First monthly update of 2018 & 5 stocks I’m keeping an eye on.

Sweet Jebus…the first month of 2018 is already over & although it went by too fast – I am happy with what was accomplished!

Personal Highlights for January:

• One of my goals for the year was to take the wife out to dinner at least 5 times, and I am happy to say we were able to get a baby sitter and went to a nice steakhouse earlier this month!
• I was able to find the time to write 6 new blog posts as well as play with the theme/look of the site.  This will continue to be a work in progress.
• Added a new section to the website called “My Bar” which although is(slightly off topic) a lot  of fun for me to write about & even more fun making and trying new drinks.
• Started (finally) watching Last Man On Earth on Netflix and it is GREAT!
• Had over 1000 visitors to the website in a month for the first time.

 

Financial Highlights for January:

I am happy to report that I have already followed through with one of my financial goals for the year – and one that I have wanted to do for some time.

• Sold my high cost RBC mutual funds and moved them to my direct investing RSP.  Replaced with a lower cost Canadian equity fund & super low cost Global fund. As detailed in this post
• Started gathering all my statements for tax time 🙂
• Continued bi weekly payments into RRSPs & Spousal RSP.
• Increased Spousal RSP amount by $100 bi weekly to try and get our accounts closer in size.
• Set up an RESP for my kids
• Got out of the Penny stock/speculation game completely(for good) and made 2 new stock purchases.  You can read more about that HERE.

 

Passive Income Update For January 2018.

TFSA’S:

Diversified Royalty: $9.07 (Dripped 2 new shares)

Canadian Western Bank: $0.24

Artis Reit: $49.86 (Dripped 3 shares)

Plaza Reit: $24.75 (Dripped 5 shares)

Algonquin Power: $110.35 (Dripped 8 shares)

Chorus Aviation: $10.80 (Dripped 1 share)

TFSA’s Total: $205.07

RRSP:

Canadian Equity Income Distribution: $213.99

Total Passive Income January 2018:  $419.06

*The transfer of funds from mutual fund to ETF/Direct investing hasn’t happened as of writing this – even though papers have been signed – so next month will represent the new funds.

Portfolio Update:

My portfolio grew by 1.67% month over month and once again hit an all time!  The early retirement portfolio now sits at $306,396.65.  Dividends grew by $14.95 vs last January (year over year growth of 3.69%).  I expect my dividend growth rate to increase quite a bit more this year once my funds are transferred from my Mutual Funds and into my direct investing account/redeployed.  I am also planning on trying to contribute more into my TFSA this year which should help increase dividends for the year.

I’ve decided to add a new section to the monthly updates, which will be my top 5 stocks I am looking to buy in the future/keeping an eye on:

Current Watch List:

Andrew Peller: ADW

Cascades: CAS

InterRent Reit: IIP

Northview Apartment Reit: NVU

Caledonia Mining: CAL

 

How was your month?

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Well that was easy…How a 1 hour bank appointment will save me over $20,000

On Friday I had an appointment at the bank, it last just over an hour – and it will easily result in savings over over $20,000 over the next 10 years (or less).

How is this possible?  It’s actually a lot simpler than you would think.  All I did was follow through on one of my goals for this year.  I finally decided to transfer my high cost RBC mutual funds to my direct investing account.

At the time of transfer I had the following 2 funds:

RBC GLOBAL DIVIDEND GROWTH FUND

RBC CANADIAN EQUITY INCOME FUND

The RBC Global Dividend Growth Fund was my very first Mutual Fund I ever purchased.  I’ve owned this fund for over 10 years.  This fund has been pretty terrible for me (10 year return of 5.3%) AND has really high fees (2.14%).  Truth be told I’ve been unhappy with this fund for years, but just kept putting off doing something about it.  Now that I am taking things more seriously, and have this website to hold me accountable I finally did something about it.  I plan on replacing this fund with an International/Global ETF.  I am currently trying to decide which low cost fund to replace this with.  So far I am leaning towards one of the funds below- although I plan to do some more research this week:

VANGUARD FTSE GLOBAL ALL CAP EX CANADA INDEX ETF (0.27% MER)

ISHARES CORE MSCI ALL COUNTRY WORLD EX CANADA INDEX ETF (0.22% MER)

Even if I end up choosing the Vanguard fund with a slightly higher MER – I would be paying 1.87% less per year in fees than I currently am.  With my current portfolio amount this would result in yearly savings of  $1215.50.  This savings amount would continue to increase each year as my portfolio increases – but even if we assume I don’t contribute to this account ever again, and it returns 0% for the next 10 years, that means in 10 years I will have saved $12,155.00.  The crazy thing is that this ETF outperformed my high cost mutual fund by close to 4% over the last 3 years as well so not only will I be saving money in fees each year, I should be getting a better return as well.

