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
Sunday, November 30, 2014
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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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:
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