Sunday, June 11, 2017

Analysis of WestJet

           
         Is it often said one of the worse types of companies to invest in are the airline stocks.  In fact, Richard Branson once said "The quickest way to become a millionaire is to be a billionaire and start an airline".  The airlines as an investment has garnered a lot of attention recently as in the past year Berkshire Hathaway has invested heavily in airlines in the United States. Berkshire Hathaway is the holding company which is ran by Warren Buffett and Charlie Munger.

        In Canada, currently we have 4 airlines which are Air Transat, Porter Airlines, WestJet Airlines, and the Air Canada.  I am going to talk about WestJet Airlines in this article.



        WestJet Airlines (ticker symbol WJA.TO) was started in 1996 by Clive Beddoe and a team of partners with just 3 planes.  WJA.TO is headquartered in Calgary, Alberta, Canada.  The company has grown tremendously since its inception. Often people who work for airlines belong to a union, but this has not been the case for WestJet as most of their workers own shares in the company.

        When people decide to take a trip, they often go on the websites of airlines or to travel agencies to look for a deal.  This makes it harder for the airlines to be profitable and remain profitable over time. Why would some one choose a specific airline over another one if they can save money?  If the savings is not significant, the traveller will choose the airline in which they find the service better.  WestJet believes just because fares are cheaper does not mean poor quality service.

         Personally, I have travelled on both WestJet Airlines and Air Canada, and the service was the same. My very first time on a plane was with WestJet in 2003.  I flight was from Moncton, New Brunswick to Grande Prairie, Alberta and I had to change planes for the final leg of the trip in Edmonton, Alberta.  The last leg of the trip was the airplane get circling the airport and it was late at night.  The lights on the runaway in Grande Prairie were not working, so we went back to Edmonton and were put up in a hotel.  I basically told them, I absolutely refuse to share a room as I do not know anyone. I was allowed to stay in a room with 2 beds by myself without a hassel.

       When deciding on an investment, we have to do research such as pouring over annual reports doing a quantitative analysis and then doing a qualitative analysis.  Quantitative analysis is pouring over the numbers.  Investors can get information from annual reports or from online sites such as google finance or Morningstar.

         WestJet revenues have grown revenues from 2.151 billion in 2006 to 4.123 billion in 2016.  This represents a compound annual growth rate, CAGR, of  7.50%

        This CAGR for revenue of 7.50% for an airline is quite impressive. Over the 10 year period, WestJet has added routes to more destinations and increased frequency of some routes when the time is warranted.   The company has aggressively repurchased shares over this time.  In 2010, WestJet actually issued more shares but have aggressively bought back shares afterwards. Over the 10 year span, the amount of shares outstanding have declined by around 8%.


        WestJet earnings per share have grown from $1.47 in 2007 to $2.45 in 2016.  This represents CAGR of  5.84%. 

        With a bottom-line growth of almost 6 percent for this airline is quite impressive and even more impressive that this includes the great financial recession of 2008-2009 and the fact Alberta is in a recession for the past 3 years due to lower oil prices.
  
        WestJet did not pay a dividend until 2010 and actually the first dividend payment date was January of 2011.  The dividend has grown from $0.20 per share per year to $0.56 per year in 2016.  This represents of CAGR of 18.72% over last 6  years.  A dividend growth rate of 18.72% is impressive for any company and even more impressive for an airline.  The dividend payout ratio for 2016 is 22.4%, so the company has room to grow the dividend in the future.

    Let's turn to the balance sheet.  The long term debt to equity ratio is 0.92. The interest coverage ratio is  9.48.

Currently, WestJet is trading at a P/E ratio of 10.7.  That is well below the broader market. This is also below the stock's own 5 year average of 11.4.  Investors are paying less for WestJet's cash flow than, over average, over the last 3 years.  The current dividend yield of 2.4% for the stock is higher than it's 5 year average of 1.5%.

Valuation

Now we will at the valuation. For a valuation we will use dividend discounted model. I used a dividend growth rate of 12% for the next 5 years then leveling off after that to a 7% growth rate after that. I am using a dividend discount rate of 10%.  With these numbers I have come $24.81

According to Questrade's Market Intelligence, they have Morningstar fair value at $25.00.

If we take a average of these numbers, we get a price of $24.90.

Right now, WestJet is at $22.93 as of Friday's close.  So the company appears to be approximately 9% undervalued.

Conclusion:

As only 2 numbers were used to get an approximation of the average price the stock is worth, I would take this with a grain of salt. The low price of a barrel of crude right now lowers the operating expenses of this company. So for a larger margin of safety, I would not be a buyer at these levels.

Also I do believe WestJet has some headwinds in the future with increase competition and possibility of lower load factors for a couple of years with people tightening their purse strings in fear of recession across North America.

Disclosure:    Currently do not own any shares of WJA.TO in any accounts.

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.




    

Need Money To Start?

           When a person decides to start investing, they often do not know where to start.  What type of investments should an individual pursue?  Well, the potential investor has to know what their time horizon, risk tolerance, hands on or hands off, invest themselves or have someone else invest on their behalf.

          A real estate investor is more hands on then an investor in the stock market. See, a real estate investor might have to deal with tenants directly in gathering rent, doing maintenance, and showing the property to them.  The real estate investor might be involved in choosing the proper, buying the property, getting a mortgage and advertising them. It is said that real estate investing is a business. But a individual must ask themselves if they want to fix toilets, deal with tenants, look for new tenants etc.

           On the other hand, investing in the stock market can be done real hands off or hands on.  If an individual decides they want to be a strict hands off investor, they have to find a stock broker or consult with investing professionals who will manage their money for them. A hands on investor can purchause instruments like precious metals, stocks, bonds, debentures etc by doing their own reseach and clicking a mouse.

         The method the rest of this article is about is investing in the stock market.  The big advantage of the stock market is that an individual can close a position really quick.  However, unless an individual investor has basically no control over the direction of the company unless they own a significant amount of shares already. The stock market is highly liquid.

       A question that always comes up is "Where to I start or how to begin?".  Starting out an individual might not have a lot of money.  I believe an individual should read about how the stock markets works.  He or she should also understand how to read financial statements.

