March dividend harvest

During the month of March I harvested $4600 in Canadian dividends and $1475 in US dividends.  With these sums, I rebalanced my portfolio as the value of my stocks in the technology sector had increased more than 5% of my sector allocation target.  Therefore, I sold some shares of Oracle (ORCL-Q), Tecsys (TCS-T) and ADP (ADP-Q).  I added to my positions in the basic consumption sector with North West Company (NWC-T) and Transcontinental (TCL.A-T) and in the healthcare sector with Becton Dickenson (BDX-N)

My dividend harvest continues to increase from year to year.  My goal is to harvest dividends that increase at a rate greater than the 2 -3% annual inflation rates.  With increasing dividend revenue, I am more comfortable budgeting my expenses during retirement knowing that I can easily offset inflation’s impact on ever lower purchasing power.

Well since January 1st, here is a list of my stocks that have increased their dividend payout as well as the rate of increase:

Dollarama            10%

Oracle                   26.3%

NWC                      3.1%

Realty Income   2% + .2%

Stantec                 5.5%

TD                           10.4%

Magna                  10.6%

Suncor                  16.7%

3M                         5.9%

AFLAC                   3.8%

ABBVie                 11.5%

 

This list represents 11 of the 44 stocks that I own.

Remember, these stocks are not recommendations… enjoy finding your own stocks!

Click here to check out this site for other companies that have raised their dividends.

Until next month!

Stocks are climbing again!

At the start of February, I withdrew about $24,000 worth of stocks from my RRSP account; these stocks are unloved these days.  The stocks were down between 25 to 30% from their September high.  At withdrawal, Questrade withheld $8000 in income tax for our governments.  I then immediately bought the same stocks in my margin account at Interactive Brokers.  To make up for the income tax amount withheld by Questrade, I borrowed the amount on my margin account at the current interest rate of  2.563% per annum.

These days, it seems like stock markets are back climbing again.  Therefore, it looks like my RRSP withdrawals are over for now.  Looking back over the last two months of RRSP withdrawals, I have sold stocks and withdrawn $ 104,000 from my RRSP account.  At the September high last year, these stocks had a value of $156,000.  I will add this $104,000 withdrawal to my 2019 income tax return.  Some of these dollars will be taxed at 53% but given the market correction, I figure that I am only paying at most 33% income tax since the withdrawal only represents 66% of the market high value ($104,000 / $156,000).  Questrade has already withheld $31,200 in income tax.  I will pay the income tax balance owing to governments at the end of April 2020.

Readers… I suggest you too keep an eye on your unloved stocks in your RRSP account… especially Canadian ones.  If you want to keep these stocks « forever » and their prices are down more than 25%… you have a rare opportunity to withdraw these at a much lower tax “hit” and position them in a margin account to generate income at a much lower tax rate in the future.

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February dividend harvest is usually thin… this year … no different.  With some US funds in my margin account, I bought 1 share of Berkshire Hathaway (BRK.B-N).  I now have 73.  Since this US stock does not pay dividends, I like to keep it outside of my RRSP as I can only benefit from its price increase over the years to come.  Thus, it can only generate capital gains of which only 50% is taxable.  When I keep it in my TFSA account… well, the income is tax free!

Note that brokers withhold 15% of dividends paid out by US companies and our governments tax these « foreign » dividends at the same tax rate as interest or salary… but, we do get a credit for the amount of taxes withheld.  This withholding tax does not apply to US stocks in a RRSP account.  Still… I prefer non dividend paying US stocks outside my RRSP.

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This month, in my margin account, I expect to receive $3600 in Canadian dividends and $761 in US dividends.  In my RRSP account, I expect to receive $216 in Canadian dividends and $965 in US dividends.  Therefore, I will put this cash to work in April buying stocks… hopefully in a down market!  Note that my fixed income investments are mostly preferred shares that I hold in my margin account.  That explains the large amount of dividends I receive in that account.

In my TFSA account, I average $218 in dividends per month.  Note that with the stocks I pulled out of my RRSP account, I now have about $130,000 of stocks I will transfer into my TFSA account in the years to come to shelter their income from income tax.

Talk to you next month,

Interest rates on the rise… or not!

