Investing Pursuits: 2016

Saturday, December 31, 2016

Portfolio Update - December 2016

       The month of December 2016 is now behind us. The price of barrel of crude oil currently trades at approximately $53.00 per barrel for WTI barrel of crude oil.

   I currently own shares in the Bank of Montreal (BMO) which trades on the Toronto Stock Exchange announced a dividend increase prior to market opening on Dec 6. I own 35 shares of BMO and the dividend increase is more than welcome. I get rewarded with increasing dividends for just being a shareholder. This is the beauty of dividend growth investing. The company does all the work and I receive a dividend payment every 3 months for just being a shareholder. When the company is doing well, they will increase the dividend as this is what investors are looking for as a dividend growth investor.

   I wrote about selling covered calls in IAMGOLD (IMG.TO) on December 10. I currently own 900 shares of this stock and the stock does not pay a dividend. I sold 9 covered call contracts and collected a premium of $242.05 after commissions. The contracts had 8 days to expiration after the calls were sold. This option expired worthless, so I ended up keeping the premium of $242.05 for being the option seller.

   Option expiration day is, for the most part, occurs on the 3rd Friday of each month. I had 3 options expired without being assigned. I got to keep the premium for all 3 option trades as I was the option seller in each case.

    I sold 2 call contracts of Potash Corporation of Saskatchewan (POT). I actually ended up selling 4 contracts of POT as my brokerage put the order in twice. I bought to cover 2 call contracts as a result of my brokerage put in my order twice. To read about this trade, you can click here. The 2 covered call contracts that I continued to own expired on Dec 30.

   I completed my trading for the year which involved 30 trades in total, which you can read about here. You can also see all my trades by clicking on the trading tab above.

   To close out the month of December, I decided to sell covered calls in IMG.TO again. The strike price is $5.00 and the expiration day is January 20. I collected a net premium of $413.05 selling these covered calls, which you can read about here.

Shares Acquired Through DRIP

1 Unit of CUF.UN.TO @ $14.59 for a total cost of $14.59           (TFSA)
1 Unit of CUF.UN.TO @ $14.37 for a total cost of $14.37      (TFSA)

4 Unit of D.UN.TO @ $18.8335 for a total cost of $75.33 (Margin Account)

0.150 shares of ENB @ $55.93 for a total cost of $8.39 (Transfer agent )

Cominar REIT (CUF,UN.TO) paid a distribution on the December 15 and a second distribution on December 30. This is the reason for 2 separate DRIP purchases within the same month. CUF.UN.TO will not pay a distribution in mid January.

As of Dec 31, 2016, the value of the portfolio is $101,049.54. This is a 5.08% increase over last month's total. The spreadsheet in the investment tab above has been updated.

Edit: Transforce Inc has changed their name to Transforce International Inc after shareholder approval. On December 30, their stock symbol on the Toronto Stock Exchange was changed from TFI to TFII, which is reflected on the spreadsheet.

Edit: The portfolio value has been corrected $101049.54. Inside my margin account, I have my trading account and a portion tied to savings. I forgot to subtract these balances.

Disclosure:   Long IMG.TO, POT

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, December 29, 2016

Option Trade - Covered Call

     Recently, I wrote about selling cover calls for 9 contracts on IAMGOLD (IMG.TO) with an 8 day expiration cycle. These 9 contracts expired worthless on December 16, which you can read about here.

     So, I was looking for an opportunity to sell more covered calls as this stock does not pay a dividend. Today, I noticed the price of gold was way up which provided an opportunity. I sold 9 contracts at $0.48 per contract and expiration day of January 20 2017. I collected a premium of $413.05 after commissions.

Summary

Days to expiration: 22 days
Strike Price: $5
Premium Collected : $413.05
Initial Cost : $4691.80
Option Assignment Fee : $24.95

Scenario #1: Option is not assigned

Return = Premium Collected / Sell Price
   = $413.05 / $4500
= 9.18%

This return of 9.18% represents a return for only 22 days. Currently the interest on my high interest savings account is 0.80% per year.

Annualized Return= $413.05/$4500 * ( 365 / 22)
   = 152.2%

Scenario #2 : Option is Assigned

Scenario #2: Option is assigned

Return=   Profit/ Initial cost
           = { (9*100*$5.00 + $413.05 - $24.95) - $4691.80} / $4691.80
           = 1.108%

If the option is assigned, the return is still positive.

Long IMG.TO

DISCLAIMER

Final Trading Account Update - 2016

As previously stated on this blog, that I have started a trading account with a balance below $1000.00. I started to add $50.00 every two weeks but that has stopped due to a recent job loss. The following table shows my stats from the start of 2016:

                               # of trades :                30
                               Total Capital added:    $250.00
                               Trading Acct Balance: $3593.49
                               Average Draw down:   $42.02
                               Average Loss:             $51.83
                               Average Accuracy:    90.00%
                               Average Risk:              $53.50
                               Average Reward:         $105.83
                               Average R/R :             1: 1.978

   I have been trading penny stocks, stocks, REITS and options. Any dividends that will be received from this account will stay within the account. The accuracy rate is high. Does this mean that I am a super trader? This does not mean that I am a super trader. The risk to reward ratio states of every $1.00 of risk there is reward of $1.978. Ideally, a trader should aim for a 1:2 risk to reward ratio which causes the accuracy rate to be lower.

   I have completed 30 trades. After completed of 30th trade on December 29, I decided to withdraw 3% of my balance $3704.63 and transfer it to my TFSA account for future investment purposes. This withdraw reduced my account balance what is not above in the table. As from the chart above, my percentile gains in the trading account are approximately 325%.

Note: The trades are listed under the Trading Tab above with all the trades listed as of December 29, 2016

DISCLAIMER

Tuesday, December 27, 2016

Option Trade

     I recently wrote about recent option trades expiring worthless on the most recent expiration date. I got to keep the premium as I was the option seller in all 3 cases.

