Tuesday, October 27, 2015

Recent Trade - Entry Point

    On Monday, I purchased 200 units of XDV on the Toronto Stock Exchange.  This is an exchange traded fund, or ETF.  ETFs is like a fund but trades as a stock.
 
     XDV is known as the iShares Dow Jones Canadian Select Dividend Fund.  The current yield of the ETF is approximately 4.78%.  The fund has a lot of financials in the top 10 of their fund. Canada is known for its financial sector,  and in particular, the big 5 banks.  Below is a  table, as of October 26,  showing the top 10 stocks of the fund by weight.


NameTickerWeight
Canadian Imperial Bank of CommerceCM9.75%
Bank of MontrealBMO6.92%
Royal Bank of CanadaRY6.40%
Bell Canada EnterprisesBCE5.98%
Bank of Nova ScotiaBNS5.50%
Rogers Communications Class BRCI.B5.08%
Laurentian Bank of CanadaLB4.97%
Toronto Dominion BankTD4.34%
Manitoba Telecom ServicesMBT4.29%
IGM Financial Inc.IGM4.19%


    I own shares in 6 out of these top 10 holdings.  My brokerage has zero commission ETFs which I took advantage of here.  I purchased 200 units at $22.49 on October 26.   I put in a good to cancel order to sell these units.  I will hold this ETF until my order gets filled. In the mean time, I will collect any dividends that this ETF will pay me.  There will be a commission on the sale.

Click to Enlarge
    An individual could use commission free ETFs, such as this, to get a higher yield than a savings account.  The yield on savings accounts today is so small these days and non-existent for regular day to day savings accounts.  Of course, the higher yield brings more risk such as the price of the ETF could go down below your cost basis.

 DISCLAIMER

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

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


Sunday, October 25, 2015

Rogers Q3 Earnings Highlights



       Public companies trading on the various stock exchanges across the world have to report earnings on a quarterly basis.  This allows investors to know how the company is doing financially and the company's plan for the future. As a shareholder of a company, an investor should take an active role, by at least listening to these conference calls.  They usually last about an hour each, and the results come directly from the CEO and the CFO of the company.  



        Rogers Communications, which trades in New York and Toronto, released its Q3 earnings on  Oct 22, 2015. So below, I posted some highlights from the conference call.

2015 Q3 Highlights  For Rogers Communications.

  • Revenue growth up over 4% YOY
  • Adjusted operating profit increase of 3% YOY
  • Free Cash Flow up almost $300 million
  • Wireless network revenue grew by 3%
  • Added 77000 pre-paid wireless subscribers
  • In September, expanded Roam Like Home to another 40 countries
                      - Now available in over 75 countries
                      - 2.1 million customers now enrolled in Roam Like Home

  • Launched WIFI calling which lets customers make calls and texts over WIFI.
                -- This started with the iPhone

    • LTE network now 3 time faster than the beginning of 2015
    • Cable revenue up 1%
    • 3.4 million homes in Ontario can access speeds up to 5 times faster than competitors
    • top line revenue growth grew by 4% YOY
    • Adjusted operating profit this quarter of $1.35 billion, which is up 3%.
    • Smart phone activations 
                         - activated 737000 phones in quarter with 1/3 being new subscribers
                         - up 20% YOY
                         - 28% increase in higher value iPhone customer activations

    • EPS $0.90 per share -  analysts’ estimate was $0.747 per share.


          Rogers Communications provide telecommunications services to residential and commercial customers. These services included Internet, cable, phone, and wireless. They are one of the major players in Canada in this space. In cable, they own Sportsnet which shows a lot of sporting events including the Toronto Blue Jays. Why mention the Toronto Blue Jays? Rogers own the Toronto Blue Jays, which is a major league baseball team. I own 200 shares of Rogers so I own a part of the Blue Jays. As the Blue Jays competed for the World Series this year, this will mean more revenue for Rogers as more games were played. 

    Disclosure: Long RCI.B

    Photocredit:  www.rogersmedia.com 

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

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

    Monday, October 19, 2015

    Option Trade

       I recently wrote about a stock purchase in Restaurant Brands International, that you can read about here.  The yield on this stock is low, so I was looking for a way to gain some cash flow from this investment.

       One of the ways to receive cash flow from a position that you own is to write a covered call.  With a covered call, the seller receives a premium for the promise to sell his or her shares at the strike price  on or before expiration.  A covered call is sort of like "renting" you stock.