       An individual investor does not need a lot of money to begin.  How to you come up with money to invest in the stock market.  Starting off, an investor needs to keep adding cash to the account.  The investor can buy stocks for cheaper commissions than ten years ago.  An investor can purchase stocks the "old way" which was purchasing stocks directly from the transfer agent or purchasing a share from a person.  The investor can purchase additional shares without commissions.  The downside to purchasing shares directly through the transfer agent is that he or she does not know what the price of the stock at the time of purchase.  If they company overs a discount on their DRIP shares, the investor is guarantee to receive this discount whereas a pseudo DRIP by a brokerage might not pass the discount onto the investor.

        Another method of purchasing stocks, is to pick stocks that pay monthly. For example, the investor saves $100 a week and their position size if $300.  So the position that pays monthly can have it's monthly dividend along with new cash to buy another position of the same stock or a new one.  A way to speed this up is to purchase commission free ETF or a REI,  rather than purchase an individual stock.  The reason for this is the ETFs and the REITs have a higher yield, for all intended purposes.  ETFs and REITs pay distributions whereas a stock pays a dividend.  Unlike a dividend, which is all the same type of income, a distribution can have its payment broken into dividends, return on capital, capital gains or interest.  The investor can take the distribution payment and add it to his own capital to purchase shares.  ETFs and REITs have  pay out 90% of their profits to unit holders. The downside to investing in ETFs or REITs, is that their is not much room for growth unless these raise more money through increasing the amount of units.

         When buying a stock that pays quarterly, an individual has to weigh 3 months to see any income from the investment. This psychologically is difficult to see at the beginning as the payments will be small. With having more money to invest at the beginning, can see an investor stay in the game though more patience and able to not throw in the towel so to speak.

Conclusion:

          Investor's will not see huge returns starting off on their journey.  It takes a while for the snowball to gather momentum and grow, but they can help speed up the process.  An individual is actually doing this right now live in real time. Dan of Sharpe Trade LLC is demonstrating starting from $500 and adding $25 each week, how an individual can build an account that pays you an income. This portfolio, which is called Sharpe Income, has an investing section and a capital gains section. The capital gains section will eventually be used to speed up the income investing side of the book. 

         If an investor buys a monthly dividend paying stock, ETF or REIT, he or she can put that capital back to work quicker.  The downside to this that dividend growth stocks, provide higher returns over the long haul as their businesses tend to grow quicker.  The companies that are considered dividend growth companies can use some of their profits to grow the business.

      The most important thing is to start.  I think a person should pay off their debts first as fast as they can and then save as much as possible this allows you to become financially free at an earlier date.
   

Disclosure:  I have no affiliation with Sharpe Trade or any of their subscription based projects. However, I do follow their public side at www.sharpetrade.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.



        

Wednesday, June 7, 2017

Price of Oil

      Western provinces in Canada have seen their industries change a lot in the past century.  The western provinces are from west to east British Columbia, Alberta, Saskatchewan, and Manitoba.  The latter 3 are also referred to as the Prairies. 

       The Prairies are known for the farmland and the flatness of the land.  Just west  of Edmonton, Alberta the land started  to increase in elevation  as the Rockie Mountains are just a 3-4 hour drive west. Although farming is still great part of the Prairies, the economic landscape changed when conventional oil was discovered in Leduc, Alberta in 1947.  Oil and gas are concentrated mostly in Alberta, but there are concentrated areas of Saskatchewan and British Columbia.

       Alberta in particular is known for boom and bust cycles with the commodity of crude oil.  Alberta has two different methods of extracting oil from the ground.  The first method is by using drilling rigs to drill for oil and all the secondary services. The second method is extraction by mining.  The latter involved extracting oil from the dirt which in the Fort McMurray and Wood Buffalo region of Northern Alberta and if often referred to as the oilsands.  The extraction of oil from the oilsands involves the use of lots of energy and there needs to be a higher price per barrel of crude oil then what the current price is.

       Currently, Alberta has the 3rd biggest oil reserves in the world, behind only Saudi Arabia and Venezuela.  The ecomony of Canada has a lot riding on the oil and gas industry.  The oil and gas industry not only employs people in the western provinces, but people from all over Canada work in the oil industry either moving to where the jobs are or flying back and forth to their place of residence.  The reason they are able to fly back and forth is due to the high wages.

   


        
      The price of a barrel of WTI crude oil was trading at $45.82 at the time of this writing.  It is often said that one operating drilling rig creates around 135 jobs, not all oil field related.  These jobs include restaurants and hotels to service the oil and gas workers.

       From the chart, we can see that oil has been struggling to reach $50  since January 15.  This has caused massive lay offs in the oil and gas sector which leads to people losing their homes and families being torn apart.  People who have high expenses, will find it difficult to replace the income that they made in the oil and gas sector.  The recession in Alberta has effected other businesses and communities all across the country. 

Conclusion:

        In North America, we have not had a recession since the big financial crisis of 2008-2009.  A recession usually happens approximately every ten years.  Currently, we have the stock markets in North America flirting with new all time highs although the price of oil is low.  So if North America goes in to a recession the price of oil will be impacted even more. 

         I think Alberta will be in major trouble if we have a North American recession. 

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

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

           
        

Saturday, June 3, 2017

Dividend Income Update - May 2017




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

        The price of barrel of crude oil has falling during the month, and it currently sits below $48.00 per barrel.  As April and May is when breakup occurs in the Western Canadian oil patch. There continues to be a major surplus of oil even with OPEC extending cuts for another 9 months.  The tide is turning towards using more renewable energy sources. That being said, the worldwide need for oil will not go away anytime soon.

      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) - $30.80
  • Emera (EMA) - $52.25
  • Enerplus (ERF)  -$ 5.58
  • Dream Office REIT   (D.UN)  - $77.63
  • Shaw Communications (SJR.B)    - $19.75
  • TD Bank (TD) - $60.00

    TFSA
    • A&W Royalties Income Fund (AW.UN) - $5.05
    • Boston Pizza Royalties Income Fund   (BPF.UN) - $26.91
    • iShares 1-5 yr Laddered Canadian Corporate Bond ETF (CBO) - $0.62
    • Cominar REIT (CUF.UN) - $21.19
    • Dream Office REIT   (D.UN)  - $ 17.63
    • Horizons Natural Gas Yield ETF (HNY)  - $4.13
    • Killam Properties REIT (KMP.UN) - $  15.60


    Total = $337.14
        
        As the amount of distribution from D.UN inside my margin account, will have a large impact on the comparison of dividend income from 12 months ago. This dividend income total of $337.14 represents an increase of 13.88 % from 3 months ago.