     So I try to collect more income in the form of option premiums. I sold a covered call in Potash Corporation of Saskatchewan (POT) with a December 30 expiration date. I currently own 200 shares of POT, so I attempted to sell 2 contracts. Actually my order went through twice, so I ended up with 4 contracts altogether. My brokerage charges $9.95 + $1.00 per contract for commissions. So, with this counting as 2 separate orders, the total commission is $23.90. The premium received after commissions is $48.10. So I contacted my broker and discussed this issue with them and they did not even give me free trades. With my brokerage and assuming all brokerages, a pop up is suppose to come up saying "You are entering into a short position, do you want to proceed?". Then if you decide to proceed, the order comes up via a pop up to be reviewed and you click to proceed or not. Then the order is sent out into the market. This did not happen.

    After contacting my brokerage, I decided to "buy to cover" to remove the extra 2 contracts from my broker account. When you "buy to cover" an option, the option buyer pays the premium. So this transaction cost a total of $57.95 after commissions.

Summary:

   I really need to learn to be more vocal with brokerages over issues like this. As you can see, I lost money already on this ($48.10-$57.95= - $9.85) . This is a small amount, but the brokerage software did not work properly. If the option is not assigned, I will look to continue to sell covered calls at a strike price I am willing to sell at.

POT and Agrium Corporation, are set to merge in the very near future as shareholders of both companies voted in favor of the merger.  If the merger passes all the hurdles, then a new company will be created. This keeps the stock price of POT slightly higher then my adjusted cost base.

Disclosure: Long POT and currently do not own and have never owned Agrium shares.

DISCLAIMER

Sunday, December 25, 2016

Option Expiration Day - December 2016

Option expiration day has come and gone. Usually options expire on 3rd Friday of the month. I had a covered call and 2 different put option expiry worthless at expiration.

   I recently wrote about selling 9 covered call contracts in IAMGOLD (IMG.TO) stock with a $5 dollar strike price. The fed announced last week they are raising the interest rate by 25bps. This caused fear in the gold sector and gold stocks fell a lot in value. The option was not assigned, but I still get to keep the premium received of $242.05. Over 5% return for 8 days is more than welcome.

I wrote about selling a naked put in Royal Bank of Canada with a $86.00 strike price, which you can read about here. The big 5 banks in Canada continued to march higher in the past few weeks. This option was not assigned. I get to the keep the premium received of $25.05 after commissions for being the option seller.

   I wrote about selling 2 covered call contracts in Potash Corporation of Saskatchewan (POT.TO), which you can read about here. The number of days to expiration was 35. I received a premium minus commissions of $48.05 after commissions. This option was not assigned.

Summary:

   With these 3 short positions on, I collected total premium of $315.15. This is $315.15 that I did not have to go to a job in order to accumulate this amount of money.

Disclosure: Long IMG.TO, POT.TO

Disclosure: Do not own any shares of RY.TO in any account.

DISCLAIMER

Friday, December 16, 2016

High Interest Savings Part #2.

We continue this topic from the last entry.

During the last week, the FED raised the rate by 25 BPS, or 0.25%. This will lead to a trickle effect where the interest paid on loads and mortgages will have the interest rate increased. This will eventually likely lead to increase in the interest rate of savings accounts. This increase in the interest rate on savings account still keeps the interest rate small. So a saver should try possible other options if they have a well funded emergency fund in place.

An option is to sell deep out of the money or simply out of the money put options on stocks or ETFs. When you sell a put option, the investor receives the option premium minus commissions upfront. So, if the price of the stock remains above the strike price or goes sideways, the investor still gets to keep the premium and can do a rinse and repeat with the same stock or a different stock.

If the put option is assigned, the investor purchases the stock or ETF the strike price. So the adjusted cost basis is calculated as follows :

       Please note: Not all brokers charge an option assignment fee for an option seller or option exercise fee for an option buyer.

      So what can the investor due if the option is assigned. If he wants to get rid of the stock , he or she can sell a covered call. A covered call gives the option seller the write to sell 100 shares of stock multiplied by the number of contracts at the strike price at or before expiration.  The covered call writer receives a premium up front.  An additional bonus of this method is that, the covered call option seller with receive the dividend if they owned the stock before the ex-dividend date.

    The premium collected should not be account as income per se. Keep it in the savings account to help the balance grow. The downside of this method is the saver can end up losing money if the stock or ETF falls in value.

Disclosure: I used these methods from time to time in my investing accounts.
DISCLAIMER

Wednesday, December 14, 2016

High Interest Savings Account ?? - Part 1

   As we go about our daily lives, we are told to save money. But in 1971, United States President Richard Nixon took US off the gold standard. That meant the US dollar became debt, or a currency. Currently we have extremely low interest rates, and therefore the interest on a high interest savings account is low. My high interest savings account current pays an annual interest rate of 0.80% per year. This is laughable actually as it below the rate of inflation.

   Is there a different way? I do believe an individual should should save up enough money to have an emergency fund, by saving money in the usual way. Once the emergency fund is fully funded, an individual could buy a commission free ETF that pays a distribution yield greater than the rate of inflation. Currently, I am doing this for savings. I currently investing in the Horizon Natural Gas Yield ETF (ticker symbol is HNY) on the Toronto Stock Exchange. The distribution yield is over 8% and pays monthly. Obviously, this will help grow you savings even quicker. I believe your investing and saving should be different.

   Is there a downside using a commission-free ETF for savings? Yes, there is a downside. The value of the ETF could decrease in value. So an individual should purchase the ETF at a low price and just not buy an ETF for the sake of buying an ETF.

