Tuesday, December 15, 2009

Canadian General Investments Announce Year-End Dividend

Another of the holdings in my DRiP portfolio has announced a good surprise for the end of the year. Canadian General Investments (Toronto: CGI) has announced a year-end capital gains dividend of $0.50 per share.

CGI is a peculiar beast called a "closed-ended fund". A closed-ended fund is a bit like a mutual fund or an ETF, except that is has a fixed number of shares. So people who want to buy in have to purchase their shares on the market. Compare that to a mutual fund, where the managing company will issue new "units" whenever someone adds money (thus diluting the purpose of the fund). Closed-ended funds are often traded at a discount to their net asset value. Which isn't so bad, since it allows one to purchase a dollar's worth of equities for less than a dollar.

CGI invests in Canadian publicly traded companies, with a long-term outlook. It pays out a small $0.06 quarterly dividend (treated as an eligible dividend for Canadian tax purposes), and usually pays a year-end capital gains dividend (which is treated has ordinary income). The year-end capital gains dividend is a way for the company to pass on to its owners the net capital gains realized throughout the year on the investments it hold.

Last year, CGI was unable to pay a year-end dividend because of the market turmoil (they had more capital loos than capital gains). Seems like this year things went better. :o)

Monday, December 14, 2009

Pfizer Raises Dividend

Today, Pfizer has announced it was raising its dividend, from $0.16 to $0.18, starting with the next payment on March 2, 2010.

While this 12.5% increase is good news, one cannot forget that the company cut its dividend in half just a few months ago when it announced it was acquiring its rival Wyeth. It remains to be seen whether the new merged Pfizer will be able to integrate its activities and solve the problem posed by the expiration of important patents in the coming years.

I hold a few shares of Pfizer in my my DRiP portfolio. I may decide to add more money in 2010, but probably only a fairly small amount.

Friday, December 4, 2009

Enbridge Increases Dividend by 15%

One of the companies I own in my DRiP portfolio, the pipeline operator Enbridge Inc., has announced that it was increasing its dividend by 15%. The quarterly dividend is being bumped from $0.37 to $0.425 per quarter.

The fact that Enbridge announced an increase was no surprise, but it is higher than I expected (I thought it would be about 8 to 10%). This is particularly nice considering that Enbridge gives a 2% discount on the shares purchased by reinvested dividends.

Based on my current small ownership of Enbridge, this will increase my dividens by $3 in 2010. Small? Of course. But I don't have to work for that $3 and it will keep growing.

Thursday, December 3, 2009

Net Worth Update

As of December 1st, my net worth was $105 161 (up 3.9% from $101 220). If I exclude house-related assets and liabilities, my net worth was $68 196 (up 5.7% from $64 503). That's the fifth month in a row where my net worth increases significantly. It looks like my predictions that the equity markets would have another downward leg were incorrect, at least for now. I still don't think we're out of the woods yet.

Assets ($168 279, up 1.7% from $165 447)

  • Bank Accounts $4 452 (down 9% from $4 907)
  • Emergency Funds $2 041 (up slightly from $2 040)
  • RRSP Accounts $44 587 (up 3.7% from $42 966)
  • Non-Registered Investments $20 123 (up 9.7% from $18 351)
  • Home $96 330 (stable)

Liabilities ($63 117, down 1.7% from $64 227)

  • Credit Cards $3 481 (down 20% from $4 384)
  • Mortgage $59 365 (down 0.4% from $59 613)
  • Line of Credit $0 (stable)


  • Debt / assets: 0.375 (down from 0.388)
  • House value / total assets: 0.572 (down from 0.582)

So, a bit less cash in the bank accounts at the end of the month, but I also spent less (as shown by the amount on the credit cards). December is upon us, so I expect a bit more spending to be done for Christmas -- either as gifts or as preparations for the Holiday feasts. I usually budget around $500-$700 for Holiday spendings.

This is also the part of the year when I complete my gifts to charities for the year. My budget for charities is around $300 per year, and slowly increasing as the years go by.

How much money do you spend for the Holidays? Do you give to charities?

Thursday, November 12, 2009

No Dividend Increase from Telus

Telus, one of the companies that I own in my DRiP portfolio, has announced last week that its next dividend will be unchanged at $0.475 per share. This means no change to the dividend, whereas this is usually the time when the company announces the annual increase in dividend.

The announcement was part of the third quarter results (full text here). Revenues were sligthly lower, a reflection of the country's weak economic growth. Meanwhile, the company is continuing with its capital expenditures program to complete its next generation wireless network (which will be completed in 2010) and continue its wireless broadband expansion. Personally, I also get the feeling that the company is bracing for the entrance of new competition in Canada be being cautious.

The lack of a dividend increase is a bit of a disappointment. However, the company also announced an amendment to the reinvestment plan to introduce a 3% discount on shares purchased by reinvested dividends. As a result of this, I am effectively getting a 3% increase in my dividend even though the nominal dividend remains the same.

Sunday, November 1, 2009

Net Worth Update

As of November 1st, my net worth was $101 220 (up 11% from $91 013). If I exclude house-related assets and liabilities, my net worth was $64 503 (up 2.7% from $62 822). As I mentioned a few weeks ago, our house gained a lot of value over the last couple of years, and that is now reflected in the new municipal rolls. This increased my net worth by $8 000.

Assets ($165 447, up 6% from $155 973)
  • Bank Accounts $4 907 (down 24% from $6 457)
  • Emergency Funds $2 040 (up slightly from $2 038)
  • RRSP Accounts $42 966 (up 4.8% from $40 993)
  • Non-Registered Investments $18 351 (up 0.7% from $18 231)
  • Home $96 330 (up 9.4% from $88 050)

Liabilities ($64 227, down 1.1% from $64 960)

  • Credit Cards $4 384(down 10% from $4 902)
  • Mortgage $59 613 (down 0.4% from $59 859)
  • Line of Credit $0 (stable)


  • Debt / assets: 0.388 (down from 0.417)
  • House value / total assets: 0.582 (up from 0.565)

The repairs for the chimney were paid this month, which explain why available cash dropped. This brings me back to my usual range of about $4-5K in my bank accounts.

Although the markets were strong for the first two weeks of the month, the last two reflected more uncertainty. People are being told that the recession is over, so they expect things to be back to where they were before the downturn. Except that coming out of the recession is the quick part of it. The recovery, in terms of jobs and profitability, will take years. This is beginning to sink in.

Even though the markets were basically flat in October, my RRSP accounts went up. That's because one of my investments (Harvest Energy) is getting bought out at a premium to market value. As a result, the value of my investment went up.

Wednesday, October 14, 2009

New Credit Card

Last spring, the sponsor of my main credit card announced that it was increasing the annual fees from $20 to $30. This is an optional fee to raise the cash-back incentive from 0.5% to 1%, which made plenty of sense when I signed up for it years ago. I had already been thinking for a while about switching to a less costly credit card (there are now plenty of no-fee cash-back cards out there), but at the time it was only $20 a year, so laziness had won out. The increase pushed me over, but as other things happened, I did not follow through on this and the anniversary of my account passed, and I was billed $30 for the annual fees.

So this summer I called the company and asked them to reduce the fees. The agent told me they couldn't do that. I told her that I thought the fees were getting too high and I was thinking about moving my money elsewhere, so what were she suggesting to keep me with them? She proposed removing the option so to avoid paying the fees. This didn't make sense to me,since that would mean reducing the amount of cash I would receive back. I told her so, and asked again whether she could offer me something to keep me with them. To no avail. The conversation ended with me letting her know that the company was leaving me no other choice than to move my business to a different company.