         Dream REIT has reduced the amount of distribution they pay monthly which was announced in February 2016.  Recently, I wrote about purchasing more units of D.UN inside a margin account.  Starting in September, the distribution from this D.UN inside the margin account will be included in my dividend income.

        I received $108.15 options premiums in May 2017.
    0
         I will update my dividend income tab with the new amount I will include my option premium income also.  It is great to see money from passive income sources deposited into my brokerage account every single month.

    How was your dividend income for May?

    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.


    Thursday, June 1, 2017

    Portfolio Update - May 2017

      This is just going to be a quick update as I have been busy lately.

    • Added 5 units of HNY.TO in TFSA at  $13.38 for a total cost of $66.92 including commissions. The commission is free for purchasing some ETFs with my brokerage, but there is a $0.02 ECN fee.  The ECN fee is on a per unit basis so more units purchased would me high ECN fees.
    • My short  $62 Put option in TD.TO expired worthless
    • My short $92 Put option in RY.TO expired worthless. Then sold another put in RY.TO at $91 strike price and a June 2 expiration date.

    Shares Acquired Through DRIP


    3 Unit of D.UN.TO @ $19.8735  for a total cost of $59.62 (Margin Account)

    1 units  of CUF.UN @ $13.2035 for a total cost of $13.20 (TFSA)

    Please note, that the DRIPs inside my margin account and TFSA are synthetic drips which indicate the distribution or dividend must be enough to purchase whole shares. 


    As of April 30, the value of the portfolio is $104822.69  $104236.43 . This is a 0.562 %  increase over last month's total.  The spreadsheet in the investment tab above has been updated.

     Disclosure:   own 100 shares of TD.TO in margin account
                       
    Disclosure:  Long D.UN, HNY, CUF.UN, TD

    Please Note:  All stocks are from the Toronto Stock Exchange.

    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, May 29, 2017

    Brief Review A&W Income Fund Quarter Results

         There is a lot of variety in Canada when it comes to fast food chains.  These restaurants included Burger King, McDonald's, A&W and Wendy's.

          The Fund is a limited purpose trust established to invest in A&W Trade Marks Inc. (Trade Marks), which indirectly owns the A&W trade-marks used in the A&W quick service restaurant business in Canada. The trade-marks comprise some of the best-known brand names in the Canadian foodservice industry. Trade Marks licences these trade-marks to A&W Food Services of Canada Inc. in exchange for a royalty of 3 per cent of the sales of 861 A&W restaurants in Canada. Source: A&W Income Fund website  )                           
           This structure makes the A&W Revenue Royalties Income Fund a "top-line" fund because income is based solely on the sales of A&W restaurants minus the Fund's and Trade Marks' minimal operating expenses, interest on Trade Marks' term debt and income taxes. The Fund is not subject to the variability of earnings or expenses associated with an operating business. (Source: A&W Income Fund website )
    A&W has changed their menu in the last 3-5 years to such as can be found in this list of facts.  I will highlight some of those here:
    • In 2013. A&W started to use beef that is raise without the use of hormones or steroids.
    • In Sept 2014, A&W started using chicken that was raised without the use of antibiotics and fed  a grain-based, vegetarian diet without the use of animal by products.
    • In Feb 2016, A&W started to use pork raised without the use of antibiotics.

        With these changes over the last several years, this has increased the prices on the menu up besides increases due to inflation.  A&W also has a lot of restaurants in Alberta and Saskatchewan, which have seen there economies struggle over the last 3 years with falling oil prices.

          The number of restaurants in the royalty pool increased from 838 to 861, which is updated every January.  This represents a increase of 2.67% in the restaurants in the royalty pool.

          A&W saw a decrease of 0.3% in Same Store Sales growth from the period between January 1 2017 to March 26 2017.  For the same period in 2016, there was an increase of 8.6% in same stores sales growth.

           The royalty income increased from $7314000 for Q1 2016 to $7355000 for Q1 2017, which represents an increase of  just 0.56% .  This small increase in royalty income and increase in expenses for administration of the fund and an increased distribution as pushed the payout ratio higher. Since this is an income fund, A&W must pay out 90% or more of their profits as distributions to unitholders.

          The income fund has fallen over the last month by 10.94% and 3.03% on May 29. The fund pays monthly distributions. 


    Disclosure:  I own 38 units of AW.UN in my TFSA and 115 units of AW.UN in my trading account.

    EDIT (May 30 2018) - This stock has had a rough start to the trading day once again. We have also had lots of things happen recently.  The Green party is British Columbia holds the balance in power.  They now have a agreement in place with the NDP, in which the current government will lose power. If this gets approved then I believe the NDP will form the government.  The NDP has said they will increase corporate taxes.  

       The premier of Ontario has announced that the minimum wage in Ontario will change dramatically. It is already set to go increase from $11.40 to $11.60 this October. In her announcement, Premier Wynne stated the minimum wage will increase to $14 on Jan 1, 2018 and to $15 the following year.  I personally think this will have dramatic effects. People of all income levels are not happy with the prices in stores now. Businesses have to raise their prices in order to increase wages.  

        The minimum wage in Alberta is supposed to be raised by $1.40 on October 1, 2017 and then raised to another $1.40 on October 1, 2018.  A&W has lots of restaurants in Alberta.  With the state of the economy in Alberta, these stores are going to struggle financially.

        I wish I would of set a stop loss in the trading account.  This position has a purchase price of $36.65.


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

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

    Saturday, May 27, 2017

    Market Outlook

          The markets are moving sideways or upwards.  At the time of this writing, the S&P 500 closed Friday at 2415.82, which is  slightly below it's all time high. North of the border, the TSX Composite Index closed at 15,416.93.  The TSX Composite Index has been in a channel between basically 15300 and 15900 since the beginning of 2017.

          With the markets being at or near their all time highs, lots of investors are becoming fearful.  In Canada, the energy is one of the main industries for investors to invest in .  With oil trading anywhere between $45 and $53 per barrel, this definitely hurts the bottom lines of the oil patch companies.  In fact, a lot of laid off workers in the oil patch are hesitant to go back.  Furthermore, a lot of companies are offering lower wages. A few months ago, it was mentioned on the Business News Network aka BNN that a company who used to pay people $40 an hour hired people back at $15 an hour.