   I purchased 14 units of HNY in the past month at $13.64 per unit. Currently, the price per unit of HNY is over $15 per unit. They just paid their monthly distribution, so I received $1.59 for being a unit holder. Currently, with my high interest savings account I would have to have a balance of roughly $2385 to get this amount of interest per month, based on a yearly annual interest rate of 0.80%. I invested a total of $191.01 in HNY and I received $1.59 in one month.

Please Note: HNY is highly volatile

We continue this issue in the next entry.

DISCLAIMER

Saturday, December 10, 2016

Option Trade

An investor can receive cash flow from the markets in 3 ways which are option premiums, dividends and interest. REITs, funds, and ETFs pay distributions that can be comprised of a combination of interest, dividends, and return of capital. Return of capital is money returned to the investor tax-free until the security is sold. Return of capital reduces the adjusted cost basis, which therefore increases your gains or decreases your losses.

I own 900 shares of IAMGOLD (IMG), that were purchased on the Toronto Stock Exchange. Currently, my adjusted cost base on my position is $4691.80 or $5.21/share. The stock has traded between $4.26 and $5.89 over the past 3 months, which can be seen in the chart.

3 Month Chart

       IMG does not pay a dividend. The price of gold has been volatile as of late, which is likely due to the election of Donald Trump and what investors think of possible interest rate hike in the US. I am looking to unload this position, but the price does not seem to go much above my adjusted cost base per share.

        I perused the option table for IMG, and decided to sell covered calls to collect some income. But, as per the chart above, IMG has been trading closer to $5 and under per share for the past 3 months. So, I decided to sell cover calls with a strike price of $5 instead of $6. The expiration date is December 16, 2016.

Summary:

Option premium received minus commissions : $242.05
Days to expiration : 8
Option Assignment Fee : $24.95
Adjusted Cost Base = $4691.80

Scenario #1: Option not assigned

Return = Option premium received /
            = $242.05 / $4500
            = 5.38 %

This return of 5.38 % is the return for only 8 days. The interest rate on my high interest savings account is currently 0.80% per year, which is actually laughable.

Annualized return = ($242.05/$4500) *(365/8)
                               = 245.41%

Scenario #2: Option is assigned

Return=   Profit/ Intial cost
           = { (9*100*$5.00 + $242.05 - $24.95) - $4691.80} / $4691.80
           = 0.539%

If the option is assigned, the return is still positive.

DISCLAIMER

Tuesday, December 6, 2016

Dividend Increase

What happened Tuesday Dec 6, prior to the markets opening? One of Canada's big 5 banks released its 4th quarter earnings. This bank was Bank of Montreal, whose ticker symbol is BMO. BMO trades on both the Toronto Stock Exchange and the New York Exchange. Some of the highlights are as follows:

4th quarter earnings of C $1.40 billion vs C 1.26 billion in 2015
Earnings growth of 11.1% year over year
Q4 EPS C $2.10 vs EPS C$1.90 in Q4 of 2015
EPS Growth 10.5% year over year
Q4 Revenue C $5.28 billion vs C $4.98 billion in 2015
Revenue Growth 6.0% year over year

Note: C in the bullet section stands for Canadian as in Canadian dollars

Bank of Montreal's board of directors feel good going forward and decided to raised the dividend by $0.08 per year per share. The annual dividend was raised from $3.44 per share to $3.52 per share. This represents a 2.33% increase. This does not seem good at first. But the Canadian banks of been raising the dividend twice a year. The Feb 2016 dividend payment was $0.84 per share, which corresponds to an annual dividend rate of $ 3.36 per share. The dividend was then raised $0.02 per quarter per share for the Aug 2016 payment. Therefore as you can see the annual dividend was raised from $3.36 per share to $3.52 per share. This represents an effective increase of 4.76% over 4 quarters.

A 4.76% increase over 4 quarters does not seem much. Considering the unemployment rate in Alberta due to low oil prices, this increase is more than welcome.

Currently, I own 35 shares of BMO which was purchased on the Toronto Stock Exchange. Therefore with this $0.08 per year increase, my forward annual dividend income is increase by $2.80. This $2.80 is equivalent to investing $80 of my own money at a 3.5% yield. But I did not have to invest any of my money and got this $2.80 per year increase in my annual dividend income. I get this increase to my annual dividend income for just being a shareholder in Bank of Montreal.

Note: The annual dividend rate for BMO has been updated on the Investment Tab spread sheet

Disclosure: Long BMO

DISCLAIMER

Sunday, December 4, 2016

Dividend Update - November 2016

The month of November 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 markets continue to go higher in the month of November. The price of a barrel of crude oil continues to play a major role in market sentiment. OPEC recently cut production by 1.2 million barrels per day. This caused the price of oil to go up to slightly over $50.00 per barrel recently. I do not see the price going up much more than this in the foreseeable future. On Nov 8, Donald Trump became President Elect of the United States. Donald Trump is pro business, so this should be positive for the markets going forward.

One thing for sure, is that I was paid dividends and distributions for being a shareholder or unit holder in various companies or funds. In Sept 2016, the Dream Office REIT in the margin account will be counted as dividend income for the first time.

Non-registered Account

Bank of Montreal (BMO) - $30.10
Emera (EMA) = $52.25
Enerplus (ERF) -$ 5.58
Dream Office REIT (D.UN) - $ 75.00
Potash Corporation of Saskatchewan (POT) - $26.45
Shaw Communications (SJR.B) - $19.75

TFSA

Boston Pizza Royalties Fund (BPF.UN) - $26.91
Claymore 1-5 yr Laddered Corporate Bond ETF (CBO) - $0.63
Cominar REIT (CUF.UN ) - $20.46
Dream Office REIT (D.UN) - $ 17.50
Killam Properties REIT (KMP.UN) - $ 15.10

Total = $289.73

As the amount of distribution from D.UN inside my margin account, will have a large impact on the comparison of dividend income from 3 months or from 12 months ago. Therefore, I will not compare November 2016 dividend income with that of 3 months and 12 months ago.

