker symbol CBO on the Toronto Stock Exchange. I just had to pay $0.04 in fees. The commissions are free to buy but ECN fees still apply. The distribution of the ETF is almost entirely interest, which means it is taxed at the marginal rate. There might be some capital gains. Since it is in my TFSA, it will not be taxed.
The entry yield on my purchase is approximately 4.28%. The distribution yield will fluctuate month to month but I should receive approximately $0.75 per month. This is nothing to write home about but not the money is working for me instead of sitting there collecting 0 % interest.
Disclosure: Long CBO
DISCLAIMER:
Saturday, August 16, 2014
Weekend Reading Aug 16, 2014
Liquid Independence posted an article about Going Cold Turkey. Liquid is going to try to not use other people's money for the rest of the year and to only invest his own money. I think it is a good call especially with the stock market at these high levels.
Dividend
Mantra recently published a few posts. The first is averaging down is recently acquired position in Deere & Company. You can read about this purchase here. The second post was actually a guest post on his site. This post was about how to figure out when you can quit, which you can read about here.
Mark, over at My Own Advisor, recently wrote a post on 2014- Financial Goals he and his wife made at the beginning of 2014.
Kraig, over at Create My Independence, recently published a podcast titled Should you Focus
on Earning Money or Building the Asset. Kraig recently left his job over a year ago to start his own business.
Photo Credit : www.cafepress.com
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