Truth be told, even with the high MER (1.92%) – I’ve been really happy with the Canadian Equity Income Fund.  It has a 10 year annualized return of 10.4%, and currently pays me a monthly dividend of over $200.  I did a little bit of research and found out that RBC offers Series “D” funds for people who use direct investing.  This is the exact same fund – but with a lower MER.  I decided to transfer this fund to a series D fund rather than liquidate my position.  This will reduce the MER from 1.92 to 1.04.  This is a reduction of 0.88% per year. Based on my current shares this will save me: $572 this year (and even more every following year as my portfolio increases).  Even if I never put another cent into this fund – and it returned 0% for the next 10 years – this would result in savings of $5720 over the next 10 years.

While I was at the bank I also finally set up an RESP for my kids and increased my spousal RRSP contributions by $100 every 2 weeks.  I normally hate these appointments – but I’d say that was a pretty good use of an hour.

If anyone has any recommendations on any low cost global/international ETF’s I’d love to hear them so I can research them this week.  Thanks in advance!

Flipped 3 Penny stocks for long term holds.

In November I decided to put just over $2,000 into 2 different Marijuana stocks, knowing full well this was a short term play/gamble.

I purchased 7100 shares of LGC Capital ($LG) for .14
I purchased 4000 shares of National Access Cannabis ($NAC) for .20
I had also previously purchased 2500 shares of Nutritional High ($EAT) for .25

Total cost of purchasing all 3 including commission: $2448.85

This week I liquidated all 3 holdings for a total of $7816.41 after commission.

Total Gain after 2 months of holding: $5367.56

Although these are obviously great gains especially in such a short period of time – I actually got a bit greedy and should have sold earlier – as I could have made an extra $3000 if I had sold LG a few days prior.  I was originally very interested in holding LGC Capital for the long haul, but after reading a bit more about their chairman, as well as seeing his antics on twitter, I ultimately decided against it as he seemed to be more worried about the stock price, and less worried about the future of the company.

Now I have almost 8k I can put towards some long term holdings, specifically ones that will add to my yearly dividend income.  Over the past few weeks I’ve been doing some research on a few different stocks, and narrowed it down to the following 5:

Northview Apartment Reit ($NVU.UN)

I have had my eye on this stock for about 3 years.  I first started looking at this stock when it was trading around $14-15 dollars and thought it was attractively valued.  It is now trading over $24 and I still think it is cheap.  With a P/E of 7.4 and a payout ratio of under 50% I feel both the stock price and the dividend still have room to grow.  The other REIT’s in my portfolio are commercial/industrial so I’ve been looking to add a residential REIT as well.  The stock currently yields 6.58%.

Interrent Real Estate Investment Trust ($IIP.UN)

This is one of the cheapest residential REIT’s I have been able to find.  With a stock price under $10, this is currently trading with a P/E of 4.4.  The yield is very low for a REIT (2.84%) and has a very low payout ratio as well which makes me think we will see some dividend increases over the next couple of years.  One concern I have with this stock is the lack of diversification (all properties are in Ontario).  Due to its extremely low valuation – this stock seems like a prime candidate for a buyout by one of the larger REIT’s.

Cascades ($CAS)

This company reminds me of one of my recent purchases (Intertape Polymer).  It is a boring, reliable company that continues to show strong profits, but has recently been beaten down by the market for no real reason.  The yield on this one is extremely low(1.17%), as is the valuation.  The 52 week high is $18.20 and it is currently trading just under $14.00.

Western Forest ($WEF)

The lowest priced stock on my list (trading at $2.68) this is a B.C wood producer that has shown consistent profits and has increased revenue over the previous 3 years.  The dividend hasn’t grown in 5 years which is a slight concern, although with a payout ratio under 40% there seems to be some room to grow it in the future as long as revenues keep increasing and they can control their costs.