           The actual drilling rig activity in western Canada can be shown in the following weekly chart.


    Source:  CAODC website




              The price of a barrel, on top of spring "break up", have a large impact on companies willing to drill right now.  These numbers would be slightly higher, but it is spring break up.  Spring breakup in western Canada, usually occurs between April and May. Basically, spring break up is where oil patch activity slows down tremendously due to the thawing of the ground.  The dirt roads become difficult to drive on and lease roads are even more horrific.  A lease road is basically a road off a main road or a dirt road that was not there recently.  These lease roads can be right through a wooded area some times. These lease roads start of smooth and there get more difficult over the time the rig is in operation due to weather events and large trucks coming in and out.  Canada is also a high cost producer for oil.

          Why all the mention on oil?  Energy companies are a major part of the Canadian markets and lot of these companies are struggling to maintain profitability.  To makes matter worse, the North American market is due for a recession. As nobody has a crystal ball,  we do not know when the recession is coming but it has been roughly 9 years since we had one. When there is a recession, the oil companies are not immune.

          Investors in Canada have limited investing opportunities within our borders. In order to invest in some sectors, we have to purchase US stocks. The companies like the Johnson &Johnson, Coca-Cola, Peps, and Phillip Morris do not exist up in Canada. Ideally, Canadians should buy US stocks when our dollar is on par with the US dollar.

       With the Canadian dollar trading at approximately $0.74 US, a Canadian investor is better off purchasing their investments in Canada.  With the state of the financial markets, investors have to be more careful in their entry points. A fellow blogger, Jason Fieber, recently published an article on a Daily Trade Alert with a video which  can you explore here.  At the bottom of Jason's article is a link to a video where Jason talks about how he researches stock.  Jason was the founder of the blog www.divendmantra.com and now is the founder and publisher of mrfreeat33.com

        Conclusion:

         With the markets at an all time highs, investors have be more careful at picking stocks and picking their entry points. Investors need to grow their cash position, so they can take action when an opportunity arises.  We do not know when the recession or a 10% to 20% correction will come.  If we did, we would be all more wealthy than we currently are.

          The new normal consists of less full time jobs and more part time jobs. Usually a company does not provide benefits for part workers.  Nowadays, an individual has to be open to working possible multiple jobs, become self employed or have side hustles.  The cost of living is going nowhere but up whereas wages are become stagnant or even less.  Since the 70s, wages have pretty much stayed the same adjusted to inflation.  I find a lot of people believe they get a "raise", when in fact they get a cost of living increase.  To me, getting a raise involves the employee being called into their boss's office and is praised for good performance and is rewarded by getting paid more. When an employee receives of cost of living increase, so do all his or her fellow employees.  For individuals to be able to invest frequently, their savings rate has to increase.  To increase his or her savings rate, an individual must lower their expenses and make more income.

    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, May 17, 2017

    Option Trades Update

           May 17 was a down day on the North American markets. Investors and traders are concerned over recent events involving the President of United States Donald Trump.  Adding to this, is the low interest rates that we have currently.  Another major issue is that of Home Capital Group (ticker symbol HCG.TO).  HCG.TO, which is in the mortgage business, continues to be the major topic of discussion. Savers are continuing to withdraw their money from their high interest savings account, which is putting strain on the HCG.TO bottom line.  HCG.TO recently got a 2 billion line of credit from HOOPP, which is Healthcare of Ontario Pension Plan to try to stay a float.  HCG.TO has said in the last week, that replacing the HOOPP line of credit is a top priority due to the high interest rate on the line of credit.

           In Canada, the TSX Composite Index was down 269.65 points which represents 1.73% decrease from the day before. The S&P 500 was down 43.64 points, or 1.82%, for the day.  The Dow Jones Industrial Average was down 372.82. or 1.78%, for the day.

          I currently have to put options set to expire this month. My short put in Royal Bank is set to expire on May 19th.  The stock RY.TO closed at $91.45 today. My strike price is $92.00 and it is for a single contract.

         My other put option is in another Canadian bank, TD Bank.  My short put in TD is set to expire on May 26th.  The stock TD.TO closed today at $62.26, which is below my strike price of $62.50.  I also currently own 100 shares of TD.TO.

         Today's closing prices of these stocks are over $8.00 per share below their 52 week highs. I am not worried at all with option assignment on these stocks, as the banks have proven over the years that they are excellent companies to own.  If Royal Bank option gets assigned I will likely write covered calls as I would like my entry point to be lower. 

    Disclosure: Long 100 shares of TD in margin account.

    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, May 10, 2017

    Option Trade

              The big banks in Canada have falling in value recently. In particular, Royal Bank of Canada (RY.TO) has falling from it's 52 high of $99.90 from a few months ago.  RY.TO is currently trading at  $93.33 per share.

           The major topic in the news in Canada is the company called Home Capital Group (HCG.TO).  The company provides high interest savings accounts for savers at low interest rate and then writes mortgages with a higher interest rate, and basically makes money off the difference.  This business model has been failing as savers have been pulling there money out in droves.  The savers are doing this as they do not feel comfortable having their money there due to recent events happening to HCG.TO.  HCG.TO has recently gotten a $2 billion line of credit from Health Care of Ontario Pension Plan, which they have used approximately 1.4 billion dollars of to stay a float.

           In Canada, there is high cost of housing in Vancouver, Toronto, Edmonton, Calgary and Fort McMurray.  The highest of these costs and in Vancouver and Toronto.  Some people are talking about a possible housing correction, so this has caused the bank stocks to trade lower as of late and slightly offset with investors chasing yield by purchasing shares in the banks.

          So on May 10, I sold a put option in RY with a May 19, 2017 expiration day.  I collected a premium of $41.05 after commissions.

    Summary:

    Strike Price: $92.00
    Total Premium Received : $36.05
    Days to Expiration: 9
    Current Annual Dividend = $3.48
     Option Assignment Fee = $24.95

    Scenario #1 :  Option not assigned

    Total Return = $36.05/ (1*100*$92.00)
                         = .00392
                         = 0.392%

    The total return for 9 days is 0.392%.  The annualized return is 15.89%.  For comparison, my interest savings accounts pays an annual interest of 0.80%.

