A Safe Investment in Canada?

        In Canada, we have very limited in terms of good companies to buy.  Unlike the NYSE or Nasdaq, the markets in Canada are mostly mining, energy, and financials.  Canada does not have investments like Coca-Cola, Pepsi, Johnson & Johnson, Clorox, Proctor & Gamble.  Canada has Cott Corporation, listed on the TSX and the NYSE, for beverage companies.  Cott's soda beverages are no where as tasting as a Coke Product or Pepsi product.

       Unless you have been hiding under a rock, the big 5 Canadian banks are known as some of the best banks in the entire world.  These big 5 banks are Royal Bank of Canada (RY),  Bank of Nova Scotia (BNS), Toronto Dominion Bank (TD), Canadian Imperial Bank of Commerce (CM), and Bank of Montreal (BMO).  The Bank Act means no individual can own more than 10% of any bank.

       I currently own shares in all 5 banks as they have been paying out dividends as follows:

• Royal Bank of Canada (RY) - started in 1870
• Toronto Dominion Bank (TD) - started in 1857
• Bank of Nova Scotia (BNS) - started in 1832
• Bank of Montreal (BMO) - started in 1829
• Canadian Imperial Bank of Commerce (CM) - started in 1868 

       All 5 of these banks trade on the Toronto Stock Exchange and the New York Stock Exchange. How profitable are these banks?  I often hear people say something along the lines of one of these banks made over $2 billion in profit last quarter.  I usually just shake my head as it is evident these type of people are not investors in these stocks and likely have no stock market investments.

        Prior to the opening bell on August 23,   Royal Bank of Canada announced a dividend increase from  $3.48 to $3.64 annually.  This represents an increase of 4.6%, which is above the rate of inflation.  The big banks have been raising dividends twice a year for the past several years, except TD Bank raises their dividend annually.  On average the banks dividend raises average average over 6% annually.  I currently own 100 shares of RY.TO, so this dividend increase raises my annual dividend income by $16.00.

      Some other stocks that are in a lot of Canadian portfolios are CP Rail, CN Railway, and Enbridge Inc. The dividend yield for CP Rail and CN Railway is usually under 2%.  The railroads are great investments to own for a long time because the barriers of entry are so high.  Transportation by rail is more environmentally friendly than transporting by truck.

Do you own any shares in any of these companies?

Disclosure:  Long BNS.TO, CM.TO, RY.TO, BMO.TO, TD.TO, CNR.TO and ENB.TO

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.

     

Recent Purchase

      As we go about our lives day by day, we must look for opportunities that can be of benefit to us.  These opportunities can come in from different areas such as a new career, new business idea, new investment etc.  In some cases the opportunity may be there in front us, but we are totally blind to the opportunity.  In a lot cases, the individual must be in a position to take advantage of the opportunity.

      For investors, we are on the lookout for opportunities as this is the peak of earning season for publicly listed companies.  Some companies report before the opening bell, while others report during the trading session or after the market closes on a giving day. These date and time of these earning releases is known in advance as a company must announce on a prior date, the exact time and date they are going to release earnings and a possible conference call to discuss the results.

     Cineplex Inc. (CGX.TO) released its earnings on August 2.  The quarter was a lackluster one and investors sold off there shares.  The share price had fallen to $41.50 before rebounding.  Some of the highlights are as follows:

• Earned $1.4 million (or $0.02 per share) in the last quarter, down from $7.2 million (or $0.12 per share) a year earlier
• Revenue of $364.1 million, up from $338.0 million for the same period last year
• Amusement Revenue was $45.7 million, compared to $24.6 million a year ago
• Media revenue was $36.6 million for the quarter, compared to $40.2 million in the same quarter from last year.
• Attendance was approximately 16.5 million, slightly down from 16.9 million from a year ago.
• Food Service revenue was $101.4 million, compared to $96.8 million for the same quarter a year ago
• Box Office revenue per customer was $10.86, compared to $9.89 a year ago
• Concessions revenue per customer was $6.03, compared to $5.74 for the same quarter last year

Cineplex is mostly a theatre company, but the company is diversifying its business in other areas of entertainment.  These new venues are Rec Rooms complexes, which include eateries, live entertainment, and games. The have launched Rec Rooms in some locations already, and plan to expand across Canada.

A couple of weeks ago, CGX.TO announced an exclusive partnership with Topgolf Entertainment complexes, which combine a driving range with other entertainment options over the next several years.

Conclusion:

        The company has missed lower earnings for the past 5 quarters.  The struggling economy in Alberta for the last 3 years  has hurt their earnings.  When the economy of Alberta struggles, the rest of the country feels it. Some people avoid going to the movies due to the cost. These costs consists of the price of a ticket plus the price of concessions. The price of a ticket can be reduced depending on the day and time of the week an individual goes to watch a movie.

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  CGX.TO is down 17.08 % over the last month. I do believe people are not going to stop going to the movies.  I do believe movie goers , will not spend as much on concessions with the possibility of a recession around the corner.

   On August 4, I purchased a 100 shares of CGX.TO at $43.85 per share for a total cost of $4389.95 including commissions. 

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  Currently $CGX.TO pays an annual dividend of $1.68 per share per  year.  This purchase adds $168 to my annual dividend income.

   I will sell covered calls against this position in the future.  I will update my investment tab spreadsheet in early September to reflect this new purchase.

Disclosure:  Long CGX.TO

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.

Is The Dividend or Distrubition Safe?

     As an investor I am like most people, I want to get paid via a dividend or distribution.  Any investor loves dividend increases.