        If the price of the stock goes down or sideways, the option seller stills get to keep the premium.  The option seller can sell another covered call on the stock if he or she chooses to. Another benefit of actually owning the shares is that the option seller still receives the dividend if they own it on the dividend record date.

         If the price of the stock goes up and the option is assigned,  the shares are "called" away.  If the strike price is about your purchase price, then the capital gain is higher do to the option premium is added to the proceeds of sale for tax purposes.  Depending on which broker you use, there might be an option assignment fee.  In my case, my brokerage as an option assignment fee of $24.95.

    CONCLUSION

         On October 19, Restaurants Brands International (RBI) was trading around $47.00 a share.  I looked at the option tables and saw the bid price was around $1.05 per contract for Nov 20 expiration and strike price of $48.00. So I watched if for about 5 minutes and saw it change to $1.10 per contract. So I placed a market order for 1 contract.

       RBI just paid a dividend at the beginning of October, so there will be no dividend paid between now and expiration as the dividend is quarterly.

    Two Possible Outcomes

    Scenario #1 - Option assigned

    Option assignment fee = $24.95
    Option commission = $10.95
    Premium = $1.10
    Number of contracts = 1
    Initial Price = $4700+ $4.95 =$4704.95
    Strike Price = $48.00

    Profit = $4800-4704.95-$24.95-$10.95+$110.00
              =  $169.15

    Total Return = $169.15/$4704.95
                          = 3.60%

    Scenario #2 - Option Not Assigned

    Premium received including commissions = $99.05
    # of days until expiration = 32

    Still get to be the owner of the 100 shares.

    Return = $99.05 / ($4704.95 -$99.05 )
                 = 2.15%

    Annualized return = 2.15%/32*365
                                  = 24.52%

         A covered call limits the profit that an investor can make but allows the investor to collect some more income from the position.  The price of the stock has risen a lot today since the option was sold. The stock currently trades at $49.28 as of this writing.  The option has not been assigned as of right now.

    Note: The shares were purchased on the Toronto Exchange.

    Disclosure: Long RBI

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

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



    Wednesday, October 14, 2015

    Recent Purchase

         There has been a stock that I have owned from time to time.  When the major acquisition was announced in the last year or so, I cashed out and netted a capital gain about $2950.00.  Tim Horton's was acquired by Burger King in a major leveraged buyout with the help of Warren Buffet.  The company that consists of the two companies, which still operate as their own brands, is know as Restaurant Brands International.
      
           I recently held the stock, RBI, up to recently.  The dividend is not very high but the dividend is paid in USD although the company is headquartered in Canada.  With a strong USD, every 1 USD buys approximately 1.30 Canadian dollars which makes the dividend yield higher.

         Today, October 14th, I purchased 100 shares at $47.00 for a total cost of $4704.95 including commissions.  This is a lowest price that I have purchased shares of RBI.

          The line ups at Tim Horton's continue to be long. For the average person, it is more economical for them to have Tim Hortons Coffee over McDonald's Coffee or Starbucks. All three of these companies serve more than coffee, but there is more Tim Hortons in Canada than the latter two.  Also 8 out of every 10 cups of coffee bought in Canada is bought at a Tim Hortons.  

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

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

    Wednesday, October 7, 2015

    Recent Sale

            I have own a certain stock for a while. This stock has cuts it dividend a few times since I became an owner. This company is Just Energy (ticker Symbol JE) , which trades on both the TSX in Toronto and the NYSE.
           
             Just Energy is a Canadian Energy Management solutions provider involved in electricity, natural gas, solar and green energy. A part of their business is providing customers with long term fix pricing.
         
              I have dripped this stock inside my brokerage account  for a while acquiring more "whole" shares. I acquired 152 shares alone though dripping of this stock.  I sold all my shares of JE on Oct 2,  via a market order, for a total of $6476.45.

     The stock was above my cost basis. So why did I sell? Just Energy used to be an income trust and then changed to a corporation. JE has a high dividend payout ratio which is sometimes over 100% and company did not grow very much. This company has many negative earnings reports over the past several quarters.  The run up in the stock is possible due to  a private holding company is buying up a lot of shares. 

    SUMMARY

    Initial Cost  (Adjusted Cost Base ) including commissions = $5997.31
    Proceeds of Sale including commisions  = $6476.45

    Profit = $479.14

     I sold to lock in profits.  