    Scenario #2:  Option is Assigned 

    Adjusted Cost Base  per share= [1*100*$92- $36.05+$24.95] / 100
                                                    = $91.89


    Yield on Cost = $3.48/$91.89*100 %
                           = 3.787%

     What would the yield be if shares purchased directly at $92.00 using a limit order?

    Commission = $4.95

    ACB/per share = [1*100*$92.00+$4.95 ] / 100
                             = $92.05

    Yield on Cost = ($3.48/ $92.05) * 100%
                           = 3.781%

    Conclusion:

          From Scenario #2, we can see the yield on cost would be roughly the same although receiving a net premium of $36.05.  The option assignment fee of $24.95 greatly reduces the difference between the yield on cost of option assignment to that of purchasing shares out right.  Not all brokerages have an option assignment/exercise fee.

         As of this time, I do not plan to open an account with Interactive Brokers. I will open an account with Interactive Brokers in the future.

    Disclosure: Currently do not own any shares of RY.TO in any accounts.


    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, May 7, 2017

    One Thing You Can Be Sure Of In LIfe

              We all know people who spend their entire paychecks.  These people live paycheck to paycheck. If you do not know anybody specifically, you can roughly tell by their actions if they live paycheck to paycheck.  Some of these people are in dire straights, while others are just more managers of their money. Some people have plans for their money even before they receive it.  These people might have a lot more fun, but they are also a lot more stressed.  Unfortunately for the rest of us, we here the complaining and snapping at people. 



             The one thing we can be sure of that will happen in an individual's life is an emergency.  These emergencies can be things such as car breaks down, roof leaks, or a job loss.  Emergencies can occur without any notice.  People need to prepare for emergencies before they happen.  People prepare by saving 3 to 6 months of expenses in an account for emergencies.  This is called an emergency fund. 

             The emergency fund  has to be easily accessible.  This can be money kept in a savings account, money market fund,  or somewhere in your house.  By having an emergency fund, an individual will not have use a credit card or sell investments to fund these emergencies.

            Having an emergency fund also allows an individual to sleep better at night.  How much money should be in an emergency fund?  The amount of money put in an emergency fund should be at least 3 to 6 months worth of expenses, but an individual should make there emergency fund as big as they need.

       How would you feel when somethings happens like this:
    • car breaks down
    • furnace breaks down
    • get sick
    • lose a job
    • sewage backup
    • house fire
       For anything that people have insurance for, there is a delay from receiving moving from insurance. For example,  if your house or place of residence catches fire and you have to go to a hotel, you will have immediate access to the money via the emergency fund instead of putting money on a credit card. The insurance will take a few days to go through and you might have to put up a fight to get it.

       People who save money these days will actually lose money due to the interest rates that banks pay on savings accounts and how this compares to inflation.  See, the emergency fund is insurance and not an investment.

        Do you have an emergency fund?
      
    Photo Credit:  www.shutterstock.com

    Saturday, May 6, 2017

    No Money to Invest?

            When it comes to investing, a lot of people say they cannot afford to invest.  I think people can not afford NOT to invest. What do I mean by that?  Investing means putting your money to work.  If a person spends on their income, they will not get anywhere in life. People often say you need tens of thousands of dollars to invest. The modern day potential investor has a lot of advantages over someone years ago.

           Years ago before the birth and rise of discount brokerages meant that investors had 2 options. They could call up the brokerage and purchase shares or units at high commission. This made it harder to pick entry points.  Also investor's were not able to see real time quotes like they do today.

            The investors of today have another method still at their disposal.  The real old method of purchasing shares is directly through the transfer agent. In Canada, can purchase shares through the transfer agent directly.  Before using the transfer agent, often times the potential investor has to buy a share from another person.  In Canada, this can be done through the website dripprimer.ca.  An individual would then go to the Share Exchange board and put a message on the board saying they are looking for a share in a certain stock. A share certificate is then sent to the transfer agent by the seller and the buyer would receive the share in a few days or so.  When an investor purchases shares through the transfer agent, they have no control of the purchase price of the new shares. Purchasing shares through the transfer agents means investors do not pay commissions and the entire dividend is reinvestment or paid out.  Some of the companies have a DRIP discount on shares purchased with re-invested dividends.  This method of investing do not require a lot of upfront costs.

         Nowadays, investors pay low commissions via discount brokerages. These discount brokerages have commissions of $10 or under compared to full brokerages which have commissions of $30 or more.  Unlike a full brokerage, an investor using a discount brokerage has to  pick their stocks on the own after doing their own research.  Currently, Dan of Sharpe Trade is proving a way this can be down.  You can read about this project, called the Sharpe Income project on Sharpe Trade and search for Sharpe Income or click on the Sharpe Income label.  Their entries on Monday provide a link to the start of the project and also a link for a spreadsheet.

       For disclosure, I have no affiliation with Sharpe Trade LLC or any of its products on their website. 

          A few of the discount brokerages off commission free ETFs for purchasing only or for both purchasing and selling. The fees associated with the purchase or selling is a ECN, or electronic exchange network, fee which is usually very small.

          Exchange Traded Funds, aka ETFs, are cheaper than mutual funds when it comes to fees and trade like a stock on the stock exchange.  Investment fees eat into returns, so an investor should keep their fees as low as possible.

          The power of DRIPs is shown in the following video.

    Wednesday, May 3, 2017

    Dividend income Update - April 2017




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

            The price of barrel of crude oil has falling during the month, and it currently sits just below $48.00 per barrel.  As April and May is when breakup occurs in the Western Canadian oil patch.  What is breakup? Breakup is where oil rig activity slows to a crawl as the ground is thawing.  This thawing causes the dirt roads and lease roads to be difficult to have large trucks travel.