Things went on unchanged for another couple of months. There were a few alternatives, but none were good enough to immediately grab my attention -- I had some time before I cut my current card lose. I had previously read about MBNA's Smart Cash credit card, which seemed the most interesting to me (3% back on grocery and gas, 1% on everything else, no annual fees). Only thing that bugged me was that this card was only being offered to existing clients, which I was not. I could have signed for another card with MBNA and then asked to be switched over, but that seemed a lot of hassle. So time passed.

About two weeks ago, I read a post from Million Dollar Journey about the new Scotia Momentum Cash Back Visa. This led me to read a thread on Red Flag Deals about the MBNA Smart Cash. And, wonder of wonders, apparently they had just announced that the card was now offered to new clients as well! I read everything that I could about the card, to make sure I wouldn't get dinged with unexpected fees. (There are no annual fees, but be aware that there are many other fees hidden away for non-purchase uses of the card -- balance transfers, fund advances, using the cheques, late payments, etc.) However, none of these were relevant to how I use my credit cards, so everything looked like a great deal to me. So I signed up for the card.

I received the card yesterday (it took only 12 days since signing up online). Activated it right away. (Told the agent that no, I don't want the balance protection. No, no need for a second card. Just activating, thank you.) So I now have my new card.

As a sign-up bonus, I will be getting 5% cash back on grocery and gas for the first 6 months (instead of the normal 3%). The maximum eligible amount in grocery and gas is $600 per month.

I usually spent about $1200 to $1500 per month using my main credit card. Of this amount, about $500 to $700 is for grocery and gas. With my previous card, I was getting just a bit less than $200 a year, and I had to pay the annual fees. With the new card, I should get about $216 back during the first 6 months; after that, I should get about $288 a year. What this cost me: 2 hours to document myself about the card, 15 minutes to sign up, 10 minutes to activate it.

That's what I call a deal.

Tuesday, October 6, 2009

Municipal Assessment Roll

We just received the new municipal assessment roll for our house, and the value is going up from $126K to $153K. That's a 21% increase and a bit less than I expected (apparently the average for Quebec City is about 30%).

An increase in the value of our house is both good and bad. In the short term, it is bad since it means we will be paying more taxes every year (it remains to be seen how much -- we will only know in January).

In the long term, it is good, since it means that our house is worth more. The day we sell (even though that's far in the future), we will recover the money we spent to buy it and some more. The important thing here is that the value of our house should at least keep up with inflation, so that we don't end up with less purchasing power.

But overall, this revision of the assessment is neither good nor bad news.

It will, however, have a fairly big impact on my net worth, since the value of my part of the house has just gone up by a few thousand dollars. Only half of the increase will be reflected in my net worth, since I use the average between the municipal assessment and my insurer's rebuild cost to determine the value of the house.

Still, that means an $8K increase to my net worth. Based on my latest estimates, this should be enough to push my net worth over the $100K milestone. Nice!

Friday, October 2, 2009

DRiP: Pengrowth Cuts Distributions

Pengrowth has announced a 30% reduction of their distribution starting on November 16, as a result of changes to its "value creation strategy".

I own a few trust units of the company in my DRiP portfolio, where it holds a very smal place. This is the third time in less than a year that this income trust has reduced its monthly distributions:
  • From $0.225 to $0.17 starting January 15, 2009;
  • From $0.17 to $0.10 starting March 16, 2009; and now
  • From $0.10 to $0.07 starting November 16, 2009.

So in a year, unitholders have seen their distributions decrease by almost 70%.

On the one hand, I can't say that I'm happy about this, even though this will have only a small impact on my portfolio. It is still a reduction of $12 to my dividends for next year.

On the other hand, I can't blame the board for finally looking to the long-term well-being of the company and its unitholders. I had not been putting much money into that company, and this confirms that it will remain only a small part of my portfolio.

Net Worth Update

As of October 1st, my net worth was $91 013 (up 4.7% from $86 909). If I exclude house-related assets and liabilities, my net worth was $62 822 (up 6.5% from $58 963). Another month with significant updraft in the equity markets. Spending was fairly stable, although some items that are usually paid cash were put on the credit card. The end result is a wash, since I end up with more cash in my account but stable liabilities (which usually go down month after month). All told, this was a great month for my finances.

Assets ($155 973, up 2.7% from $151 903)
  • Bank Accounts $6 457 (up 33% from $4 849)
  • Emergency Funds $2 038 (down 24% from $2 697)
  • RRSP Accounts $40 993 (up 6.7% from $38 418)
  • Non-Registered Investments $18 231 (up 6.7% from $17 094)
  • Home $88 050 (stable)

Liabilities ($64 960, down slightly from $64 994)

  • Credit Cards $4 902 (up 4.2% from $4 706)
  • Mortgage $59 859 (down 0.4% from $60 105)
  • Line of Credit $0 (stable)


  • Debt / assets: 0.417 (down from 0.428)
  • House value / total assets: 0.565 (down from 0.580)

I moved some money from my emergency funds to my bank account, in order to pay for the repairs to the chimney (estimated to $1 350). There were some delays on the work (due to rain), so the money will be paid out only in October.

Both my registered and unregistered investments went up significantly again this month, while the credit cards went up a little bit. (Remember that the amount on my credit cards is either 0% financings or the current balance that gets paid every month. So it is all non-interest bearing debt.)

I also sent in the papers to open a TD Waterhouse brokerage account (for the equity side of my TFSA). I also did the same for a new credit card to replace my current one. More on these later.

Monday, September 28, 2009

News: MCD Dividend Increase

To the surprise of many (including mine, even though I purchased some shares three weeks ago), McDonald's announced last week that the company was increasing its quarterly dividend from $0.50 to $0.55, a 10% increase.

Although the market is taking this increase well (the stock moved up by about 4% since), it is apparent that some people are questioning this increase. The company has fared well during the ongoing recession, but has really not improved earnings. So is increasing the dividend a wise move? Only time will tell.

Personally, I believe that over the long term things will work out. The move may have been a bit premature, and designed as a way to reassure investors that the company is confident about the future. After all, the stock hasn't moved much during the market comeback during the last 6 months, so maybe the company felt it needed to send a message to investors: "We still make money for you, one way or another." Maybe this move will simply mean that next year's dividend increase will be smaller. It all evens out in the long term.

In the meantime, I will simply keep collecting those dividends in my RRSP.

Thursday, September 24, 2009

RRSP Addition: McDonald's

About two weeks ago, I added another company to my RRSP account - McDonald's Corp. (NYSE: MCD). I don't think I need to explain what the company does -- this giant of the fast-food industry needs no presentation.

Why did I select this company? First, I like their new gourmet burgers (both the Angus and the Chicken), as does Princess. Much better quality and taste, and somewhat heftier portions (no need to buy a second burger with that one). Theirs salads have also improved significantly.

Second, the company's stock did not follow the rest of the market during the last 6 months' steep climb. I believe it still presents interesting balue and potential at less than 15 times earnings. The dividend yield is also good at 3.5%, The company has a solid history of raising dividend, with a 5-year dividend growth rate of 32%.

I purchased 50 shares at about $55.50 per share.

Friday, September 18, 2009

Net Worth Update

I realized today that I had forgotten to post my net worh update for September. It's been a bit more difficult to post since at my new workplace I cannot easily access my blog page.

As of September 1st, my net worth was $86 909 (up 3.9% from $83 682). If I exclude house-related assets and liabilities, my net worth was $58 963 (up 4.9% from $56 225).The markets kept going up in August, which explains most of the increase. We kept spendings quite reasonable during our vacation, so it had no impact on our finances.