     Every time a company makes an announcement regarding their dividend or distribution, the result can be one of four things:  dividend or distribution can be increased, decreased, ssuspended, or remain the same.

     I recently wrote about a REIT that I owned has lowered its annual distribution.  Since writing that post, I received another distribution payment and increased the number of units via drip.  Going forward the drip will be turned off.  Dream Office REIT (D.UN.TO) reduced its annual distribution rate from $1.50 to $1.00 effective with the July 2017 distribution and corresponding August 15th. I currently own 631 units in my margin account and 168 units in my TFSA.  That means my annual dividend/distribution income will be reduced by $399.50.

      Another REIT that I owned, Cominar REIT (CUF.UN.TO) just released earnings in the past week. They also announced  a distribution cut from  $1.47 per unit per year to $1.14 per unit per year. This reduction will start with the August distribution to be paid out September 15th. I currently own 176 units in my TFSA.  This reduction will reduce my annual dividend / distribution by another $58.08

      Besides holding CUF.UN.TO inside my TFSA account,  I hold CUF.UN.TO in small savings account.  The interest rate for high interest rate savings account are so low that it is actually laughable.  So I started a small experiment with a few positions. These 2 positions are 26 units of HNY.TO and 152 units of CUF.UN.TO.  Horizon's Natural Gas Yield ETF has ticker symbol HNY.TO.  So for this savings account, my annual distribution is reduced by $50.16.  My adjusted cost base of CUF.UN.TO is $14.25 per unit.

     This distribution cuts are proof it is best to diversify. A reasonable portfolio should be around 15 to 20 positions with their weights more equal to each other. When there is a cut to a major holding and not many positions, you will feel it more as a greater percentage of your income is lost. 

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.

Dividend Income Update - July 2017

      The month of July 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 channel between $45 to $50 per barrel of WTI crude oil.

        Emera Inc. reported its earnings and there was no dividend increase announced.  This payment on Aug 15th will be the 5 quarter of a quarterly dividend of $0.5225 per share. Emera Inc. (EMA.TO) is a utilities company involved with the transportation and distribution of energy.  Emera Inc. is a partner in the controversial Muskat Falls project. The Muskrat Falls project is a Hydro Electric Project the will create electricity from the falls to supply Newfoundland and Nova Scotia. The electricity will come to Nova Scotia via a subsea cable and land on the Eastern shore of Nova Scotia. This project is currently over budget.
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      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

• Bell Canada Enterprises (BCE) - $71.75
• Bank Of Nova Scotia (BNS) - $15.20
• Canadian Imperial Bank of Commerce (CM) - $35.56
• Enerplus (ERF)  -$ 5.58
• Dream Office REIT   (D.UN)  - $78.50
• Roger's Communications Class B (RCI.B) - $96.00
• Shaw Communications (SJR.B)    - $19.75
• Bank Of Nova Scotia (BNS) - $25.21  (Transfer Agent) 

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) - $21.44
• Dream Office REIT   (D.UN)  - $ 20.88
• Horizons Natural Gas Yield ETF (HNY)  - $5.83
• Killam Properties REIT (KMP.UN) - $  15.60
• TFI International (TFII) - $9.50

Total = $453.38

    
    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 $453.38 represents an increase of 1.455% from 3 months ago.

     Dream REIT has reduced the amount of distribution they pay monthly which was announced in February 2016.  Dream Office REIT again reduced their annual distribution again and will take effect with the July 2017 distribution to be paid on August 15.  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 $68.05 in option premiums for July  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 July?

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.

Portfolio Update - July 2017

        The month of July 2017 is now behind us.  We have seen the markets hits new all time highs a few times, usually the results of strong earnings from selective companies.

     We have seen strengthening of the Canadian dollar, equivalent of a decrease in the US dollar.  The price of a barrel of crude oil continues to channel for the most part between $45 and $50.  As a result of the low oil prices, the province of Alberta continues to struggle with its finances and it's overall economy.  Alberta is the only province in Canada that does not have a sales tax, as the GST of 5% is a federal tax. Alberta government receives royalties from the oil and gas activity, which greatly affects the government's revenue.

     As earnings are reported on a daily basis in the short term, is going to affect the markets positively or negative.


Shares Acquired Through DRIP

3 Unit of D.UN.TO @ $19.84574 for a total cost of $59.54 (Margin Account)

1 units  of CUF.UN @ $13.12431 for a total cost of $13.12 (TFSA)

1 unit of D.UN @ $19.84574 for a total cost of $19.85 (TFSA)

0.324878 shares of BNS.TO @ $77.5984 for a total cost of $25.21 (Transfer Agent)           

    I have turned off all DRIPs in my margin and TFSA accounts. They only drips turned on will be for BNS.TO and ENB.TO directly with the transfer agent.  These 2 positions are shown in the investment tab spread sheet with the color orange.

I recently wrote about Dream Office REIT after they made an announcement. They are once again, cutting their annual distribution by around 33% starting with July's distribution which will be paid on August 15.  There annual distribution will be cut from $1.50 per unit to $1.00.  So, my annual dividend income will be cut by approximately $400.00.


As of August 1,  the value of the portfolio is $104451.57. This is a 1.148%  increase over last month's total.  The spreadsheet in the investment tab above has been updated.

Note:  I do  have 2 short put option contracts currently in my portfolio as of Aug 1.

Disclosure:  Long D.UN, ENB.TO, CUF.UN, BNS.TO

Please Note:  All stocks are from the Toronto Stock Exchange except TTR which trades on the Venture Exchange.
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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.