          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 Nova Scotia (BNS) - $24.96  (transfer agent)
    • Bank of Nova Scotia (BNS) - $15.20
    • Bell Canada Enterprises (BCE) - $71.75
    • Canadian Imperial Bank of Commerce (CM) - $ 35.56
    • Enerplus (ERF)  -$ 5.58
    • Dream Office REIT   (D.UN)  - $77.25
    • Roger's Communications Class B (RCI.B) - $96.00
    • Shaw Communications (SJR.B)    - $19.75

      TFSA
      • A&W Royalties Income Fund (AW.UN) - $5.05
      • Boston Pizza Royalties Income Fund   (BPF.UN) - $26.91
      • iShares 1-5 yr Laddered Canadian Corporate Bond ETF (CBO) - $0.62
      • Cominar REIT (CUF.UN) - $21.07
      • Dream Office REIT   (D.UN)  - $ 17.63
      • Horizons Natural Gas Yield ETF (HNY)  - $4.45
      • Killam Properties REIT (KMP.UN) - $  15.60
      • TFI International (TFII) - $9.50

      Total = $446.88
          
          As the amount of distribution from D.UN inside my margin account, will have a large impact on the comparison of dividend income from 12 months ago. This dividend income total of $446.88 represents an increase of 8.09% from 3 months ago.

           Dream REIT has reduced the amount of distribution they pay monthly which was announced in February 2016.  Recently, I wrote about purchasing more units of D.UN inside a margin account.  Starting in September, the distribution from this D.UN inside the margin account will be included in my dividend income.

          I received $0.00 in options premiums in April 2017.

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

      How was your dividend income for April?

      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.






      Tuesday, May 2, 2017

      Option Trade

       

         



              The big banks in Canada have falling in value recently. This decrease in value can be the result of a lot of things currently.  We are due for a recession in North America ,as historically, we have had a recession every 8-10 years.  Currently, right now Alberta is in a recession all of its own in Canada.  The province of Alberta major employer is the oil and gas industry.  The oil and gas industry involves drilling companies, production companies, oilfield service companies and companies whose derive a lot of business due to indirectly serving the oil and gas industry.  My previous employer made machined parts for the oil and gas industry and had one major client.

              A major issue in central Canada is the housing situation in Ontario in their largest city which is Toronto. Toronto and its adjacent areas such as Mississauga are part of what is known as the GTA.  The prices of houses here extremely high due do the population.  The mayor of Toronto and some members of their provincial government are concerned about a possible housing correction as they believe many people will not be able to afford their homes. Our interest rates are extremely low right now.  When they start to rise, the will mean higher mortgage payments eventually for the people.

             The other major city in Canada with similar high priced homes is Vancouver.  Vancouver is located in British Columbia. 

            So on May 2, I sold a put option in TD with a May 26, 2017 expiration day.  I collected a premium of $41.05 after commissions.

      Summary:

      Strike Price: $62.50
      Total Premium Received : $41.05
      Days to Expiration: 24
      Current Annual Dividend = $2.40
       Option Assignment Fee = $24.95

      Scenario #1 :  Option not assigned

      Total Return = $41.05 / (1*100*$62.50)
                           = .0066
                           = 0.66%

      The total return for 24 days is 0.66%.  The annualized return is 9.99%.  For comparison, my interest savings accounts pays an annual interest of 0.80%.

      Scenario #2:  Option is Assigned 

      Adjusted Cost Base  per share= [1*100*$62.50- $41.05 +$24.95] / 100
                                                      = $62.34


      Yield on Cost = $2.40/$62.34*100 %
                             = 3.850%

       What would the yield be if shares purchased directly at $62.50 using a limit order?

      Commission = $4.95

      ACB/per share = [1*100*$62.50+$4.95 ] / 100
                               = $62.55

      Yield on Cost = ($2.40/ $62.55) * 100%
                             = 3.837%

      Disclosure:  Long 100 shares of TD.TO in my margin account.


      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, April 30, 2017

      Portfolio Update - April 2017

             The month of April is now behind us. The price per barrel of crude oil is currently trading below $50.  The oil patch in Western Canada has picked up some, but no where close to it was prior to September 2014.  In Sept 2014, the price of oil was around $95 per barrel for a barrel of WTI Crude Oil.  With the price hovering around $50.00 per barrel, the energy stocks are are trading low and some are struggling to be profitable.

              Last month, I wrote about selling puts in Home Capital Group (HCG.TO) at a strike price of $25.00. I bought to close the 2 put option contracts to reduce my losses. It ended up with a loss of around $355 dollars.

             Was this my last stake in Home Capital Group? I am afraid not.  I got my tax refund back and put the refund in my TFSA.  So with approximately $1200 in my TFSA, I bought 65 shares of HCG.TO at $18.00.  The stock rose a bit and I tried to sell, but the stop limit order was triggered but the stock did not rise up to the limit price I wanted to sell.  The day ended and I still owned my shares.  Prior to the open of the markets the next day,  HCG.TO announced an intent to have a $2 billion line of credit with an interest of approximately 15%.  See, HCG.TO is in the mortgage business.  So people deposit money in saving accounts and interest is paid to these savers.  HCG.TO then lends this money out by writing mortgages at a higher interest rate. Savers have been pulling there money out at record levels in the past month. This company is being investigated by the Ontario Securties commission, fired there new CEO,  and had directors resign.  The stock closed Wednesday at $5.99 per share.

              Back to my postion at $18.00 per share.  When I woke up the next day the stock was trading at $8.00 per share. I set a limit order at $7.00 to sell.  I changed my order to a market order when it was trading at $7.30 per share. As we all know market orders get filled right away.  This did not happen. So I cancelled the market order and made a new one. Still nothing happened.  Then went to Yahoo Finance and typed in the ticker symbol, which said the trading of the stock was halted.

           When the trading resumed of HCG.TO, the sell order was filled at $7.28 but then apparently a buy for 65 shares was executed.  I then placed an order to buy 25 more shares of Dream REIT in my TFSA.  After this order for $D.UN.TO  was filled, I noticed my cash balance in my TFSA was negative by approximately $500.00.  This fiasco of HCG.TO did not show up in my trading confirmations or account summary.  My brokerage Questrade said it seems that order for HCG.TO went through when it was not suppose to go through.  As of April 30, they never got back to me yet.  

            The 25 new shares of D.UN.TO was filled at $19.45 for a total of $491.29 including commissions. D.UN.TO currently pays an annual distribution of $1.50 per unit. This purchase adds
      $37.50 to my annual dividend income.

           I wrote previously about wring 2 cover call contracts on Rogers Communications Class B shares (RCB.B.TO)  with a strike price of  $60.00 per share.  I thought my position was safe as RCI.B never traded above $60.  Then earnings was announced on April 18. They stock has risen in value, and I did not want the covered calls to get assigned. I bought to close my covered calls for a loss. 