         My adjusted cost basis was approximately $7.88 per share. I wanted to sleep well at night  so holding 761 shares was too big of a position and having too high of an ACB made it an easy decision to sell. If I plan to own this stock in the future it will not be a big position.

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

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

    Sunday, October 4, 2015

    Dividend Update - September 2015




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

           The price of a barrel of crude oil is still a major focus of the markets and the economy. Some analysts are predicting the WTI price of a barrel of crude oil to remain between $40 to $55 for the next year. At the same time, other analyst are predicting the WTI price for a barrel of crude oil to be around $80.00 a barrel. None of us are able to say where the price of oil is going to be by the end of this year or at the end of the next few years.

           The Chinese markets continue to affect our markets along with the low oil prices.  Also, in North America, the interests rates have not been raised is a very long time. If the FED raises interest rates then this will likely effect all countries as it shows the United States are slowing their economy and making it more expensive to borrow money.

     Non-registered Account
    • Enbridge (ENB) - $3.33
    • Enerplus (ERF)  -$ 26.70
    • Just Energy (JE) - $93.75
    • Killam Properties (KMP)  - $5.75
    • Shaw Communications (SJR.B)    - $19.75
    TFSA
    • Boston Pizza  Royalties Fund (BPF.UN)   - $25.34
    • Claymore 1-5 yr Laddered Corporate Bond (ETF) - $0.77
    • CN Rail  (CNR) - $11.88
    • Cominar REIT (CUF.UN ) - $5.39 
    • Dream Office REIT   (D.UN)  - $ 16.61
    • Enbridge (ENB) - $15.35
    • Killam Properties (KMP) - $  14.80
    Total = $239.42

     This total represents a 2.663% increase from 3 months ago and 8.921% decrease  year over year. 

          I also received another distribution payment of $56.00 for my swing trade in Dream Office 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 $1491.47 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.

    How was your dividend income for September?

    Disclosure : Long all securities above.

    Photo Credit: www.mipaq,co.za

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

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

    Friday, October 2, 2015

    Portfolio Update - September 2015

        The month of September has come to an end. Therefore,  it's time to update the portfolio.  The market in China continues to show weakness. The price of a barrel of crude oil continues to remain below $50.00. The low price of crude oil has boosted the manufacturing sector but has hurt a lot of companies in the energy sector. These are just some of the reasons why the declines in the market over the past several months. 

         On September 1, I purchased 5.066 shares of Enbridge at a cost of $52.31 for a cost of $265.00. This was directly though the transfer agent, so the only cost to acquire these shares is a price of a stamp.  On September 1, Enbridge also paid a dividend. Therefore, the shares I already owned through the transfer agent were dripped.

       On September 18, I wrote about a covered call transaction. I sold a call option in Royal Bank with a January 16, 2016 expiration. I received a premium of  $64.05 including commissions. A covered call allows an investor to receive more income as the premium is paid to me for being obligated to sell my 100 shares on or before the expiration date. I get to keep the premium regardless if the stock goes above $80.00, goes lower or sideways.

       On September 21, I sold my 50 shares in Restaurant Brands International. The profit on my position was $64.76 excluding dividends.  Restaurant Brands International is the parent company that consists of Burger King and Tim Hortons.  Burger King and Tim Hortons are run as separate companies, so the parent company breaks the earning up for the two restaurant chains when they report earnings.

        On September 24 , I purchased 47 shares of Dream REIT in my Tax Free Savings Account.  Dream Office REIT has most of their buildings in major urban centers in Canada. This purchase allowed to to average down on my position of Dream REIT and also gave me enough shares to DRIP. I turned on the DRIP immediately for this position.

       I completed a couple of trades which involved short selling.  With short selling, an investor or trade first borrows the shares and then immediately sells them. This action is done by clicking sell instead of buy.  The goal of short selling is to buy the shares back at a lower price and then return them to the broker.  The profit or loss in short selling is the different between the sell price and the bought price minus the commissions. The trades were in the same stock, which was Agnico Eagle Mines Limited on the Toronto Stock Exchange. You can read about these trades here.

        I ended the month off with two more trades.  One trade was completed and the other is still option. I completed a trade in Cominar REIT inside my margin account. I made a very small profit on this trade to the tune of $8.56.   For disclosure, I own 44 units of Cominar REIT inside my TFSA still. The last action of the month was selling a put option in Telus Communications.  I sold a Oct 16, 2015 put option with a strike price of $42.00.  I collected a premium of $43.05 after commissions.