Dream REIT has reduced the amount of distribution they pay monthly which was announced in February. Recently, I wrote about purchasing more units of D.UN inside a margin account. Starting in September, the distribution from this D.UN inside the margin account will be included in my dividend income.

I currently have DRIP turned on for the following stocks in margin account, which are D.UN and ERF. DRIP is turned on for D.UN and CUF.UN inside my TFSA. DRIP is turned on for BNS and ENB with the transfer agents. When investing with transfer agents directly, all the dividend is reinvested as you are able to buy partial shares. When you can only purchase whole shares with DRIP, then the dividend received has to be higher than the price of the stock to receive at least one share.

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 November 2016?

Disclosure : Long all securities above.

Photo Credit: www.mipaq,co.za

DISCLAIMER

Thursday, December 1, 2016

Portfolio Update - November 2016

       The month of November 2016 is now behind us. What a month as we had 2 major events occur. Donald Trump become President Elect of the United States and OPEC agreed to cut oil production by 1.2 million barrels per day. The latter caused a jump in oil prices to slightly above $50 a barrel for WTI Crude Oil.

      On November 11, I sold 2 call option contracts on the 200 shares of Potash Corporation of Saskatchewan (POT) that I currently own which you can read here. The strike price is $25 with a December 16, 2016 expiration date.

       On November 14, I wrote about purchasing 39 units of Horizon's Natural Gas Yield ETF, whose ticker symbol is HNY on the Toronto Stock Exchange.  My brokerage provides the opportunity to purchase most ETFs commission free.

      November 18 was option expiration day as it is the third Friday of the Month.  I recently sold 3 call contracts with a $6.00 strike price and 3 put options with a $5.00 strike price.  The 3 put option contracts was assigned at expiration, which you can read about here. I decided to sell 3 put option contracts at $5.00, in order to average down on my position of IAMGOLD (Ticker Symbol IMG). When an investor or trader sells a put option, they are obligated to BUY 100 shares of in the underlying stock. By selling an put option, an investor can collect a premium up front, for something he or she is willing to do anyway. So, after this put option assignment I owned a total of 600 shares altogether.

     I purchased an additional 300 shares of IMG as the price was lower than $5.00 a share. With 900 shares and my adjusted cost basis being around $5.22 a share, I am looking to unload these shares with a direct sell or by selling covered calls. I did not write a post about this purchase.

      On November 23, I wrote about different Pathways to Retirement. As lot of people invest in Registered Retirement Savings Plans such as a 401k in the United States and RRSP in Canada. These accounts are savings plans where an investor hopes the money grows and stays above the amount they contributed. Therefore, these plans will affect an investor's net worth. An investor in a non-registered account can invest for cash flow or capital gains. The cash flow can come from dividends interests, and selling options to collect premiums upfront.

      On November 29, I wrote about purchasing 50 shares of High Liner Foods Inc (HLF) at $19.99 per share. HLF trades on the Toronto Stock Exchange. As people live busy lives and the health recommendations of eating a certain amount of seafood for things such as Omega 3 fatty acids, people will often purchase Frozen Fish products, to reduce their trips to the grocery stores. HLF also sells their products to restaurants. I purchased one of their products today at the grocery store today, as it was on sale.

I recently wrote about selling a put option in Royal Bank (RY) with a strike price of $86.00 and an expiration date of December 16, 2016. A few days after selling this put option, Royal Bank released its earnings.  Investors reacted negatively to these earnings and the stock fell a few dollars but still remained about my strike price.

Shares Acquired Through DRIP

1 Unit of D.UN.TO @ $16.8635 for a total cost of $16.86           (TFSA)
1 Unit of CUF.UN.TO @ $13.8035 for a total cost of $13.80      (TFSA)

4 Unit of D.UN.TO @ $16.8635 for a total cost of $67.45 (Margin Account)

As of Dec  1, 2016, the value of the portfolio is $96166.29. This is a 2.22% decrease over last month's total. The spreadsheet in the investment tab above has been updated.

Disclosure:   Long HLF, IMG, RY, HNY

DISCLAIMER

Option Trade - Royal Bank

      I am looking to establish another position with Royal Bank. The stock was currently trading around $89.00 a share after the recently earnings release from Bank of Nova Scotia. The closing price on November 28 was $89.27.

    On Nov 28, I sold 1 put contract on RY with a strike price of $86.00 and expiration date of December 16. I collected a total premium of $25.05 after commissions.

Summary:

Strike Price: $86.00
Total Premium Received : $25.05
Days to Expiration: 18
Current Annual Dividend = $3.32
Option Assignment Fee = $24.95

Scenario #1 : Option not assigned

Total Return = $25.05 / (1*100*$86.00)
                     = .0029
                     = 0.29%

The total return for 18 days is 0.29%. The annualized return is 6.08%. My high interest savings accounts pays an annual interest of 0.80%.

Scenario #2: Option is Assigned

Adjusted Cost Base per share= [1*100*86.00 - $25.05 +$24.95] / 100
= $86.00

This would represent a discount of 3.66 % on the closing price of $89.27 on November 28.

Yield on Cost = $3.32 /$86 *100 %
                       = 3.860%

What would the yield be if shares purchased directly at $86?

Commission = $4.95

ACB/per share = [1*100*$86.00 +$4.95 ] / 100
                         = $86.04

Yield on Cost = ($3.32 / $86.04) * 100%
                       = 3.859 %

The yield on cost appears to be the same almost. If the premium received was higher, then the yield on cost for the option assignment would be greater as the adjusted cost basis would be a lower dollar figure.

Please Note: As of the time of this writing, Royal Bank was fallen in price after releasing earnings but still above $86.00.

Disclosure: I do not own any shares of RY in any accounts as of this writing.