           On a positive note, my short put in TD.TO expired worthless.  The strike price of this put was $64.00.  I am own 100 shares of TD.TO.


      Shares Acquired Through DRIP


      3 Unit of D.UN.TO @ $20.0035 for a total cost of $60.01 (Margin Account)

      1 units  of CUF.UN @ $14.6435 for a total cost of $14.64 (TFSA)

      Please note, that the DRIPs inside my margin account and TFSA are synthetic drips which indicate the distribution or dividend must be enough to purchase whole shares. 

      I received the dividend payment of my shares of Bank of Nova Scotia (BNS.TO) with the transfer agent on April 26. It takes a few businesses to show the price of the shares and the amount of new shares.  As of the time of this writing, I do not know the price of reinvestment and the amount of new shares.

      As of April 30, the value of the portfolio is $104236.43 . This is a 1.186%  increase over last month's total.  The spreadsheet in the investment tab above has been updated.

       Disclosure:   Long RCI.B, TD.TO, BNS.TO, D.UN.TO

      Please Note:  All stocks are from the Toronto Stock Exchange.

      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, April 24, 2017

      Why Diversification Is Important?

               When most of us started to think about investing, we are told to diversify our assets.  New investors tend to gravitate towards mutual funds as they provide instant diversification. A mutual fund is where money from investors is invested by professional money managers according to the mandate, also know as the objective, of the fund.  If you are like me, you try to buy individual stocks.

               Over the past year or so, a company is Canada has been under hot water. This particular company is called Home Capital Group Inc  (ticker symbol HCG ) and trades on the Toronto Stock Exchange. 

            
      Home Capital Group Inc. is a holding Company and operates through its principal subsidiary, Home Trust Company. Home Trust is a federally regulated trust company offering deposit, mortgage lending, retail credit and credit card issuing services. Licensed to conduct business across Canada, Home Trust has offices in Ontario, Alberta, British Columbia, Qu├ębec, Nova Scotia and Manitoba. (Source : Home Capital Website

          HCG has had a lot of negative events over the last year or so. Some of these are as follows:
      • On Feb 10, HCG discloses that the Ontario Securities Commission sent an enforcement notice after the market closed on Feb 9, 2017
      • On March 14, HCG discloses that legal and regulatory matters in regards to the issue immediately above.
      • On March 27, HCG announces the departure of their CEO which occurred over night. This CEO was in the position less than a year.
      • On April 19, 2017 HCG releases a statement on the Ontario Securities Commission intention to pursue an administrative proceeding against the company and 3 individuals. These 3 individuals are Martin K Reid, former President and CEO, Gerald M. Soloway, former President and CEO and currently a director of the Company, and Robert Morton, the Company's Chief Financial Officer.
      • On April 24, HCG annouces the pending retirement of Gerald M. Soloway and appoints Robert Blowes as interim CFO.

      Click to Enlarge


              The above chart is a one year chart.  The stock as dropped over 50% in value over the past 365 days.  The dividend was increased over this time span.


      Click to Enlarge

            
           HCG is down 44.16% since the start of the calendar year.  I recently sold puts at $25 strike price and bought to close for loss of $353.90, which you can read about here.  On April 24, you can see the stock dropped 9.09% during which they announced the pending retirement of the current director Gerald M. Soloway.  

           This stock over the last year  shows why stock market investors need to diversify.  An investor would be out a lot of money if they bought the stock 6 weeks ago or before 6 weeks.  I do believe HCG has to do more to lessen the fears of investors and to right the ship once again. 

          Diversification helps you sleep at night.  I am sure a lot of investors are worried about where the stock price is heading.  Canadian investors can diversify in Canada, although the degree of diversification does not compare to the US Market. 

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

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


      Saturday, April 22, 2017

      Trading Account Update

      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 :                34
                                     Total Capital added:    $250.00
                                     Trading Acct Balance:  $3732.82
                                     Average Drawdown:   $49.97
                                     Average Loss:             $52.02
                                     Average Accuracy:    85.29%
                                     Average Risk:              $61.02
                                     Average Reward:         $105.96
                                     Average R/R :             1: 1.736



              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? No it does not.  The risk to reward ratio states of every $1.00 of risk there is reward of  $1.736.  Ideally, a trader should aim for a 1:2  risk to reward ratio which causes the accuracy rate to be lower.

            The drawdown above is inter-trade drawdown.  This type of draw down is the dollar amount the trade moves against you.  Why is it important to keep track of inter-trade drawdown?  It helps you know if you are picking good entry points.  It is normal for trades to have inter-trade drawdown. 

      Note:  The trades are listed under the Trading Tab above with all the trades listed as of April 21, 2017.

      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, April 13, 2017

      Option Trade - Trade Closing.

          Last month., Home Capital Group Inc. fired their CEO over night.  The stock price fell after markets opened the following morning.  I decided to sell put options. These 2 put option contracts had a strike price of $25.00 and an April 21 2017 expiration date.

          The stock rallied upwards for a bit, but has fallen.  The issues surrounding this company are causing investors to back off from buying and sellers getting worried about their investment.  Today the stock closed at $21.70 per share, which is an 8.63% decline from yesterday's closing price. 

         Earlier in the day when I was able to be at my computer, I closed my trade by putting in a Buy to Close order.  My order was filled at $2.35 per contract.  The stock was trading  at $22.80 per share when my order was filled.  So how much money did I lose on this trade?

       Summary:

      # of contract = 2
      Premium Received = $128.05 including commissions
      Premium Paid = $481.95 including commissions

      Total Loss = $481.95 - $128.05
                        = $353.90


             The lesson to learn here is when you sell a put for option premium income, buy a put option of lesser premium as insurance. Basically, your protecting yourself  if the trade goes against you which means the option was assigned. This will lower your net premium received, but will limit your loss.

            If an investor is willing to buy the stock at the strike price and wants to keep the stock as a long term hold, then buying a put option as insurance would be a matter of choice. 


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

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

      Saturday, April 8, 2017

      Trading Account - Update

            I started a trading account in January 2015.  Trading can consist of going long or short. Trading can be down with options, futures, futures options,  stocks, bonds, ETFs or mutual funds. Each of these types of instruments come with different levels of risks and a trader can lose more than their initial investment.

            A lot of people will not trade, because they believe trading involves have their eyes glued to the charts when a trade is in progress.  A trader will have to look at the charts all the time if the instrument they are trading is highly leveraged or the position can move against them really quick.

