Wednesday, November 17, 2010

RRSP: Bye Bye GE - Hello 3M

I had been thinking of selling my General Electric (NYSE: GE) shares in my RRSP. The company has been struggling for a long time, with its financial division dragging down the rest of the company. As I see it, the company will continue to grow slowly and recover from its past mistakes, just as slowly. I see that growth at less than 5% per year. With a current dividend yield around 3%, I think I can find a better use for that money.

So I've sold GE and used the money to purchase shares of 3M Company (NYSE: MMM). The company is also a large conglomerate with diversified income streams, but without the financial division that's been pulling GE down. 3M keeps innovating and developping new products. Current yield is a bit lower at 2.6%, but the company keeps increasing the dividend at a steady pace and its payout ratio is lower.

My money could have been put into a different company with better growth prospects. But GE (and now 3M) fulfilled a specific role in my portfolio and moving my money into a growth-oriented company would not have satisfied that role.

As I sold GE and purchased 3M on the same day, I was able to same on currency conversion fees (what is sometimes called a "wash trade"), reducing them almost to nothing.

I also own a few shares of 3M in my DRiP portfolio.

Tuesday, November 9, 2010

Brokerages Lowering their Commissions

There is a wave of fees reductions at Canadian brokerages going on right now. Many of them have announced a lowering of the minimum account value needed to get reduced commissions on purchases and sales.

I currently have 2 brokerage accounts, one with TD Waterhouse (for my TFSA) and one with Disnat (my RRSP). Both have announced a reduction of fees.

TD Waterhouse: "We are pleased to announce that effective November 4, 2010, clients with $50,000 or more in household assets, invested through TD Waterhouse Discount Brokerage, will now be eligible to trade Canadian or U.S. equities for $9.99 flat when using our online or automated telephone Electronic Brokerage Services. Canadian and U.S. option trades will be subject to the same $9.99 base rate plus $1.25 per contract. Clients with less than $100,000 in household assets must also register their account(s) for eServices to qualify."

That's good, but it will be some time before I reach $50K with only my TFSA. I might get there sooner if I were to consolidate accounts, but right now I get a service with Disnat that TDW does not provide: Medallion signature guarantees. I find those really useful to exchange shares directly with other investors, as part of my DRiP strategy.

There are also rumors that TDW may soon offer USD currency within their RRSP. *That* might make it worthwhile for me to consolidate some RRSP money to reach the treshold, as I hold a lot of US stocks in my RRSP. I'd have to bring at least $25K in the RRSP to avoid paying annual fees.

Disnat: "We are pleased to announce that as of November 1, 2010 you will be able to take advantage of our flat-rate commissions of $9.95 per transaction when you complete a minimum of 10 monthly transactions via our Disnat Classic website! This new flat fee will also apply to accounts with a minimum net worth of $100,000."

Not as good as what TDW offers. Disnat has not changed its treshold; it's just telling investors that if they trade more, they'll get a better deal. As I don't do a lot of transactions (and don't plan on doing much more in the future), this change has no benefit for me.

The major reason for me to keep this account with Disnat is the Medallion signature guarantee service and the fact that the brokerage has an office here in Quebec City. So I can just drop by to get my signature guaranteed (for securities transfers) at no cost. Although TDW also has such a service, they do not use the Medallion stamp, which I need for US transfers.

So in the end, the fees reduction wave has had little effect on me. But it will make it easier for me to reach the reduced treshold in the future.

Friday, November 5, 2010

Telus Increases Dividend, Removes Discount

Telus (Toronto: T and T.A) today announced that the company is raising its dividend from $0.50 to $0.525 per quarter. This is a 5% increase, which follows another 5% increase that was announced in May. Good news for me, as it will raise my yield on cost to 6%.

But the company has also announced that, starting with the March dividend, it will stop giving a discount on reinvested divideds. This second announcement was burried in its 3rd quarter results, at page 7. Shares for dividend reinvestment will now be purchased on the open market instead of being issued from treasury.

That's good news overall. I own Telus in my DRiP portfolio.

Wednesday, November 3, 2010

Net Worth Update

As of November 1st, my net worth was $136 763 (up 2.4% from $133 563). If I exclude house-related assets and liabilities, my net worth was $94 916 (up 3.2% from $91 973). Another good month, but again that's because of the stock markets. Things are chugging along, dividend gets paid, a little money is added here and there. Boring, but boring is good!

Assets ($197 251, up 1.46% from $194 419)
  • Bank Accounts $5 335 (up 11% from $4 811)
  • Emergency Funds $2 575 (up 4.2% from $2 471)
  • RRSP Accounts $60 061 (up 2.8% from $58 407)
  • Non-Retirement Investments $30 643 (up 1.8% from $30 093)
  • Home $98 430 (stable)

Liabilities ($60 488, down 0.6% from $60 856)

  • Credit Cards $3 834 (down 3.5% from $3 972)
  • Mortgage $56 583 (down 0.4% from $56 841)
  • Line of Credit $0 (stable)


  • Debt / assets: 0.307 (down from 0.313)
  • House value / total assets: 0.499 (down from 0.506)

The first payment for the new windows went through, but was completely lost in the general rise of my assets. When the balance of the payment goes through, however, it will be more noticeable as the amount is bigger. The windows should be installed within the next two weeks. Cash position looks strong, so I should be able to pay for them out of my regular account, without touching my emergency funds.