January Purchases in RRSP

In January, I made 3 purchases in my RRSP, using cash generated by the sale of Harvest Energy in December, plus some money I added to my account.

First, I established a position in Kraft Foods (NYSE: KFT). Who doesn't know Kraft? There is uncertainty due to the Cadbury acquisition, which is driving down the share price. I see this as an opportunity to initiate a position in the company, so I bought 100 shares. Kraft is a solid dividend grower -- the company started paying a dividend in 2001, and has increased every year except 2009. The average increase is 9% over the last 5 years. Current dividend yield is 4%.

Second, I made a small move on Brookfield Assets Management (Toronto: BAM.A). I like what I see in this company, which invest in long-life assets (properties, renewable power and infrastructure assets) throughout the world. Management has a long-term mindset that I like, and the company has a solid cash position that it is using to purchase assets from distressed companies that were not as conservatives as Brookfield. So I purchased 100 shares (a small position) and plan on purchasing more in the future. The company pays a US$0.13 dividend every quarter (even though this is a Canadian company), for a 2.4% yield.

Finally, I doubled my position in PepsiCo (NYSE: PEP). I first purchased 100 shares of PepsiCo in May 2008, before all the market turmoil began. I sold half of those shares in September of the same year, but held the remaining 50 shares through all the madness that was 2009. I felt that now was a good time to add to my position in the company, averaging down. The time when the company usually announces its dividend increase is coming (last time was in May) and I'm confident that shareholders will get another raise this year.

3M Company Increases Dividend

Another company in my DRiP portfolio, the well-known maker of PostIt, 3M Company, announced yesterday that it was increasing its quarterly dividend from $0.51 to $0.525 -- a small 3% increase. This is the 52nd consecutive year that 3M has increased its dividend.

This will have a very small impact on my dividend income for 2010, since my position in 3M is quite small at this time.

Net Worth Update

As of February 1st, my net worth was $109 990 (up 1% from $108 935). If I exclude house-related assets and liabilities, my net worth was $72 528 (up 1.1% from $71 722). A more modest risethis month, as the markets have coller down a little.

Assets ($172 640, down 0.1% from $172 843)

• Bank Accounts $4 312 (down 36% from $6 761)
• Emergency Funds $2 255 (up 0.1% from $2 252)
• RRSP Accounts $47 773 (up 5.7% from $45 200)
• Non-Registered Investments $21 597 (down 0.5% from $21 708)
• Home $96 330 (stable)

Liabilities ($62 650, down 2% from $ 63 908)

• Credit Cards $3 482 (down 22.2% from $4 477)
• Mortgage $58 868 (down 0.4% from $59 117)
• Line of Credit $0 (stable)

Ratios

• Debt / assets: 0.363 (down from 0.370)
• House value / total assets: 0.558 (up from 0.557)

Less cash in in the bank account and lower credit card debt this month, as I paid off my credit cards for the Holliday shopping. I also made a lump transfer of $2 000 to my self-directed RRSP, and I plan on doing another transfer in February. The first municipal taxes tax payment is also programmed for February, so available cash may be tight at the end of the month. I may end up dipping into my emergency fund, but will put back the money into it within two months if I do.

Fortis Increases Dividend

This week, I got my first raise in 2010 from one my companies, as Fortis has announced it was raising its quarterly dividend from $0.26 to $0.28 -- a 7.7% increase.

I own my stake in Fortis in my DRiP portfolio, where the increase will have an impact of $4 to the amount of dividend income I will receive in 2010. Of course, I won't actually touch that money at all since it will all be reinvested in additional shares of Fortis. This will keep compounding for years, until I need the money.

2009 Review: Financial Goals

With 2010 now well under way, it is time to review what happened to my finances in 2009. I'll begin by reviewing my 2009 goals to see how successful I was in meeting them, as well as setting goals and objectives for 2010.

First, a reminder of some definitions:

• 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 -- Success

My objective here was to increase my net worth from $70K (at the end of 2008) to $85K at the end of 2009. As of January 1st, my net worth was $108K, which means I completely fulfilled this objective. Even if I ignore the increase in the value of our house, which accounts for $8K of the total increase, I still doubled my objective. I had a lot of help from the markets' recovery, but I think my basic plan was sound.

So for 2010, my objective is now to reach a net worth of $125K.

The means remain pretty much the same -- regular deposits to my RRSP and to my DRiP portfolio, keeping an emergency fund, continued debt reduction (mostly house-related, since I have little personal debts remaining).

Financial Goal 2: Increase my Dividend Income -- Partial success

My objective here was to grow the dividend income from my DRiP portfolio from $700 to $850 through additionnal purchases in the portfolio. I almost made it, since my total dividend income was $840. The shortfall is partially due to smaller purchases at the beginning of the year, when I focused on debt reduction, and from the investment mix I selected -- I purchased more corporations (with lower yield) at the beginning of the year than income trusts, since I saw the recession as an opportunity to load up on quality dividend growers. The move paid of in terms of net worth, but this meant slightly lower dividend income for 2009. I can live with that.

For 2010, I would like to see my dividend income grow from $1115 -- which is what I will receive if I make no additional purchases and get no dividend increases -- to about $1300. That's a steeper objective than last year, because I expect more dividend increases than last year. I will account for dividend income from both my DRiP portfolio and my TFSA brokerage account.

Financial Goal 3: Reorganize my Investment Accounts -- Done

My objective was to evaluate my current brokerage accounts to see if they still fit my needs, and open/close accounts accordingly. In June I closed my Canadian Shareowner Investment account. And in October I began the process of opening a TD Waterhouse account to host my TFSA equity investments. I moved out my emergency funds from my TFSA at ING Direct, since I'll benefit more from having better-yielding investments sheltered by a TFSA. I also decided to keep my account with Disnat, since the service I can get there for signature guarantees are quite handy for dripping.

There is no need to renew this goal into 2010.

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What are your financial goals for 2010?

Cheers!