Power Corp ($POW)

This is another one of those buy and hold forever type of stocks, and also another I’ve had on my watch list for some time.  Currently trading at a P/E under 10, while also paying a generous 4.45% yield makes this especially attractive right now.  Power corp is the holding company of Great West Life (one of the largest insurance companies in Canada and I believe the largest employer in my hometown of Winnipeg).  Power Corp has also maintained a dividend for 20 years, and has increased it’s dividend for 3 consecutive years.

When purchasing stocks for the long haul,  I like always ensure that I DRIP any dividends and like to have enough shares so that I can at least DRIP a full share each dividend payout.  To ensure I could reinvest 1 full share at the current prices, I would need to invest the following into each of the stocks above:

NVU.UN = $4583

IIP.UN = $4181

CAS = $4685

WEF = $356

POW = $2877

So What did I buy? 

In the end I decided I liked the idea of set it and forget it.  I purchased 200 shares of Power Corp which should give me enough to drip at least 2 shares every quarter.  With the remaining cash I only had enough to ensure I could reinvest in full shares of Western Forest so I purchased 522 shares of Western Forest which should allow me to repurchase 3-4 shares each quarter.  Another reason I leaned towards these 2, is that I already have about 10% of my TFSA invested in REIT’s, and I recently purchased a similar packaging company to cascades (Intertape Polymer).  I feel like all of these would have been good buys, but these 2 specifically help with diversification.

These purchases will add $328.56 to my yearly dividend income (purchased in my Tax Free Account).

I am still very interested in adding the other 3 stocks on my list to my portfolio, but unfortunately it will have to wait until I can inject some more cash into my TFSA.

Curious what the rest of you think with these choices – do you think I made the right choice?  Would you have purchased one of the others on my list instead (or some different stocks altogether)?

November Stock Roundup: Intertape Polymer beats on earnings.

This month a few of my stocks have reported earnings:

• Caledonia Mining
• Artis Reit
• Intertape Polymer

While, most of them did well.  I was extremely pleased with Intertape Polymer’s results.  You may recall I purchased ITP just over a month ago when it was near its 52 week low.

Here is what I said in October:

“The business itself is boring, but it has paid and increased the dividend for over 5 years (yields 3.5%)in US dollars, has increased earnings year over year and was trading at a 30% discount to the 52 week high.  I purchased 275 shares @ 19.08.”

The stock had been beat up for no apparent reason, and last week they reported EPS of 0.32 vs the analyst expected 0.29.

Here are some other notes from their earnings report:

• Revenue increased by almost 18% (mostly due to acquisitions)
• Net earnings increased from $13 to $19.2 million
• Adjusted EBITDA increased 15.9% to $32.4 million
• ITP repurchased/cancelled almost 500k shares
• Revenue in the fourth quarter is expected to be greater than last year
• Gross margin & adjusted EBITDA are expected to be greater in the 4th quarter than last year.

All in all, it was a great report, and it looks like the next quarter should be just as good if not better!

Here are a few notes from some other stocks I own that reported earnings over the last week or two.

Caledonia Mining:

This has been one of my favorite stocks for the last few years.  It never seems to get the attention it deserves, but it continues to be well positioned financially, trades extremely cheaply and has a lot of cash on hand.  I hope with their increased cash position & low stock price the company decides to buy back some shares.

• Increased gold production &  gross & net profit
• Increased EPS
• Broke a record for most gold produced in a single quarter
• Increased their overall cash position – net cash now close to 12 million
• Plans to extend depth of the mine which should result in 4 extra years of production.

Artis REIT:

Artis is a REIT headquartered in my home town of Winnipeg.  They own buildings all across Canada & the USA.  The stock had been beat up the last couple of years due to a high % of their properties being in Alberta (when oil prices dropped, the Alberta economy tanked & a lot of the buildings lost value/became vacant).  Over the last couple of years they have been selling off some Alberta properties and expanding in the US market.  It looks like this move is starting to pay off.

• Net operating income from Alberta has been reduced from almost 40% to 25%
• Because a third of their income comes from USA when the Canadian dollar is weak, the returns are even stronger
• Reduced total debt to EBITDA
• Continuing to reduce retail exposure
• Reported FFO per unit of $0.36
• Dividend currently yielding a whopping 7.6%. The payout ratio is pretty high, but they should be able to continue to pay as they have been able to consistently reduce their debt.