Assets ($151 903, up 1.7% from $149 412)
  • Bank Accounts $4 849 (down 4.7% from $5 088)
  • Emergency Funds $2 697 (up 3.3% from $2 612)
  • RRSP Accounts $38 418 (up 4% from $36 953)
  • Non-Registered Investments $17 094 (up 7.2% from $15 946)
  • Home $88 050 (stable)

Liabilities ($64 994, down 1.1% from $65 730)

  • Credit Cards $4 706 (down 5.2% from $4 964)
  • Mortgage $60 105 (down 0.8% from $60 593)
  • Line of Credit $0 (stable)


  • Debt / assets: 0.428 (down from 0.434)
  • House value / total assets: 0.580 (down from 0.589)

Both my registered and unregistered investments went up significantly this months, while the credit cards went down a little bit. (Remember that the amount on my credit cards is either 0% financings or thrrent balance that gets paid every month. So it is all non-interest bearing debt.)

I got the estimate for the repairs of the chimney ($1 350), which will be performed at the end of the month.

Saturday, September 12, 2009

RRSP Addition: ENSCO

A couple of weeks ago (during my vacations), I made another purchase in my RRSP account - ENSCO (NYSE: ESV).

ENSCO International Incorporated is an international offshore contract drilling company. As of February 17, 2009, its offshore rig fleet included 43 jackup rigs, two ultra-deepwater semisubmersible rigs and one barge rig. The company also has six ultra-deepwater semisubmersible rigs under construction.

The financial situation of the company is quite good. Long-term debt stands at $274 M, for a company with a book value of $4 677 M, operating cash flow of $1 140 M and net income of $1 151 in 2008.

Of course, the drilling industry is being severely affected by the recession, and ENSCO is no exception. Compared to earnings per share of $8.17 in 2008, the estimates for 2009 and 2010 are about $5.40 and $4.10, respectively.

The company's shares were trading at about $39 when I made my purchase. Using Benjamin Graham's formula to determine its fair value gave me a fair value between $63 (based on 2009 estimated earnings and current book value of $32.95) and $55 (using 2010 EPS estimates). That's a margin of safety of 30 to 40%. The company has been buying back shares in the last couple of years, reducing the number of shares from 152 millins in 2006 to 141 millions in 2008.

Considering that offshore drilling is not about to go away, I am fairly confident that over the mid- to long-term, the company will do well. Its small debt load and hefty cash flow will allow it to easily survive the recession. The company has been around for a while, and has valuable expertise in offshore drilling, including ultra-deepwater drilling. It seems unevitable that the price of oil will climb back above $100 per barrell once the recession is over. This means a resumption of offshore drilling.

The company also pays out a minuscule dividend of $0.025 per quarter, for an annual yield of %. The dividend is so small that it was completely irrelevant to my decision to buy this company.

I consider the company a value investment for the medium term (about 5 years). As such, I only established a small position in the company (50 shares).

Wednesday, August 26, 2009

Back from Vacation

I came back to work on Monday, after 2 weeks of vacation. Had a really good time this year, with a good mix of days away from home and days spent at home tinkering outside (taking advantage of the sun and fresh air). In the end, our vacation cost us very little (less than $500 for both Princess and I), with dining out coming in first while gas came out second.

I did keep an eye on my finances during my time off, but for the most part I avoided posting anything on my blog or on other discussion lists. I did make a purchase in my RRSP right before I started my vacation -- I'll post about it soon.

On the work front, I started on a new project also on Monday, so I expect the next couple of days to be filled with a lot of reading, listening, and organizing new information to get a good picture of what I'll have to work on. Looks like a very interesting but challenging project.

Tuesday, August 4, 2009

Net Worth Update

As of August 1st, my net worth was $83 682 (up 4.3% from $80 228). If I exclude house-related assets and liabilities, my net worth is $56 225 (up 6% from $53 014).

This was a month with 3 pay weeks, so I expected a nice rise this month. But I also spent more money than usual, as we replaced our mattress with a new, high-quality one. We got it at half the price, but it still cost us about $1 400. This went on a credit card no-interest 15-month financing, which we will gradually pay down over the next year.

The stock market also kept rising this month, so this was positive to my portfolios. How long will that optimism last? And how deep will the correction be?

Assets ($149 412, up 3% from $145 067)
  • Bank Accounts $5 088 (up 28% from $3 981)
  • Emergency Funds $2 612 (up 0.3% from $2 604)
  • RRSP Accounts 36 953 (up 3.4% from $35 742)
  • Non-Registered Investments $15 946 (up 9.8% from $14 527)
  • Home $88 050 (stable)

Liabilities ($65 730, up 1.4% from $64 839)

  • Credit Cards $4 964 (up 29% from $3 845)
  • Mortgage $60 593 (down 0.4% from $60 836)
  • Line of Credit $0 (stable)


  • Debt / assets: 0.434 (down from 0.445)
  • House value / total assets: 0.589 (down from 0.607)

My credit card debt went up this month because of the new mattress, as well as ongoing expenses for the landscaping I am doing on the yard. I will probably have another big expense in August or September, as we have to make repairs on the outdoor part of the chimney. I should have an estimate of the costs soon.

On the work front, I will move to another project within the company for a couple of months -- things look like they will be on hold for a while on my previous project, and I have skills that made me perfect for the other project. This will be good for me, since the new project will allow me to learn quite a bit while at the same time allowing me to make full use of skills (UML certifications) I acquired two years ago.

Wednesday, July 15, 2009

RRSP Addition - Canam Group

Last week, I purchased a new company in my RRSP -- Canam Group Inc. (Toronto: CAM), headquartered in St. Georges in the Beauce region of Quebec. So I am investing in my back yard! :o)

Canam Group Inc. is an industrial company specialized in the design and fabrication of construction products and solutions (i.e. concrete, steel and wood structures for large projects). The company employs close to 2,600 people in Canada, the United States, Romania and India, and has partnerships with companies in Saudi Arabia, the United Arab Emirates and China.

The financial situation of the company is strong, with only $70M in debt and net earning of $48M ($0.99 per share, diluted). A dividend of $0.04 per share is paid quarterly, for a dividend yield of 2.5% (a decent yield) on a dividend payout ratio of 20% (which leaves plenty of room to grow the company).

The stock currently trades in a $6-7 rande, while the book value is above $9. That's a discount to book value of 25 to 35%. Using the Graham formula to calculate the fair value of the stock, I get close to $13, for a margin of safety of 50%. A classical value pick.

Why is the company trading so low? I believe it is the uncertainty of the economy. Although economic stimulus packages -- with an emphasis on infrastructures -- have been announced in many countries (including both Canada and the U.S.), the markets seem unsure whether this will be enough to maintain the earnings of the company. I believe that, even if those fears prove to be true in the short term, the company will flourish over the long term (5 years or more).

I can afford to wait.

Wednesday, July 8, 2009

DRiP Addition - Hasbro

I am in the process of adding a new company to my DRiP portfolio: the toy manufacturer Hasbro, Inc. The company sells many different game and toy, with well-known brands such as Monopoly, Transformers, Magic: The Gathering, Tonka and NERF. It also sells toys related to the Star Wars franchise and the Marvel-related toys (think Spider Man, Iron Man, Hulk and X-Men).

Toys are not going to go away anytime soon. New toys are always sold, since few children want last year's hot items. The recession may pressure the earnings somewhat, but the company should still be able to make a profit and continue paying its dividend. Although I don't see the company as a high-growth, this should provide a moderate but steady growth of about 5-10% per year (when including the dividend).

Hasbro currently pays out a dividend of $0.20 per quarter, for a yield of 3.4%.

The company's DRiP/SPP has no fees, and allows monthly purchase of little as $25.

Thursday, July 2, 2009

Net Worth Update

As of July 1st, my net worth was $80 228 (up 2.4% from $78 372). If I exclude house-related assets and liabilities, my net worth is $53 014 (up 3.2% from $51 352).