DISCLAIMER

Tuesday, November 29, 2016

Recent Purchase

    High Liner Foods Incorporated (HLF) is a Canadian company that is involved in the processing and marketing of prepared and packaged frozen seafood. Some of the company's retail branded products are sold in Canada, United States and Mexico. These brands of products consist of names such as High Liner, Fisher Boy, Mirabel, and Sea Cuisine. High Liner Foods offers its products to restaurants, institutions, food retailers and food service distributors under Icelandic Seafood and FPI brands. The Canadian business includes 100 individual products sold under the brand High Liner.

Information about Financials

    High Liner Foods Inc Revenue grew from $260.4 million in 2005 to $1.002 billion in 2015. This represents a CAGR = 14.43% over 10 years.

     HLF had earnings per share (EPS) has grown from an -3.93 in 2005 to $0.96 EPS in 2015. The 2015 of EPS is after a 2:1 stock split on May 30, 2014.

   The Interest Coverage Ratio is ratio that is used to determine how easily a company is able to pay its debt. The interest coverage ratio is calculated by dividing earnings before interest and taxes (EBIT) by the interest expense over the same period. HLF had an interest expense in 2015 $16,102,000 and EBIT of $36,310,000. Therefore the interest coverage ratio is 2.25. With an interest coverage ratio below 2.5, the company should not take on more debt and try to increase its earnings or pay down its debt some.

   HLF paid a dividend of $0.465 per share in 2005. The stock had a 2:1 stock split on May 30, 2014. Therefore on a split adjusted basis, HLF paid a dividend of $0.2325. In 2016, HLF will pay an annual dividend of $0.56. This represents a CAGR of 8.32% over 11 years.

Summary

    As people are encouraged to add more seafood in their diets for a variety of reasons such as Omega 3 fatty acids, along with increase in population, the demand for their product should continue. Although people would prefer fresh fish, it is not always convenient as we live busy lives.

    On Nov 23, I purchased 50 shares of HLF at $19.99 per share for a total cost $1004.62 including commissions. Currently, HLF pays an annual dividend of $0.56 per share. The yield on cost of these shares is 2.79%. This purchase of 50 shares increases my annual dividend income by $28.00.

HLF is set to pay a dividend on December 15 and the record date is December 1. The ex-dividend date is therefore November 28. As my shares were purchased prior to the ex-dividend date, I will receive the dividend on December 15.

I will update my investment tab spread sheet in early December with purchase.

Disclosure : Long HLF

DISCLAIMER

Wednesday, November 23, 2016

Pathway to Retirement

     All individuals and couples all have one thing in common when it comes to retirement. We all have to have enough money to live off as people will be unable to work most jobs past a certain age.

     This income in retirement can come from a pension, capital gains, interest, or cash flow. Some people think their only way to retirement is too win the lottery. These lottery players think investing in stock market is gambling or that you need a lot of money to invest in the market.

      I know of a lot of people play various lotteries every week. These lotteries include scratch tickets, even splits, and the major lottery games. In Canada, one of the lottery games is 6-49. The odds of winning are 1 in 14.3 million (1 / (49C6). For those not familiar with math, 49C6 represents "49 Combination 6". This game consists of 49 numbers in which 6 balls are randomly chosen by a machine. A bonus number is also drawn. If the number on these 6 balls are the same as the 6 numbers picked by the lottery player winner, then he or she wins the jackpot. The lottery player can also win other ways, but the money will be a lot less. The scratch tickets winning amounts are a lot less. So if you add the amount of money paid to play various lottery games, it can add up. Personally, I think a person is better off playing bingo instead of playing these lottery games. If the bingo game has 400 players, then your chance of winning is 1 in 400.

       The pension can come in various forms. They can be small government pension for old age, a small government pension or a defined benefit pension. The defined benefit pension is not an option for most people, as usually only government or crown corporation employees have this setup. Defined benefit pension a liability for the employer for as long as the pension receiver is alive. So most companies have down away with them, and made the worker responsible for his or her own retirement by using a registered contributions plan.

      The downside of a contributions plan to a worker, is the money put in is not guaranteed to be there when you go to take it out. These plans are called RRSP (Canada), 401k (US), super annotation (Australia) etc. are capital gain types of setups. So as the value of these plans go up or down, corresponds to the same change in an investor's net worth at that given time. So an investor will have to withdraw money out of this account therefore reducing the balance.

   An individual could invest in investments that pay them either every month, quarter, semi-annual or annual. This pay is called cash flow. So the investment is paying a cash flow in the form of a dividend, interest, premium, distribution, or rent. The goal of this is to have enough income coming in from your investments to exceed your expenses, which means the investor will be financially free. Even if the investor is not financial free, the income from the investments will help cushion the blow in cash of a lay off at a job.

    Which is best? The two best options are pensions and/or cash flow investments in my opinion.  In Canada, an individual can invest in non-registered accounts or tax-free savings accounts.  These individuals can invest in other cash flow investments such as real estate or oil and gas.

     Most people in Canada have heard about Derek Foster. Derek Foster let the rat race at age 34 by investing in dividend paying stocks, income trusts and REITS. Derek used leverage of few times to aid is investing. To find out more about Derek, feel free to check out his website www.stopworking.ca.

    In summary, an individual who thinking the best chance of retirement is, for lack of better word, is gambling with their life. The odds of winning is so high that an individual should only play the lottery once and awhile for entertainment purposes.

DISCLAIMER

Monday, November 21, 2016

Option Expiration Day - Nov 18

   I recently sold a covered call involving 3 contracts of IAMGOLD (Ticker Symbol IMG) with a strike price of $6.00 and option expiration day of Nov 18, 2016, which you can read about here. The option has expired and was not assigned. As the seller of the option, I get to keep the premium I received.

   I also sold puts options involving 3 contracts of IMG with a strike price of $5.00 and option expiration day of Nov 18, 2016. You can read about this transaction here. I currently owned 300 shares of IMG, so by selling puts I was collecting premium while waiting to buy at my price target. This option was assigned at the stock price for IMG was trading slightly below $5.00 at expiration.
My brokerage charges an option assignment fee of $24.95. So I now own a total of 600 shares.