         My performance in 2016 morphs my performance of 2017.







            If any of the trades I put on with stocks, REITS, or ETFs, the dividend and distribution stay in the account.  Currently in 2017, I am in the middle of a trade in PZA.TO. This stock has paid a dividend March 15 and will pay a dividend around April 15. 

           Why the difference between 2015 and 2016?  In 2016, I traded penny stocks a lot whereas this past year I only completed 2 trades and in the middle of the third. Penny stocks are very high risk as the trade can move against you in a hurry. I was not planning on trading penny stocks so much in 2016 due to their really high risk.  PZA.TO is Pizza Pizza Royalties Corporation, and trades around  $17 per share. 


          To see all my trades except the last completed one and the one that I have on currently, click here.

      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.




      Tuesday, April 4, 2017

      Dividend Income Update - March 2017




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

              The price of barrel of crude oil continues to trade over $50.00 per barrel and is currently around $50.00 per barrel.  With the price of oil seeming to remain above $50.00,  the drilling activity in western Canada has begun to pick up. Other major things to happen in Canada was the Government of Alberta releasing it's budget just ahead of the federal government releasing their budget. The Alberta Government is forecasting the price per barrel of WTI crude oil to remain below $60.00 until 2021. The recovery in Alberta is going very slow.

            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

      • Enbridge (ENB) - $9.32
      • Enerplus (ERF)  -$ 5.58
      • Dream Office REIT   (D.UN)  - $ 76.75
      • High Liner Foods (HLF) - $7.00
      • Shaw Communications (SJR.B)    - $19.75
      • WestJet Airlines Ltd. (WJA) - $19.60
        TFSA
        • A&W Royalties Income Fund (AW.UN) - $5.05
        • Boston Pizza Royalties Income Fund   (BPF.UN) - $26.91
        • Canadian National Railway (CNR) - $15.68
        • iShares 1-5 yr Laddered Canadian Corporate Bond ETF (CBO) - $0.62
        • Cominar REIT (CUF.UN) - $20.95
        • Dream Office REIT   (D.UN)  - $ 17.63
        • Enbridge (ENB) - $19.24
        • Horizons Natural Gas Yield ETF (HNY)  - $4.67
        • Killam Properties REIT (KMP.UN) - $  15.10

        Total = $263.85
            
            As the amount of distribution from D.UN inside my margin account, will have a large impact on the comparison of dividend income from 12 months ago. This dividend income total of $263.85 represents an decrease of 3.32% from 3 months ago.  This decrease is attributed to the fact CUF.UN.TO paid distributions twice in December which results in no payment in January.  This decrease is lessened to do DRIPs and new distribution from AW.UN.

           I currently own 100 shares of High Liner Foods, but 50 shares were bought after the ex-dividend date.

         Dream REIT has reduced the amount of distribution they pay monthly which was announced in February 2016.  Recently, I wrote about purchasing more units of D.UN inside a margin account.  Starting in September, the distribution from this D.UN inside the margin account will be included in my dividend income.

            I received $245.15 in options premiums in March.

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

        How was your dividend income for March?

        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.





        Sunday, April 2, 2017

        Portfolio Update - March 2017

               The month of February March 2017 is now behind us. The price per barrel of crude oil has traded below $50 per most of the month of March.  All eyes in Canada were on the budgets for Alberta and then the federal government of Canada.  The Alberta budget is big news  in Canada due to the importance of the province to the overall economy of Canada.  People from all parts of Canada work in Alberta and fly back and forth.  These workers not only provide revenue for the airlines but also the local economies of the areas these workers call home. The NDP government of Alberta did not cut spending in their budget and forecasting the government running deficits until 2024. The NDP government of Alberta is also seeing the price of oil remaining below $60.00 until 2021.

              I wrote about purchasing more shares of High Liner Foods (HLF.TO) on March 5, which you can read about here.  This means that I own 100 shares of HLF.TO.  The 50 shares purchased in March were not eligible for the dividend on March 15. This purchase adds $28.00 to my annual dividend income base on a yearly dividend of $0.56 per share.

              On March 10, I wrote about a covered call expiring on TD Bank (TD.TO) which you can read about here. TD Bank is involved in a class action lawsuit as employees say they were pressured into sales tactics to increase business.  Banks are for profit corporations, therefore their goal is to be profitable. I do not think the lawsuit has any merit.

             I wrote about post about WestJet Airlines Ltd. (WJA.TO), which you can read about here.  WJA.TO is a profitable airline and has been profitable for many years.  Their employees do not belong to a union, but can participate in employee stock purchase plan.  On March 29, I sold all my shares of WJA.TO.  This sale decreases my annual dividend income by $78.40.   If the price of WJA.TO falls below $22.00 per share, I will strongly consider purchasing shares.

             I was watching BNN, which is the Business News Network in Canada, one morning and the topic of the day was the Home Capital Group (HCG.TO) has fired their CEO over night. Adding to the fact that HCG.TO fired their CEO, was the fact he was is the position for less than a tear.  The company also had some problems over the last few years. I decided to take advantage of the stock falling approximately 10.00% by selling a put option.  I collect the premium upfront as the seller of an put option is paid a premium for being obligated to BUY the shares at the strike price on or before expiration.

            I also decided to write a covered call in Roger's Communications Inc. (RCI.B.TO) with a strike price of $60.00.  I have owned 200 shares of RCI.B.TO for awhile. RCI.B.TO has not raised it's dividend in over 2 years.


        Shares Acquired Through DRIP


        0.170 shares of ENB.TO @ $54.71 for a total cost of $9.32 (Transfer Agent)

        4 Unit of D.UN.TO @ $18.8635 for a total cost of $75.45 (Margin Account)

        1 units  of CUF.UN @ $14.1135 for a total cost of $14.11 (TFSA)

        Please note, that the DRIPs inside my margin account and TFSA are synthetic drips which indicate the distribution or dividend must be enough to purchase whole shares. 

        As of  April 2, the value of the portfolio is $103014.50. This is a 0.226%  increase over last month's total.  The spreadsheet in the investment tab above has been updated.

         Disclosure:   Long RCI.B, TD.TO, HLF.TO

        Please Note:  All stocks are from the Toronto Stock Exchange.

        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.