The market continued its rise this month, although things became more volatile with both ups and downs. As I mentioned last month, I am not convinced that this spring's rise is solid and I expect things to weaken over the summer, as the severity of job losses impact the economy. The price of oil rose has began stalling around $70, and the Canadian dollar has move down a little from its recent peak of the beginning of June.

I have money ready to be deployed in my self-directed RRSP account, and I continue to slowly add money to my DRiPs.

Assets ($145 067, up 1.7 % from $142 605)
  • Bank Accounts $3 981 (up 23% from $3 227)
  • Emergency Funds $2 604 (up 0.3% from $2 595)
  • RRSP Accounts $35 742 (up 2% from $35 051)
  • Non-Registered Investments $14 527 (up 7% from $13 550)
  • Home $88 050 (stable)

Liabilities ($64 839, up 0.1% from $64 233)

  • Credit Cards $3 845 (up 26% from $3 051)
  • Mortgage $60 836 (down 0.35% from $61 050)
  • Line of Credit $0 (stable)


  • Debt / assets: 0.445 (down from 0.447)
  • House value / total assets: 0.607 (down from 0.617)

My credit card debt went up this month because of planned expenses: new tires for the car (about $550) and materials for the work I have begun on the back yard (about $500).

The one bad news this month was that at work the project I was working on has temporarily been put on hold by our client. We are confident that it will restart within a few months -- it is a delay, not a cancellation -- but this will cause us some headaches when things restart. In the meantime, I've been assigned to another smaller project. So there is a little bit of uncertainty on this side.

Just to be of the safe side, Princess and I decided to postpone the addiitonal windows replacements. So instead of replacing three more windows over the summer (for about $3 000 -- our windows are large), we will wait until December to order this year's set along with next year's. Both sets would be installed next summer. That will allow us to take advantage of the Canada renovation tax credit announced in January, while deferring most of the expense to next year. We will review this plan in a couple of months to see if it is still viable.

Tuesday, June 23, 2009

RRSP Manager Change

A couple of months ago, my employer announced that it was switching manager for our group RRSP. Our former plan manager (Fidelity) is pulling out of Canada for the management of group plans. A few weeks ago, we got more details regarding the new manager (Sun Life) and the plan features, including the products that will be available.

Here's a summary of the changes, and how they impact me.
  1. Employer's Contribution: Currently, my employer provides a 50% match to the contribution we make under the group plan, up to 4% if the employee contributes 8% of their salary.
    This won't change, except for a little detail. Previously, the employee's contribution would be in increments of 1%, and the employer's contribution would match in increments of 0.5%. Now, the employer's contribution will be in increments of 1% (rounded down).
    This doesn't impact me, since I contribute 8% to fully take advantage of the employer's contribution.
  2. Products Available: With Fidelity, we had a limited list of mutual funds available, none of which were index funds. The funds' total expense ratios were reduced because of the group plan, but were still between 0.75% (money market fund) to 1.25% (foreign stock funds).
    With Sunlife, the range of funds offered is a little bit broader and includes some index funds from Barclays Global Investors (BGI). The total expense ratios for the index funds are from 0.36% (bond index fund) to 0.56% (EAFE index fund).
    Good news for me, since it will allow me to move towards an index strategy in this part of my RRSP.
  3. Fees: With Fidelity, there was no additional fees -- everything was included in the expense ratios of the funds. Transferring money out of the plan to another (possible only for the employee's contribution) was also free. So I was doing this once or twice a year, transferring money from my group plan towards my self-directed RRSP at my discount broker.
    With Sun Life, there will be heavy fees and penalties -- 100$ for each transfer and the employer's contributions will be suspended for 1 year.
    This has a big impact on me, since I will no longer be able to transfer money from my group RRSP towards my self-directed RRSP.
    To reduce the impact of the additional fees, I decided to transfer most of the money from my contributions towards my self-directed RRSP. Since the transfer was processed before the switch to Sun Life, there will be no fee. And transfers before the switch does not trigger the suspension of the employer's contributions.

So the news were mixed for me. On one hand, the new fees and penalties on transfers threw a wrench in my usual way of handling my different accounts. On the other hand, the availability of index funds made it easier and less expensive to implement an index strategy.

Wednesday, June 10, 2009

Closed my CSI Account

I've finally closed my Canadian ShareOwner Investments brokerage account. I opened this account in 2006 when I began my adventures with dividend reinvestment plans (DRiPs), but stopped using it when I discovered a more cost-efficient way to purchase starter shares for my DRiP portfolio.

I had mentioned doing thisin one of my 2009 financial goals (Reorganize my Investment Accounts). This will be one less account to keep track of.

It is still my intent to open anothe brokerage account, to take advantage of tax-free growth in a TFSA. At this time, TD Waterhouse has to most appeal to me.

Tuesday, June 9, 2009

Share Purchase: PG

I just purchased some shares of Procter & Gamble (NYSE: PG) in my RRSP, at $52.50 per share. The company currently pays out dividends of $1.76 per year, for a yield of 3.35% on my purchase price.

Procter & Gamble has products in every house -- it certainly is quite present in ours! The company owns some of the best-known brands in North America, such as Tide, Gillette, Olay, Crest, Oral-B, Duracell, Always and Pampers.

I have been keeping an eye on the company for some time now, and it seemed like a good time to initiate a position. The stock currently trades at a P/E ratio of 14 (it is usually around 20) and the company has recently announced a 10% increase to the quarterly dividend (from $0.40 to $0.44). Over the last 10 years, the dividend growth has averaged 11% per year, so I think we can expect more increases in the future.

This is a company that I plan on keeping for a very long time, adding more money as time goes by.

Monday, June 1, 2009

Net Worth Update

As of June 1st, my net worth was $78 372 (up 3% from $76 057). If I exclude house-related assets and liabilities, my net worth is $51 352 (up 4.7% from $49 057).

The market recovery continues, and that accounts for most of the rise in my net worth. I am far from convinced that the current rise will prove to be solid -- I expect the summer to bring another fall (no pun intended). In fact, I hope it does, for times of pessimism are great for investors looking for quality companies selling at a discount.

The rise of the Canadian dollar has also been fast and pronounced. It rose 10% in the month of May alone. I've started buying some U.S. dollars in April to feed my U.S. DRiPs, and I will continue now that the terms are more interesting. Some economists are expecting parity again by the end of the year. My guess is that as long as the current wave of optimism continues, the U.S. dollar will continue to fall. However, it should have a revival if (or rather when) another wave of pessisism hits the markets. We shall see.

Assets ($142 605, up 1.7% from $140 259)
  • Bank Accounts $3 227 (down 20% from $4 038)
  • Emergency Funds $2 595 (down 14% from $3 007)
  • RRSP Accounts $35 051 (up 7% from $32 751)
  • Non-Registered Investments $13 550 (up 10% from $12 290)
  • Home $88 050 (stable)

Liabilities ($64 233, up slightly from $64 202)

  • Credit Cards $3 051 (up 0.6% from $3 034)
  • Mortgage $61 050 (down 0.2% from $61 172 -- revised number)
  • Line of Credit $0 (stable)


  • Debt / assets: 0.45
  • House value / total assets: 0.62

I had to revise the amount outstanding on my mortgage, since I had made a small mistake last month. My liquidities went lower this month because I paid some bills outrights (such as the second installment of this year's municipal taxes). That was planned for, so this caused no problem at all.

Things are proceeding well. There is some slow-down at the company I am working for, due to delays in the start of some projects. But I should not be impacted since I work on a billable project for a client.