   IMG does not pay a dividend, so I will be looking to sell all these shares either a direct sell or a covered call in the near future.

Disclosure: Currently own 600 shares of IMG.

DISCLAIMER

Saturday, November 19, 2016

Trading Account Update - Nov 19

As previously stated on this blog, that I have started a trading account with a balance below $1000.00. I started to add $50.00 every two weeks but that has stopped due to a recent job loss. The following table shows my stats from the start of 2016:

                                # of trades :                29
                               Total Capital added:    $250.00
                               Trading Acct Balance: $3130.53
                               Average Drawdown:   $42.71
                               Average Loss:             $51.83
                               Average Accuracy:    89.66%
                               Average Risk:              $52.69
                               Average Reward:         $87.82
                               Average R/R :             1: 1.667

Click to Enlarge

I have been trading penny stocks, stocks, REITS and options. Any dividends that will be received from this account with stay within the account. The accuracy rate is high. Does this mean that I am a super trader? This does not mean that I am a super trader. The risk to reward ratio states of every $1.00 of risk there is reward of $1.67. Ideally, a trader should aim for a 1:2 risk to reward ratio which causes the accuracy rate to be lower.

Note: The trades are listed under the Trading Tab above with all the trades listed as of Nov 19, 2016

DISCLAIMER

Monday, November 14, 2016

Recent Purchase

I had some money in my TFSA account that I wanting to put to work. What to do with it? Buy a dividend growth stock, a bond ETF, average down on a position, or dividend based ETF?

I noticed an ETF that I previously held in my TFSA had been trading at a low price. Horizon's Natural Gas Yield ETF (ticker symbol : HNY) was trading below $14.00 per unit.


Click to Enlarge

The objective of this ETF is as follows :

The investment objectives of Horizons HNY are to provide unitholders with: (i) exposure to the price of natural gas futures hedged to the Canadian dollar, less the ETF’s fees and expenses; (ii) tax-efficient monthly distributions; and (iii) in order to mitigate downside risk and generate income, exposure to a covered call option writing strategy. - Source : Website

The ETF pays a monthly distribution that is variable. As per the chart above, you do not necessarily see the variable distribution. The distribution is paid to 5 decimal places. So, I recently purchased 39 units of HNY at $13.60. The distribution is approximately between $0.10 to $0.11 per unit per month. My broker has zero commissions for most ETFs.

I will update my investing tab spreadsheet in early December with this new purchase.

Disclosure: Long HNY

DISCLAIMER

Sunday, November 13, 2016

Potash Corporation of Saskatchewan - Covered Call

       I was completely shocked that the markets were open on November 11. In Canada, November 11 is Remembrance Day. On the 11 hour of the 11 day of the 11 month in 1917, World War I ended.

       On November 11, I decided to write a covered call in Potash Corporation of Saskatchewan (POT.TO) with a December 16, 2016 expiration day. This stock trades on both the Toronto Stock Exchange and New York Stock Exchange. When an investor or trader writes a covered call, they collect premium upfront for being the option seller. Sometimes, people refer writing a covered call to "renting shares".

       Recently, POT announced a merger with their competitor Agrium Corporation. On Nov 3, both of these companies voted separately in favor of the merger. There are still a lot of hurdles to overcome before this merger happens in the future.

Summary:

Commission: $11.95
Option Assignment Fee : $24.95
# of Contracts : 2
Premium = $60
Days to Expiration: 35

Scenario #1 - Option is not assigned

Return = ($60.00 - $11.95) / (2* $25* 100)
= 0.96 %

This return is for 35 days only. This is a lot higher than most savings accounts are today.

Annualized Return = $48.05 / $5000 *(365/35)
                             = 10.02%

Currently, my high interest savings account pays 0.80% per year. This is so ridiculous that it is laughable.

Scenerio #2 - Option Assigned

Adjusted Cost Basis currently = $4245.85
Money out = Sell Price + Premium Collected - Option Assignment Fee

Return : (Money out - Money in ) / Money in
           = ($5000 + $48.05 - $24.95 - $4245.85 ) / $4245.85
           = 18.31 %

EDIT: For Scenario #2, the return would actually be higher if I included the dividends previously received.

Disclosure: Long POT

DISCLAIMER

Tuesday, November 8, 2016

Dividend Update - October 2016

The month of October 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 markets continue to go higher in the month of October. The price of a barrel of crude oil continues to play a major role in market sentiment. The world has the eyes on the upcoming election for president of the United States. As Barrack Obama is not allowed to run for a third term, the US will have a new president elect on Nov 8.

One thing for sure, is that I was paid dividends and distributions for being a shareholder or unit holder in various companies or funds. In Sept 2016, the Dream Office REIT will be counted as dividend income for the first time.

Non-registered Account

Bell Canada Enterprises (BCE) - $68.25
Bank Of Nova Scotia (BNS) - $23.83 --- This is directly with transfer agent.
Bank of Nova Scotia (BNS) - $14.80
Enerplus (ERF) -$ 5.58
Dream Office REIT (D.UN) - $ 75.00
Shaw Communications (SJR.B) - $19.75
Rogers Communications Class B (RCI.B) - $96.00

TFSA

Boston Pizza Royalties Fund (BPF.UN) - $26.91
Claymore 1-5 yr Laddered Corporate Bond ETF (CBO) - $0.63
Cominar REIT (CUF.UN ) - $20.46
Dream Office REIT (D.UN) - $ 17.50
Killam Properties REIT (KMP.UN) - $ 15.10
Transforce (TFI) - $8.50

Total = $392.31

As the amount of distribution from D.UN inside my margin account, will have a large impact on the comparison of dividend income from 3 months or from 12 months ago. Therefore, I wil not compare October 2016 dividend income with that of 3 months and 12 months ago.

