Thursday, May 29, 2008

Readjusting my RRSP

This week, I made some changes to the content of my self-directed RRSP. I had given this some thought for the last couple of months, and I finally took the first step towards this.

You see, until now the stocks that I held there were mostly of Canadian companies. But in the last two years I have been expanding my DRiP portfolio considerably, most of which is also in Canadian companies. So I was quite overweight in Canada. And with the favourable treatment of Canadian dividends, versus the unfavourable treatment of foreign dividends, made it more efficient to hold foreign companies in my RRSP.

So I sold three relatively small positions. Two of those were in companies that I have been holding for some time, but that have not performed as expected, Killam Properties (Toronto: KMP) and Northgate Minerals (Toronto: NGX). The third position was a short-term trade done on Gildan Activewear (Toronto: GIL) when their stock nosedived a few weeks ago on disappointing results. It had recovered enough to show a small profit for me.

The proceeds of those sales were invested in a fairly large position in Pepsi Co (NYSE: PEP). I have been watching Pepsi for over a year now, and was interested in starting a DRiP with the company. However, the funds I have available for dripping are limited, and I already have many other companies that are currently attractive.

Since Pepsi has moved down quite a bit from its high in January, this looked like a good time to buy into it. My plan is to hold these shares for a long time -- this is a retirement account, after all.


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