Thursday, May 21, 2009

Sun Life and Manulife Cut DRiP Fees

Last week, Sun Life Financial and Manulife Financial both announced that they were cutting fees on the dividend reinvestment and share purchase plan (DRiP/SPP). That is good news for Canadian DRiP investors, as these two companies used to have the highest fee structure in Canada -- so high that it was actually cheaper to use discount brokers to purchase shares.

The fees on dividend reinvestment and on additional purchases were completely eliminated, bringing these plans to par with Canadian banks that offer DRiP/SPPs.

Both companies also announced discounts on reinvested dividends (2% for SUnlife, 3% for Manulife).

These moves will the companies preserve (reinvestment discount) and raise additional capital at a relatively low cost (no fees on purchases). By now, this is a familiar song for investors in these days of the recession.

I have already made arrangements to add both companies to my DRiP portfolio. Only time will tell if these plans remain intact once the recession is over.

Thursday, May 7, 2009

Reduced Harvest Energy... Too Soon

On Monday, I sold some 400 units of Harvest Energy Trust (Toronto: HTE-UN) at $6.70 within my RRSP account.

These were the units I purchased in early March, when I believed the market was pricing in a bigger cut to the distributions that I expected. Turned out I was wrong and the market was right, so the price kept going lower after I purchased. I decided to keep those units for a little while anyway, figuring they would trade within a range as long as the price of oil remained at $35-$45.

The price of oil rose quite a bit recently, and the price of Harvest followed. Since I was way overweight in that company, I decided to sell those additional units purchased in March, to take advantage of that rise (which I believe is temporary).

Turns out I pulled the trigger too early, because the price has kept climbing for the last two days, and will probably rise again today. So with hindsight it looks like I purchased too soon, and sold too soon.

I'm still turning a small profit on those units, but it would have been much larger had I waited three more days. However, since I still have a decent position in the company it doesn't hurt too much. I haven't lost any money, after all. And that was the point of not going for an all-out sale -- being able to participate if the stock kept going higher.

This freed up some cash that I'll be able to deploy elsewhere when the current bout of optimism falters and stumble. The market has just been distracted by the swine flu from the state of the economy.

Wednesday, May 6, 2009

PepsiCo Increases Dividends

PepsiCo, the maker of soft drinks, fruit juice, snacks and other foods, has announced an increase of its quarterly dividend from $0.425 to $0.45, a 5.9% raise.

I own some shares of Pepsi in my RRSP account, so that's good news for me. At the current prices, it might even be interesting to buy some more shares. This increase will bring the dividend ratio to 3.6%, which is on the high side comparing it to the 1.9% average of the last 5 years.

Friday, May 1, 2009

Net Worth Update

As of May 1st, my net worth was $76 057 (up 10% from $69 093). If I exclude house-related assets and liabilities, my net worth is $49 057 (up 11% from $44 188).

That's an amazing rebound of my net worth, bringing me back to par with my highest net worth reached last September (before the financial crisis that led to the current recession). About $2K of this was due to an increase in my house's value, but another $3.7K was due to the markets rebounding. The rest was debt reduction financed from my salary.

Assets ($140 259, up 4.4% from $134 358)
  • Bank Accounts $4 038 (up 6.6% from $3 789)
  • Emergency Funds $3 007 (up 0.6% from $2 990)
  • RRSP Accounts $32 751 (up 9% from $30 018)
  • Non-Registered Investments $12 290 (up 8.2% from $11 355)
  • Home $88 050 (up 2.3% from $86 100)

Liabilities ($64 202, down 1.6% from $65 265)

  • Credit Cards $3 034 (up 2% from $2 964)
  • Mortgage $61 050 (down 0.2% from $54 867+$6 328)
  • Line of Credit $0 (down 100% from $1 000)

My line of credit is now completely paid off, and the Heat Pump loan was combined with the mortgage (thus the two amounts added together). Spending remained reasonable, as showned by the fairly stable amount on my credit cards.

In May I will have some fairly large payments to be made for the house. The second half of this year's municipal taxes (about $1K), as well as another payment for the replaced windows (another $1K). We will also begin improving our back yard, so I expect more expenses there. So I expect lower liquidities at the end of the month, and possibly a lower net worth as well.

Thursday, April 23, 2009

Johnson & Johnson Increases Dividends by 6.5%

Johnson & Johnson (JNJ) has just announced at their annual meeting that the company was increasing the quarterly dividend from $0.46 to $0.49 -- a 6.5% increase.

Considering that 1st-quarter earnings were stable (at $1.26), this is a signal from the company as to its confidence in the future. This brings the payout ratio to 42%, which is quite reasonable. The dividend yield now stands at about 3.8% (much higher than the 5-year average of 2.3%).

I own some shares of JNJ in my DRiP portfolio. :o)

Wednesday, April 15, 2009

Renewing the Mortgage

Princess and I just renewed our mortgage. I have to say that it is a great time to do this, with interest rates being as low as they are tight now.

Considering the current economic situation, and probable inflation coming in the next couple of years (as a result of so much cash being infused into the economy), we decided to go with a 5-year fixed rate mortgage. We got a fairly good rate at 4.5% (down from 5.7% we had been paying since last year).

I am well aware that this is going against oft-mentioned statistics saying that a variable-rate mortgage usually (I think the statustuc is 90% of the times) comes ahead in the long run. And the variable rate of 3.25% was also appealing. However, I think we are in that 10% period where a fixed-rate mortgage will come ahead. I wouldn't be surprised to see interest rates climbing significantly in 2010. The big question will be by how much.

In addition to the renewal of the mortgage, we rolled in the heat exchange loan into our mortgage. That was a 10-year loan (taken 2.5 years ago) at a fixed rate of 8.5%. It was an ok rate at the time, but rolling it into our mortgage will decrease that rate by 4%, which is a lot.

All told, even with adding the heat exchange loan to our mortgage, our mortgage payments remain the same as they were before we renewed -- that's a decrease of about $150 per month. :o)

So what we are also doing is increasing our payments by that $150 per month. So our payments are remaining the same, but repayment of the mortgage will be faster.

As you can guess, we are quite happy with that. We could have gotten a better rate elsewhere (ING Direct was posting a 3.95% 5-year rate), but being able to roll in the loan, and saving the trouble of switching bank was good. And our credit union usually kick back parts of the interest paid by members, so our actual rate is lower than 4.5% (probably around 4.2%).

We also have a good relationship with our credit union. We are satisfied with what we got. :o)

Thursday, April 9, 2009

Parking Some RRSP Money

This week, I parked some unused cash in my self-directed RRSP account (at a discount broker) into a money market mutual fund. At a bit more than $1000, this was not enough to actually buy stock with it, so I figured I might as well park it somewhere it would earn a little money, considering that interest rates are so low right now that my brokerage wasn't paying me anything on it.

This was the first time I was purchasing a mutual fund using my brokerage account, so I was a little bit nervous. In fact, I initially made a couple of mistakes (thankfully without impact) when ordering the mutual fund. Everything was sorted out in the end, so that was a positive experience.

Usually, I'm not a big fan of mutual funds. I don't like to pay annual fees, particularly since how much you have to pay in fees is hidden into the prospectus. But in this case, I'm just parking money for a couple of months, so I figured it was worth it. My selection process was fairly simple -- I was looking for:
  1. A short-term parking place -- thus a money market of Treasury fund;
  2. A fund that had no purchase nor selling fee;
  3. A fund with a low minimum purchase treshold (only $1000 available);
  4. A fund that did not impose a fee for short-term trading.

Based on the funds offered by my brokerage, I settled on the RBC Canadian Money Market fund (Series F). The annual fees are fairly low at 0.55%, no penalty for holding the fund for only a short time, and no trading fees. Minimum investment amount is $500, with additional increments of $25. It pays out distributions monthly, and those will be paid in cash into my account. The yield was about 3% last year, but I expect it will be around 2% this year.