Dream REIT has reduced the amount of distribution they pay monthly which was announced in February. Recently, I wrote about purchasing more units of D.UN inside a margin account. Starting in September, the distribution from this D.UN inside the margin account will be included in my dividend income.

I 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 October?

Disclosure : Long all securities above.

Photo Credit: www.mipaq,co.za

DISCLAIMER

Sunday, November 6, 2016

Portfolio Update - Oct 2016

      The month of October 2016 is now behind us. One of the major issues still facing the world is the low price of a barrel of crude oil and the upcoming US election for President of the United States.

On Oct 3, I sold 1 RY.TO $79.00 Oct 28 2016 put option to collect a premium of $59.05 after commissions. This option was not assigned, but as the seller of the option I get to keep the premium. I currently do not have any option position in RY.

       On October 13, I sold my position in Manulife Financial (MFC), which you can read about here. This reduce my annual dividend income by $74.00. I still have my eye on this stock hoping the price will fall below by previous purchase price of $18.61 a share.

   October 21 was option expiration day. I had 3 options expire that day which involved POT.TO and IMG.TO. I had 2 covered call contracts with a strike price of $23 expire worthless for POT.TO. I got to keep the premium as I was the option seller. As there was pending meetings involving a merger of Potash Corporation of Saskatchewan and Agrium, I did not look to put on any more covered call positions involved POT.TO. IMG.TO had been trading between $5 an $6 a share, so I previously sold a put option for $21 and a covered call option for $23 for 3 contracts each. The price of IMG dipped well below $5 dollars but rose about $5 and was not assigned.

      As the price of IMG.TO was trading below $6 on October 21st, I decided to sell 3 covered call contracts with a strike price of $6 dollars and a Nov 18, 2016 expiration date. You can read about this transaction and the transactions of the previous paragraph, by clicking on this link.

On October 24, I sold 3 put contracts in IMG.TO with a $5 strike price and Nov 18, 2016 expiration date. I collected a premium of $47.05 after commissions. I did not write a blog post about this transaction.

      On October 28, I purchased 140 shares of Westjet Airlines (WJA.TO) at $22.39 per share for a total cost of $3140.04 including commissions. WJA.TO released its earnings a couple of days later and beat expectations. Regardless of this impressive earnings report, the federal government changes the ownership regulations for foreign ownership of Canadian airlines from (25% to 49%) to increase competion with our carriers.The latter, caused the stock price to become lower. WJA.TO currently pays an annual dividend of $0.56 per share. This adds $78.40 to my annual dividend income. I did not write a blog post about this transaction.

   On Nov 2, I noticed the price of Canadian Imperial Bank of Commerce (CM) has fallen in price somewhat. So, I decided to take an advantage of this opportunity to pick up some shares. I purchased 28 shares of CM.TO for a total of $2747.65 including commissions. This Canadian bank does not get as much attention as the other 4 big Canadian banks. CM currently pays an annual dividend of $4.84 per share. The purchase of 28 shares of CM.TO adds $135.52 to my annual dividend income. I recently wrote a post, showing the annual dividend amounts going back to year 2000, which you can read about here.

     On Nov 3, Potash Corporation of Saskatchewan and Agrium voted to merge the 2 companies with over each company voting over 97% in favor of the merger. There is still a lot of hurdles that have to be dealt with prior to this actually happening.

Shares Acquired Through DRIP

0.333221 Shares of BNS.TO @ $71.51 for a total cost of $23.83

As of Nov 6 2016, the value of the portfolio is $98346.53. This is a 9.03% increase over last month's total. The spreadsheet in the investment tab above has been updated.

Disclosure: Long all mentioned securities.

Disclaimer:

Saturday, October 29, 2016

Turning The Tap Open

With the uncertainty in the whether interest rates will rise or stay the same as affected the values of REITs. In Canada, the REITs also have to deal with the effects of low oil prices. This is caused the price of REITs to fall and remain low over the past several months.

So I decided to TURN drip on for Dream Office (Ticker Symbol D.UN.TO) in both the margin account and TFSA. I also decided to turn the DRIP on the Cominar REIT (Ticker Symbol CUF.UN.TO) inside the TFSA. As there was issue with getting a confirmation from my brokerage, these DRIPs might not happen until November 15, 2016 payment. These DRIPs will allow for the purchase of whole shares only.

Disclosure: Long D.UN.TO and CUF.UN.TO

DISCLAIMER

Saturday, October 22, 2016

Option Trades - Update

The 3rd Friday of each month is always an option expiration day. Some stocks have options that are weekly. I had 3 options that were set to expire on Oct 21, 2016.

There was rally in the price of gold lately, which pushed the price of IMG.TO over $5 per share.

       -3 Put IMG.TO $5 Oct 21 2016 = $53.05 premium collected
       -3 Call IMG.TO $6 Oct 21 2016 = $ 38.05 premium collected

I previously wrote a covered call in Potash Corporation on the Toronto Stock Exchange

       -2 Call POT.TO $23 Oct 21 2016 = $88.05

In these 3 option trades that expired, I get to keep the premium of $179.15 as seller of options get to keep the premium regardless if market goes up, down, or sideways.

With the price of IMG.TO trading near $5.50 a share on Friday, I decided to write a covered call with Nov 18 2016 expiration date. I sold 3 call contracts with a $6.00 strike price to collect a premium of $41.05 after commissions.