In opposite direction to interest rates, fixed income investments have been going down in price.  In my portfolio, my fixed income allocation is filled with preferred shares.  During November, the decrease in price has been noticeable.  So much so that my Allocation of funds indicated that it was time to sell off some common shares to move over to fixed income and buy additional preferred shares.

Also typically moving in opposite direction to increasing interest rates are another result of changing interest rates is the changing price of interest sensitive stocks such as Real estate (REIT) and Utilities.  These two sector’s impressive growth in November seems to indicate that the markets believe interest rate increases are over.  Nonetheless, my stock allocation indicated that these two sectors were overweight.  Therefore, I did some “pruning” by selling some shares.  Interesting note, stocks in these two sectors were having a bad 2018.

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In November, three sectors spiked up in price.  Therefore, I sold some of the following stocks :

  • American State Water (AWR-N) – Utilities
  • RIO CAN (REI.UN-TO) – Real estate
  • Johnson & Johnson (JNJ-N) – Health

With the sale proceeds and the monthly dividends I added to these not so popular stocks :

  • AFLAC (AFL-N) – Finance
  • Canadian Western Bank (CWB-T) – Finance
  • Dollarama (DOL-T) – Basic consumption
  • Helmerich & Payne (HP-N) – Energy
  • Oracle (ORCL-Q) – Technology
  • Tecsys (TCS-T) – Technology

Please note that these stocks are not recommendations.  Stock picking is very personal.  So please have fun selecting your own “businesses”.

Until next month,

Sale, sale, sale!

Wow… October brings a great stock exchange sale.

When is the best time to buy shares?  When you have cash in your long term savings plan.

Which stock should I buy?  Base your decision using an objective decision tool like the 2019 stock allocation.

I have already completed my October stock shopping.  I will be back at it again in November.  I hope the sale lasts for a while and even gets better.

Happy shopping!

Until next month,

S&P 500 index capital allocation modifications to three sectors

Last week, the S&P 500 index managers decided to move several stocks from both the technology and the discretionary consumption sectors to the newly renamed communication sector.  This change involves 24 stocks.  On this list, are big names like Alphabet, Facebook and Walt Disney.

All this to let you know that my 2018 stock allocation tool has been adjusted to reflect theses changes ahead of my normal year end update.  The bottom line, more money now goes into the communication sector and less money goes to the both the technology and discretionary consumption sectors.

Therefore, to help you and I make investing decisions; I’ve uploaded and posted my Stock allocation tool for 2019.

—————————————————————————————————————————————–With the changes taking place in the stock allocation tool, I now have my eyes on buying shares of Walt Disney in the communication sector.  Its dividend increases regularly, and more importantly to me, I really enjoy its movies and would be proud to be associated with the name.

By the way, my other communication stock holding are AT&T (T-N) and Telus (T-T).

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During the month of September I sold some shares of Pepsi (PEP-N).  The basic consumption sector in my portfolio and more precisely this stock was getting too high in value.  With these funds added to the dividends I received, I added to my shareholdings of Novo Nordisk (NVO-N) in the health sector and Trans Continental (TCL.A-T) in the discretionary consumption sector.

Until next month,

Tech and healthcare stocks are hot!

Over the month of July, my tech and healthcare stocks increased in price.  So much so that my stock allocation was telling me that my portfolio’s share of these two sectors was above their targets.  Therefore, I sold some shares of Microsoft (MSFT-Q), Tecsys (TCS-T) and Novo Nordisk (NVO-N).

I ploughed the proceeds into sectors that were below my portfolio’s targets.  Therefore, I added to the following sectors that were below my sector targets:

– Magna (MG-T) Industrial

– AT&T (T-N) Telecom

– Allied Properties (AP.UN-T) REIT

– Helmerich & Payne (HP-N) Energy

– Mcdonalds (MCD-N) Consumer discretionary

– Nutrien (NTR-T) Material

– TD Bank (TD-T) Finance

With the PCC model portfolio I use, it is easy to sell high and buy low!

Note that these stocks are not recommendations.  They are stocks that I have held for many years.

Please select stocks that meet your criteria.  You are welcomed to use my asset allocation and stock allocation tables to build your portfolio.

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Note that I’ve added a button to allow donations to pay for my blog’s expenses and my time.

Until next time,