I'll keep the money there until I need it for a purchase.

Wednesday, April 1, 2009

Net Worth Update

As of April 1st, my net worth was $69 093 (up 4.9% from $65 874). If I exclude house-related assets and liabilities, my net worth is $44 188 (up 7.4% from $41 149).

It feels good to have a positive month after all those negative months. Much of the increase was due to a comeback in the markets. Things have been much better on the debt side, as I paid back some of my line of credit and controlled spending more tightly on the credit cards. Let's see the details!

Assets ($134 358, up 0.3% from $133 989)
  • Bank Accounts $3 789 (down 14% from $4 425)
  • Emergency Funds $2990 (down 12% from $3 394)
  • RRSP Accounts $30 018 (up 3.5% from $28 993)
  • Non-Registered Investments $11 355 (up 5.8% from $10 728)
  • Home $86 100 (stable)

Liabilities ($ 65 265, down 4.2% from $68 115)

  • Credit Cards $2 964 (down 36% from $4 642)
  • Mortgage $54 867 (down 0.2% from $54 989)
  • Heat Pump Loan $6 328 (down 0.9% from $6 386)
  • Line of Credit $1 000 (down 50% from $2 000)

So my bank accounts have come down from last month, partly due to planned expenses and partly from paying down half of my line of credit. The other big item was credit card debt, which went down substancially this month as a reined in spending. It shows too. so I'm happy with that.

My plan to concentrate on debt reduction for a couple of months is going well. I will keep doing that this month, but I expect May to be harder on liquidities, because of planned expenses for the house (second municipal tax payment and the last payment on the windows we replaced last fall).

Friday, March 6, 2009

Net Worth Update

As of March 1st, my net worth was $65 874 (down 3.8% from $68 441). If I exclude house-related assets and liabilities, my net worth is $41 149 (down 6.25% from $43 890).

It certainly felt that way. My investments keep melting as if was spring already, and with the large yearly expenses that I mentioned last month... Ouch! At the end of the month I added $2k to my RRSP account, and it simply looks as if it simply disappeared when you compare the current value with last month's.

So let's look at the detailed carnage.

Assets ($133 989, down 0.5% from $134 669)

  • Bank Accounts $4 425 (up 11% from $3 990)
  • Emergency Funds $3 394 (up 0.3% from $3 383)
  • RRSP Accounts $28 993 (down 3.5% from $30 033)
  • Non-Registered Investments $10 728 (down 3% from $11 058)
  • Home $86 100 (stable)

Liabilities ($68 115, up 2.8% from $66 228)

  • Credit Cards $4 642 (up 0.9% from $4 601)
  • Mortgage $54 989 (down 0.2% from $55 110)
  • Heat Pump Loan $6 386 (down 0.7% from $6 439)
  • Line of Credit $2000 (up 100% from $0)

Although the cash in the bank accounts was higher, this was because of the planned expenses. A bit of that money is already gone, with more coming out next week. Liabilities have crept up this month, because the $2k I added to my RRSP account came from my line of credit. This is a very short-term move, which gave me the flexibility to contribute right before the limit for the fiscal year 2008. It also transformed a tax bill into a tax return. I plan on paying back this part of the line of credit with the next 3-4 months. Credit card debt was fairly stable but remained high. This was caused by some car repairs that were financed on the card.

For the next couple of months I will concentrate more on debt reduction than on investments. It now looks like the recession will be long and painful, so I will probably feel less stressed if my debt load is lower. And since we have some more renovations planned for this summer, less debt seems like a good idea.

Tuesday, March 3, 2009

Harvest Energy Cust Distributions 87%

Harvest Energy, that I own in my RRSP, announced their 2008 results, as well as a 87% reduction of the distributions to $0.05 per month.

So I was too optimistic yesterday when I purchased more units of the trust. I was estimating that the cut would be to $0.10 per month. Now, based on my purchase price of $5.83 yesterday, those units are yielding 10%. The units have falling quite a bit this morning, hitting a low of $4.50 (which yields 13%).

I figure that as long as the price of oil remains in the $35-45 a barrel, the trust units will trade in a $4-$5 range. The question is, how long will the barrel of oil stay that low? I still believe that over the long term, this is a good investment. It still hurts, though!

Well, I already knew that I'm not good at timing the market...

Monday, March 2, 2009

Added to Harvest Energy

Today, I added to my position in Harvest Energy Trust (Toronto: HTE.UN) within my RRSP by purchasing 400 units at $5.83 each. They are reporting tomorrow, and like everyone I expect the distributions to be cut. The question is: By how much?

Looking at how much of a beating the stock has had lately, to me it looks like the market is pricing it as if the trust was about to completely eliminate the distributions. I think that's highly unlikely. I'm expecting a cut from $0.30 to $0.10 per month -- which would leave the yield at 20% based on the current price. At that yield, I don't mind keeping the units for a long time. But if the price pops up, as I expect it will, then I may sell that additional stake for a quick profit. After all, there's a lot of sales going on.

One thing to remember about Harvest Energy is that, while a large part of their income is from pumping oil and gas out of the ground, it also owns a refinery. Have you noticed that the price of gasoline hasn't fallen as much as oil itself? Refiners are still making good margins, maybe even better margins than last year, because the price they pay for oil is down more than the price they receive for refined products. So for Harvest the refining part of the business is acting as a counterweight against the free-falling oil price.

Saturday, February 28, 2009

GE Cuts Dividends by 68%

Yesterday, General Electric finally made the move that many were predicting -- a dividend cut. The company has cut its quarterly dividend from $0.31 to $0.10, starting with the July payment (the April payment will still be $0.31).

I own shares of General Electric in my RRSP. This move will reduce the amount of dividends that I receive in 2009 by $90, and by double that amount for the following years.

Hopefully, within a few years things will stabilize and GE will be able to increase its dividend again.

I don't plan on selling my shares. I still believe that GE will thrive in the future. In fact, I am considering buying some more at some point in the future. At the current price of $8.50 a share, an annual dividend of $0.40 still represents a yield of almost 5%.

Friday, February 20, 2009

Pengrowth Cuts Distributions

One of the companies in my DRiP portfolio, Pengrowth Energy Trust, has just announced a reduction of their monthly distributions from $0.17 to $0.10 -- a decrease of 41%. The reasons stated are "financial prudence in uncertain times", being able to "fund substancially all of its capital program" and "flexibility to pursue new acquisition and consolidation opportunities".

Pengrowth had already announced a first cut (from $0.225 to $0.17) in December, so overall Pengrowth has cut distributions by 56%. Considering that in less than a year the price of oil has fallen by more than 50% (not even considering its peak last July), this doesn't come as a surprise. I would be much more worried if Pengrowth had kept paying such a high distribution, and obviously the market was already pricing in a cut, as the yield was around 22% recently. Oil and gas trusts must follow the price of the resource they extract, it's as simple as that.

Although this will somewhat impact my dividend income for 2009 (by a bit over $9), this may prove to be a good time to add to my holdings of the trust. This morning the price of the units has fallen to around $8.70 -- which translates to a distribution yield of 13%. I wouldn't be surprised to see the price fall further. Making small periodic purchases of units through the Optional Trust Unit Purchase Plan will allow me to take advantage of the lows, while diminishing timing risk. Pengrowth offers a 5% discount to units purchased through the plan.

Wednesday, February 11, 2009

3M Increases Dividend by 2%

Another one of the companies I own in my DRiP portfolio has announced a dividend increase. 3M Company, the maker of the Scotch brand and of the ubiquitous Post-It stickers, as well as a wide variety of industrial products worldwide, is increasing the dividend from $0.50 to $0.51 per quarter, starting with the next payment in March.