DISCLAIMER

Thursday, October 20, 2016

Recent Dividend Increase

As an investor in a dividend growth stock, what is that I look for as an investor? As an investor, I look for a history of dividend growth. On October 20th, Transforce Inc (ticker symbol : TFI ) released its earnings for their most recent quarter. Some of the highlights are as follows:

Operating income of $72.4 million, or 8.1% of revenue before fuel surcharge; solid year-over-year improvements in Package and Courier, as well as in LTL

Adjusted net income from continuing operations* of $56.4 million, or $0.60 per diluted share*, versus $48.6 million last year, or $0.48 per diluted share

Free cash flow from continuing operations* of $81.3 million, or $0.88 per share*, a portion of which was returned to shareholders through the repurchase of common shares ($41.8 million) and dividends ($15.8 million)

Quarterly dividend increased 12% to $0.19 per share from $0.17 previously

Revenue before fuel surcharge from continuing operations of $897.4 million

Transforce Inc. is a North American leader in the transportation and logistics industry, that is headquartered in Montreal, Canada. They operate across Canada and operate through subsidiaries in the United States. Transforce Inc. operates in various sectors as follows:

Package and courier
Less-than-truckload
truckload
logistics

Conclusion

The annual dividend rate of Transforce Inc was increased from $0.68 per year to $0.76. This represents an increase of 11.76%. What are the chances of getting a raise of 11.76% in a year at a job? Most jobs people never even get raises. The might get a cost of living increase, which they interpret as a raise. Personally, I do not consider a cost of living increase a raise as everyone usually gets this regardless of when they started to work at the particular company. I currently own 50 shares of this company, so that means my annual dividends received increase by $4.00 for doing absolutely nothing. This is equivalent of investing $114.29 of my own money at a 3.5% yield.

Disclosure: Long TFI

DISCLAIMER

Tuesday, October 18, 2016

CIBC - Dividend Analysis

Canada has 5 big banks which are often regarded as some of the best banks in the world. These banks are Royal Bank of Canada (RY), Bank of Nova Scotia (BNS), Toronto Dominion Bank (TD), Bank of Montreal (BMO) and Canadian Imperial Bank of Commerce (CM). The ticker symbol for each of these banks is in parentheses.

Today, we are going to focus on Canadian Imperial Bank of Commerce, commonly know as CIBC. CIBC has been paying dividends in 1868 and that year is not a typo. CIBC has not missed a dividend payment in 148 years. Therefore, CIBC has been paying dividends longer than any current human has been alive. These dividends are coutesy of the investor relatons site of CIBC and represent the value in Canadian dollars.

Year                   Annual Dividend Amount
2000        $1.290
2001                  $1.440
2002    $1.600
2003                  $1.640
2004                  $2.200
2005                  $2.660
2006                  $2.760
2007                  $3.110
2008                  $3.480
2009                  $3.480
2010                  $3.480
2011                  $3.510
2012                  $3.640
2013                  $3.800
2014                  $3.940
2015                  $4.300
2016                  $4.750

As you can see the dividend has increased each year from 2011 to 2016. During the sub prime melton which lead to the global recession, CIBC did not reduce its dividend, but it also did not raise its dividend from 2008-2010. The other 4 big banks in Canada did the same with no dividend increase or decrease in basically the same time frame.

With the dividend increasing this much, this also causes the price of the stock to rise as people want the yield. In order to keep increasing the dividend, the bank has to increase earnings each year as dividends are paid from earnings.

Compound Annual Dividend Growth Rate from 2000 to 2016 is 8.49%.

Compound Annual Dividend Growth Rate from 2010 to 2016 is 5.32 %

Everytime the dividend is raised, an investor gets a raise that is usually higher than you would get at a job. When the company raises its dividend, an investor does not do anything besides remaining a loyal shareholder. A dividend growth investor invests in companies that pay dividends and increases their dividend yearly, which helps them to reach financial freedom quicker.

Disclosure: Do not own any shares of C.I.B.C.

DISCLAIMER

Saturday, October 15, 2016

Dividend Update - September 2016

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 markets continue to go higher in the month of September. The price of oil continues to be a big topic. Recently watched on BNN, that OPEC believes there will be a bigger surplus in 2017 although they capped production recently.

Non-registered Account

Enbridge (ENB) - $8.30
Enerplus (ERF) -$ 5.58
Dream Office REIT (D.UN) - $ 75.00
Manulife Financial Corporation (MFC) - $18.50
Shaw Communications (SJR.B) - $19.75

TFSA

Boston Pizza Royalties Fund (BPF.UN) - $26.91
Canadian National Railway (CNR) - $ 14.25
Claymore 1-5 yr Laddered Corporate Bond ETF (CBO) - $0.64
Cominar REIT (CUF.UN ) - $5.39
Dream Office REIT (D.UN) - $ 17.50
Enbridge (ENB) - $17.49
Horizons Natural Gas Yield ETF (HNY) - $9.99
Killam Properties REIT (KMP.UN) - $ 15.10

Total = $234.40

As the amount of distribution from D.UN inside my margin account, will have a large impact on the comparison of dividend income from 3 months or from 12 months ago. Therefore, I wil not compare Sept 2016 dividend income with that of 3 months and 12 months ago.

Dream REIT has reduced the amount of distribution they pay monthly which was announced in February. Recently, I wrote about purchasing more units of D.UN inside a margin account. Starting in September, the distribution from this D.UN inside the margin account will be included in my dividend income.

I 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

Pages

Saturday, December 31, 2016

Thursday, December 29, 2016

Tuesday, December 27, 2016

Sunday, December 25, 2016

Friday, December 16, 2016

Wednesday, December 14, 2016

Saturday, December 10, 2016

Tuesday, December 6, 2016

Sunday, December 4, 2016

Thursday, December 1, 2016

Tuesday, November 29, 2016

Wednesday, November 23, 2016

Monday, November 21, 2016

Saturday, November 19, 2016

Monday, November 14, 2016

Sunday, November 13, 2016

Tuesday, November 8, 2016

Sunday, November 6, 2016

Saturday, October 29, 2016

Saturday, October 22, 2016

Thursday, October 20, 2016

Tuesday, October 18, 2016

Saturday, October 15, 2016

DISCLAIMER