    Shares added due to drip

    0.065 shares ENB @ 51.26 for a total of $3.33
    3 shares of ERF @ $7.19 for a total of $21.57
    1 share of KMP @ $10.00 for a total of  $10.00
    11 shares of JE@  $8.07 for a total of $88.77

         As of  October 1 of  2015, the value of my portfolio stands at $78639.68. This is an increase of  4.357% over last month. I will update my investing account tab above.

    Disclosure: Long JE, KMP, ERF,  CUF.UN, D.UN

    EDIT: Royal Bank Covered Call was added to the spreadsheet on October 4, 2015. It got overlooked while writing this post and updating the spread sheet on October 2, 2015.

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

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

    Recent Trade - Trade #2

       On September 30 after exiting my position of Cominar REIT inside the margin account I went shopping. I was looking for a possible position instead of trading. So I ended up in the "middle of the road"

        I sold a put option for $0.54 for October 16, 2015 in Telus Communications. The strike price is $42.00. When you sell a put option, you are paid a premium for the obligation to BUY 100 shares of the stock on or before expiration. The option seller gets to keep the premium regardless if the market goes up, down, or sideways.

    Two scenarios can occur  when selling a put option:

    Scenario #1   Option not assigned.

    # of days to expiration = 16
    Option Commission = $10.95
    Premium paid to me = $0.54
    # of contracts = 1
    Strike Price = $42.00

    Premium including commissions = 1*100*$0.54 - $10.95
                                                          = $43.05

    Return = $43.05/($4200-$43.05)
                = 1.036%

    So my return for 16 days is 1.036%

    Annualized Return = 1.036% / 16 *365
                                     = 23.62%

    Return on capital is the amount of capital required in your account to put on the trade.  Return on capital is usually 20% of break even. 

    Return on Capital = $43.05/ (.20*($4200-$43.05))
                                 = $43.05 / $831.39
                                 =  5.178%

    Annualized Return on capital = 5.178% /16 *365
                                                     =118%

    Scenario #2   Option is assigned

    Annual Dividend Rate = $1.68
    Option Assignment Fee = $24.95

    Adjusted cost basis =  $4200 -(1*100*$0.54 - $10.95) +$24.95
                                    = $4181.90

    Yield with option assignment = $1.68/(4181.90/100 shares)
                                                    = 4.017%

    I will now calculated the yield if I purchased the stock without an option at $42.00.

    Adjusted Cost Basis including commission = $4200+ $4.95
                                                                          =  $4204.95

    Yield = $1.68 /($4204.95/100 shares)
              = 3.995%

    DISCLAIMER

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

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





    Thursday, October 1, 2015

    Recent Trade - Trade 1

        The REIT sector has been beaten down later as a result of the economy. The low price for a barrel of crude oil is starting to show its effects right across Canada. Thousands of Alberta workers live in other parts of Canada on their days off. With these people not working very much, means they are spending less in their own communities.

         Another factor in why REITs are not performing well is due to the interest rate situation.  Interest rates have been low for quite a while. This means the price of borrowing is cheaper for new mortgages and renewals.  But interest rates will eventually rise, so this future possibility could be already factored into the current price of the REIT.

         I currently own units in Cominar REIT (CUF.UN) and Dream REIT (D.UN).  I just recently purchased more units of Dream REIT, which you can read about here. For disclosure, I also own shares in Killam Properties (KMP), which trade as a corporation.

        I looked to this sector to place a trade.  On September 28, I purchased 150 units of Cominar REIT inside my margin account at a price of $15.98 per unit.  I immediately placed a limit order to sell the units.  On September 30, their volume of shares traded was low, so I lowered my limit order to get filled. I am still long Cominar REIT in my tax free savings account.

    Summary:

    Initial Cost=  150*15.98+$5.47
                      = $2402.47

    Proceeds of Sale (including commissions) = $150*16.11-$5.47
                                                                         = $2411.03

    Profit = $2411.03 - $2402.47
              = $8.56

    The profit was real small.  This trade used some margin of around $600.00.  As of right now, my cash in my margin account is positive.

    Disclosure: Long CUF.UN in TFSA.

    DISCLAIMER

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

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