This is a small increase, just 2%, but shows that the company is confident of the future. After all, it recently reported comparable 2008 earnings of $5.17, a 3.8% increase. Actual earnings (including the special items) were quite a bit lower at $4.89 (a 13% decline), so it's a mixed picture.

That still leaves the payout ratio at an healthy 40%, so the company can easily afford to continue paying the dividends.

Since my position in 3M is quite small, that increase will have almost no impact to my dividend income (about $0.17), but it still shows that the company is solid.

Thursday, February 5, 2009

Net Worth Update

As of February 1st, my net worth is $68 441 (down 3.2% from $70 716). If I exclude house-related assets and liabilities, my net worth is $43 890 (down 5.3% from $46 338).

This is caused by quite a bit of cash going out to yearly expenses -- car registration, filling the oil tank of the house, paying for the windows. These were planned for, and I had the cash available to pay for those. It still impacted my net worth.

The stock market also went down again in January, so my RRSP accounts suffered again. My non-registered accounts increased, in part because the companies there held up fairly well, but also because I keep adding money there.

Assets ($134 669, down 1.3% from $136 390)
  • Bank Accounts $3 990 (down 17% from $4 785)
  • Emergency Funds $3 383 (up 0.1% from $3 378)
  • RRSP Accounts $30 033 (down 5.7% from $31 861)
  • Non-Registered Investments $11 058 (up 6% from $10 400)
  • Home $86 100 (stable)

Liabilities ($66 228, up 0.5% $65 873)

  • Credit Cards $4 601 (up 13% from $4 086)
  • Mortgage $55 110 (down 0.2% from $55 230)
  • Heat Pump Loan $6 439 (down 0.7% from $6 492)
  • Line of Credit $0 (stable)

I have some more big expenses coming in for February, with the first payment of the municipal taxes for the house. My plan is to watch my spending to cut things back a little. I will also have some overtime that should be paid to me soon, although this may slip to early March.

So, nothing to worry about, but I'll have to be more careful with unecessary spendings.

Tuesday, February 3, 2009

TransCanada Increases Dividend

TransCanada Corporation, one of the companies in my DRiP portfolio, has just announced a 6% increase to the quarterly dividend (from $0.36 to $0.38) along with an increase of 8% to the comparable earnings per share for 2008.

To me, it means an increase of approximately $1.35 in dividend income for 2009, and $1.75 for every future year. These may look like a small amounts, but this will be paid out every year, and coumpounded by reinvestment of the dividends. Best of all, I had to do absolutely nothing to get this small pay raise.

On top of that, a 6% increase easily beats inflation, which was 1.16% in 2008 according to the Bank of Canada.

Thursday, January 29, 2009

TransAlta Increases Dividends, Pfizer Cuts

TransAlta has just released their Q4 results and announced a 7% increase of their dividends, from $1.08 to $1.16 annually. This is another company that I own in my DRiP portfolio, so this is good news for me. It's alway nice when I get a pay raise, even if this will have a minimal impact on my 2009 dividend income (about $1). The point is that the dividend is growing, and will probably keep growing in the future.

However, another company that I own and DRiP, Pfizer, announced earlier this week that it was buying Wyeth and cutting its dividend by 50%. Normally a cut like that would hurt, but my position in Pfizer is so small (3 shares) that it will have very little impact (about $1.30) on my overall dividend income. I don't plan on selling that position, but I will wait and see how the merger goes before I put any more money into the company.

Wednesday, January 28, 2009

Home Renovation Tax Cedit - Quebec vs Canada

I finally found some details regarding the home renovation tax credit annouced by the Quebec finance minister last week. And there we go, Canada's finance minister annouced his budget yesterdy, which also includes home renovation tax credits. How do they compare to each other?

Quebec's Home Renovation Tax Credit
  • 20% of amounts exceeding $7 500, up to a maximum credit of $2 500 (for renovations of $20 000 or more)
  • The renovations have to be performed by a "qualified contractor", so self-performed renovations are out.
  • See the details here.

Canada's Home Renovation Tax Credit

  • 15% of amounts exceeding $1 000, up to a maximum credit of $1 350 (for renovations of $10 000 or more)
  • The renovations cost are eligible, as well as the associated expenses (building permits, professional services, equipment rentals and incidental expenses). It also includes renovations such as painting the house, laying new sod, etc.
  • See the details here.

At first glance, when comparing the two, the federal program seems to target modest spendings by house-owners while the provincial program looks like it targets bigger renovations. Also, Quebec's plan totally exclude any self-performed renovations, which seem to be allowed in Canada's program.

Since I was planning on continuing the replacement of our windows in phases of about $3 000, as well as perform some renovations myself (such as painting the exterior of the house and setting up a vegetable garden in the back yard), Canada's program is much more interesting to me. I may step up some of the renovations in 2009 to take advantage of the programs, but not by too much.

Do you have renovation plans for 2009?

Friday, January 16, 2009

Renovation Tax Credit in Quebec

Earlier this week, the Finance Minister of Quebec annouced a new tax credit on renovations performed during 2009, to help stimulate the economy. According to the press release, the tax credit be 20% of the amount of renovations, up to a maximum of $2 500, on renovations that exceed $7 500.

You can read the press release here (it is only available in French as I write this, but I'm using the English link, so hopefuly they will translate the press release).

The press release is a bit ambiguous. Is it 20% of the whole amount, or 20% of whatever exceed $7 500? If it's the first, then I may be encouraged to speed up some of the renovations we are currently planning. The second would make it too much of a burden to our finances for me to consider it -- I would stick to my plan and keep doing it bit by bit.

Are you considering renovations in 2009? Does a program like that encourage you to speed up your plans?

Tuesday, January 13, 2009

My DRiP Portfolio

I often mention my DRiP portfolio, but I realized the other day that I've never taken the time to list the companies that it contains. Well, now is the time to fix that omission:
  • Bank of Nova Scotia (Toronto: BNS) -- 19%
  • Bank of Montreal (Toronto: BMO) -- 5 %
  • Aberdeen Asia-Pacific Income Inv. Co. (Toronto: FAP) -- 17%
  • Canadian General Investments Limited (Toronto: CGI) -- 6%
  • Telus (Toronto: T.A) -- 5%
  • Fortis (Toronto: FTS) -- 10%
  • TransAlta (Toronto: TA) -- 2%
  • Enbridge (Toronto: ENB) -- 3%
  • TransCanada Corp. (Toronto: TRP) -- 6%
  • Imperial Oil (Toronto: IMO) -- 2%
  • Suncor (Toronto: SU) -- 1%
  • Pengrowth Energy Trust (Toronto: PGF.UN) -- 1%
  • H&R REIT (Toronto: HR.UN) -- 5%
  • RioCan REIT (Toronto: REI.UN) -- 1%
  • Johnson and Johnson (NYSE: JNJ) -- 16%
  • Pfizer (NYSE: PFE) -- 1%
  • 3M Company (NYSE: MMM) -- 2%

(You will notice that the total is over 100% -- that's because of rounding errors.)

So I have a total of 17 companies in my DRiP. Most of these are Canadian, because those were the easiest to start and send money to, but as you can see I have started adding some U.S. companies to the mix. I plan on adding more of these, essentially in sectors that are not represented in the Canadian stock market. My prime targets for expension of my portfolio are Pepsi (NYSE: PEP) and Procter & Gamble (NYSE: PG).

My companies (I like saying that) are divided by sectors as follow:

  • Financials (BNS, BMO) -- 24%
  • Fixed Income (FAP) -- 17%
  • Technology and Telecom (T.A) -- 5%
  • Energy and Pipelines (FTS, TA, ENB, TRP) -- 21%
  • Oil & Gas (IMO, SU, PGF.UN) -- 4%
  • Real Estate (HR.UN, REI.U) -- 5%
  • Health (JNJ, PFE) -- 17%
  • Industrial (MMM) -- 2%
  • Others (CGI) -- 6%

So, you can see that this is not exactly a balanced portfolio (although it isn't too bad). I am overweight in financials and energy, but that's a common theme in Canadian markets, while I am underweight in consumer products (which is completely absent) and industrials.

But since I look at all my portfolios when assessing my diversification, the goal is not to keep a balanced DRiP portfolio, but rather to keep a balanced overall portfolio. I hold more consumer products and industrials in my RRSP accounts, as well as additional fixed income products. That allows me to optimize my taxes, since foreign dividends and interests are taxed less favourably than Canadian dividends. Eventually, I will hold some of my companies in a self-directed TFSA account, for the same reasons.

Monday, January 12, 2009

Financial Goals for 2009

After reviewing my 2008 goals last week, it's now timeto turn ahead and establish some goals for 2009. In this article, I will focus on my financial goals and the related objectives, and the means I will take to attain them.

First, let me define what I mean by "goals and related objectives":
  • A goal is the statement a desired result.
  • An objective is a quantifiable measure to evaluate progress.
  • A mean is a way that is used to reach an objective.

Financial Goal 1: Increase my Net Worth

  • Description: That's fairly straightforward and general -- I want to be richer at the end of the year than I am right now.
  • Objectives: At the end of 2008, my net worth was standing at $70K. I would like to increase it by $15K to $85K by the end of the year.
  • Means: Regular deposits to my RRSP and to my DRiP portfolio, occasional deposits to my TFSA (emergency fund), continued debt reduction (mostly house-related, since I have little personal debts remaining).

Financial Goal 2: Increase my Dividend Income

  • Description: Although I reinvest all the dividends I receive, it is nice to see the amount coming in from those investments increase.
  • Objectives: For 2008, I received ans reinvested about $400 from my DRiP portfolio. Just by leaving those investments alone, this should rise to $700 because all the money added during 2008 will have a full year to generate more dividends. That's nice, but I would rather see my dividend income rise to $850.
  • Means: Regular purchases made within my DRiP portfolio.

Financial Goal 3: Reorganize my Investment Accounts

  • Description: I've been using that same brokerage account (Disnat) for almost 10 years, and my needs have evolved since. I also opened an account with Canadian Shareowner Investments (CSI), that I now use very little. Simplifying my accounts would be good.
  • Objectives: I will investigate, select and open a new brokerage account that will meet my current and future needs. This does not preclude keeping my current brokerage account open. I will also close my CSI account.
  • Means: Analyze my needs, research other discount brokers, open and close accounts.


Thursday, January 8, 2009

BMO Adds a Discount on Reinvested Dividends

On Monday, Bank of Montreal announced that they would start offering a 2% discount on reinvested dividends, starting with their next dividend payment at the end of February.

Since BMO is one of the companies that I own in my DRiP portfolio, I will be benefitting from that discount. But what does it means when a company offers such a discount? What are the implications?

Well, it is fairly simple. When a company annouces such a discount, it is usually because it is a low-cost way for them to issue new shares to raise more capital. If you read the annoucement linked above, you may notice the part of the text where it says "the Bank has decided to issue shares from treasury". Issuing share from treasury is simply another way to say that they are creating new shares.

Although companies cannot raise a lot of capital this way, it is just one more way for them to do so. Bank of Montreal, for example, has in the last couple of months announced that they were issuing common shares, preferred shares and notes (debt) to raise more capital (and thus prop up their balance sheet). Combined, these issues allowed it to raise 1.6 G$.

So the discount on reinvested dividends is not a surprise, although this is just a drop in the overall issuance bucket.

Wednesday, January 7, 2009

Net Worth Update for 2008

As of January 1st, my net worth is $70 716 (up 1.4% from $69 761). If I exclude house-related assets and liabilities, my net worth is $46 338 (up 1.7% from $45 557).

If I compare this to last year, my net worth went up by $12 658 from $58 058, an increase of 22%. If I exclude house-related assets and liabilities, my net worth went up by $7 194 from $38 944, an increase of 19%.

Not bad at all, considering that the sotck markets took quite a hit starting in September. That had no negative effect on the value of our house, so that part helped keep up the overall number.

Assets ($136 390, up 0.5% from $135 692)
  • Bank Accounts $4 785 (up 32% from $3 632)
  • Emergency Funds $3 378 (up 0.7% from $3 354)
  • RRSP Accounts $31 861 (down 3.1% from $32 889)
  • Non-Registered Investments $10 400 (up 7.5% from $9 668)
  • Home $86 100 (stable)

Liabilities ($65 873 (down 0.1% from $65 932)

  • Credit Cards $4 086 (up 2.4% from $3 992)
  • Mortgage $55 230 (down 0.2% from $55 350)
  • Heat Pump Loan $6 492 (down 0.7% from $6 545)
  • Line of Credit $0 (stable)

Christmas shopping has kept my credit card debt fairly stable (it had risen last month due to some important car repairs). This should go down again this month, although a refill of the heating oil tank might limit that decrease somewhat. Municipal tax season is also approaching, so available cash will be somewhat tighter. Bank accounts were higher at the end of the month due to a 3-pay month. Otherwise, my net worth would have decreased.

A second payment for the windows has just been done, but I used cash to pay for my part of it, so the line of credit will remain at 0. Next payment will be in May, and at that time we will probably put in the order for the second part of the house (another $3 000). We are also planning some other home renovations for this year. The chimney needs some attention, and I'm not sure how much that will cost. The roof will also need to be reshingled soon, although it hasn't sprung any leak yet.

Tuesday, January 6, 2009

2008 Review: Goals

The year 2008 is now over, and it is time to review how it went. This may take a coupleof posts, since a lot went on during that year.

First, I will evaluate how I did regarding the goals I had set last year. Let's see how I did on each of my goals.

Goal 1 - Lose some weight: I wanted to lose some weight, with the objective being to go from 210 pounds down to 195. I failed miserably, as my weight at the end of the year was 220 pounds. The year started well in this regard, as I begun exercising regularly at home, spending 30 minutes or more on the treadmill every day. Things were going well, until I hurt myself to a foot while clearing snow (we had a lot of snow in Quebec last winter). It took some months before I could walk without feeling any twinge, and by that time I started procrastinating. So things got pushed back again and again. -- Failed.

Goal 2 - Increase my passive income: The objective here was to increase income from my DRiP portfolio generated from $130 in 2007 to $450 in 2008, through additional purchases. This was an ambitious objective. I ended the year with about $400 generated by my DRiP portfolio, which is still reasonable. I added $7 000 in new money to the portfolio, but because I decided to invest more in growing dividend payers instead of income trusts, the increase in passive income was not as big as planned. Over the long term, I expect this will result in a better performance from my portfolio. -- Partial success

Goal 3 - Increase my net worth: The stated objective was to increase my net worth by $20 000, like I had in 2007.My objective is to increase it by $20 000, like I did in 2007. Again, this was an ambitious objective, and the troubles in the stock market made that very difficult. Still, I managed to increase my net worth by over $12 000, which is still quite an accomplishment. -- Partial success

Goal 4 - Blog more often: The stated objective was to write one article every week. Well, I was not that regular, but I still improved on the number of posts I did over the year, with a total of 34 posts. -- Failed

So, I failed to achive my 2 non-financial goals, but did fairly well with my 2 financial goals. I'll have to do better in 2009!